The Consumer Financial Protection Bureau (CFPB) reported on Wednesday April 6 that most payday loan borrowers did not have extended payment plansthat lenders must offer borrowers in the majority of states where payday loans are banned, and instead pay more rollover fees.

“Our research suggests that state laws that require payday lenders to offer extended repayment plans at no cost are not working as intended,” CFPB Director Rohit Chopra said in the bureau’s press release. “Payday lenders have a strong incentive to protect their income by encouraging borrowers to re-borrow in expensive ways.”

More than 12 million borrowers take out payday loans each year in the 26 states where payday loans are not banned, and 16 of those states require payday lenders to offer extended payment plans at no cost.

Payment plans allow a borrower to repay principal and fees already incurred, spreading the remaining balance over several months. If they default on their loan, buyers can roll over their loan, which renews the borrower’s loan for another pay period and the borrower must pay a fee.

On a $300 loan, a borrower would pay $45 in rollover fees every two weeks until they could repay the principal and incurred fees, meaning the borrower would have paid $360 in rollover fees. rollover after four months and still owe the initial $300.

If the same borrower opted for an extended payment plan with no fees at the time of the first rollover, they would only have to pay $345 over an extended period. Most payday loans have gone to borrowers who used the rollover option so many times that the accrued fees exceeded the original principal, according to previous research from the bureau.

Related: 21 attorneys general have urged the CFPB to regulate BNPL

In March, the CFPB closed its call for comments on the Buy Now, Pay Later (BNPL) survey it launched in December. Most of the 44 public comments available on the bureau’s website urged the CFPB to increase transparency and disclosure requirements of BNPL companies.

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NEW PYMNTS DATA: WHY PATIENT PORTALS ARE BECOME TABLE TOPS FOR CONSUMERS

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