Payday Loan Industry Regulation And Legislation

Payday Loan Industry Regulation And Legislation



Payday Loan Industry Regulation And Legislation
A number of​ states from coast to​ coast are attempting to​ impose further regulations on​ the​ payday loan industry,​ but without much success in​ many cases .​
Consumers of​ payday loans have generally argued against more stringent measures and limitations,​ that would limit their access to​ payday loans .​
And,​ in​ the​ meantime,​ the​ payday loan industry continues to​ grow,​ both in​ the​ numbers of​ loans issued and the​ dollar amounts of​ loans issued.
In Washington State,​ there were no less than 14 bills introduced during the​ 2004-2018 legislative session,​ with the​ specific intent of​ more tightly regulating the​ payday loan industry .​
Nine of​ the​ most aggressive proposals stalled in​ committee .​
If passed,​ these bills would have lowered payday loan interest rates and decreased the​ maximum amounts that a​ borrower could access.
Even more heavily opposed was a​ proposal to​ establish a​ statewide database of​ payday loans,​ giving both the​ industry and the​ state a​ way of​ looking at​ how many payday loans a​ borrower already had when he or​ she applied for another .​
This measure was designed to​ prevent borrowers from seeking loans from multiple lenders .​
Some analysts viewed the​ proposal as​ a​ potentially dangerous intrusion into people’s personal finances .​
The payday loan industry contended that cutting interest rates and putting a​ lower cap on​ loan amounts would significantly damage their business.
Most of​ the​ regulations proposed in​ Washington were stalled in​ legislative committees and never reached the​ floor of​ the​ legislature.
A bill passed two years ago in​ Washington already provided a​ number of​ consumer protections .​
The state requires,​ for example,​ that borrowers have the​ right to​ cancel a​ loan within one business day .​
a​ borrower ‘payment plan’ was also made mandatory,​ requiring that once a​ borrower has received four loans from the​ same lender,​ he or​ she is​ allowed to​ work out a​ repayment plan over at​ least 60 days.
The State of​ Oregon has also been embroiled in​ a​ payday loan controversy including attempts to​ restrict an​ industry that is​ largely unregulated in​ that state .​
a​ bill proposed during the​ 2004-2018 legislative session would have imposed mandatory 31 day loan periods,​ effectively eliminating the​ practice of​ rollovers.
More than 1500 clients of​ just one payday lender wrote urging the​ Oregon legislature not to​ pass the​ proposed restrictions .​
In general,​ those individuals said they valued being able to​ access short term loans quickly and easily,​ without having to​ depend on​ the​ good will of​ family or​ friends when they ran into an​ emergency cash flow situation .​
They also indicated that they did not consider the​ interest rates unfair.
At the​ same time,​ the​ dollar amount of​ payday loans granted in​ Oregon has grown by 285 percent in​ the​ past five years,​ and the​ number of​ loans issued has grown 138 percent in​ the​ same time period.
In New Mexico,​ the​ State House of​ Representatives introduced a​ bill that would limit payday loans to​ $1,​000 each and imposed restrictions on​ some fees and charges .​
While the​ legislation did not prevent rollovers,​ it​ specified that a​ loan was forgiven once the​ customer had paid twice the​ amount that was originally borrowed .​
Consumer groups and the​ state’s Attorney General pushed for a​ payday loan interest cap .​
Arizona’s governor has stated that he will not sign the​ measure because it​ fails to​ provide adequate protection for borrowers.
On the​ other side of​ the​ U.S.,​ in​ the​ State of​ Maine,​ lawmakers have been asked to​ approve changes to​ existing laws that would allow significant expansion of​ the​ payday loan industry .​
Under current state law,​ fees are capped at​ $15 for loans up to​ $250,​ and at​ $25 for loans exceeding $250 .​
One of​ the​ proposed changes in​ that state would allow lenders to​ charge as​ much as​ 17.5% per week,​ which would amount to​ $17.50 per $100.
In addition,​ payday lenders in​ Maine would be exempted from the​ state’s existing consumer credit code .​
They would be allowed to​ use advertising methods that are currently prohibited and to​ have greater leeway in​ collection methods in​ the​ event of​ default.
The U.S .​
Military contends that military personnel are disproportionately targeted by payday loan companies and that lenders adjacent to​ military bases charge higher rates of​ interest .​
a​ recent study lends some validity to​ that point of​ view.
Most of​ the​ recent legislation aimed at​ regulating payday loans across the​ country,​ however,​ is​ aimed at​ in-state,​ storefront businesses,​ rather than Internet based lenders .​
It may be that Internet payday lenders have not been targeted as​ aggressively because they tend to​ be much more competitive,​ offering lower interest rates and lengthier repayment terms.




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