For years, a handful of sketchy payday lenders have been using purported affiliations with tribal lands to try to skirt federal and state laws. But courts and regulators have recently been cracking down on these operations, saying that a tribal connection does not shield a business from prosecution. One operation facing charges from the Federal Trade Commission has now agreed to pay nearly $1 million in penalties over charges that it illegally garnished borrowers’ wages and wrongfully sued them in tribal courts. [More]
Critics of payday lending say the practice traps many borrowers in a debt spiral, forcing them to take out additional loans to pay back the first. Yet these short-term loans do have proponents (many of them profiting from the industry) who claim that without this pricey option for quick cash, desperate consumers will turn to more unsavory means, leading to increased crime rates and other doom and gloom predictions. But does that really happen? [More]
Lisa took out a payday loan to help pay her rent. When she couldn’t repay the loan after 14 days she rolled it over, bringing her total debt to $800. After repaying more than $1,400, she remains stuck in the revolving door of debt associated with payday lending. It’s stories like these that the Consumer Financial Protection Bureau aims to stop with new rules to regulate the payday loan industry. But those in the payday industry say Lisa should have simply known better. [More]
The revolving door that is the payday lending debt trap is real. The high-interest, short-term loans may even be more damaging to consumers that previously thought. Four out of five payday loans are rolled over or renewed every 14 days by borrowers who end up paying more in fees than the amount of their original loan, a new Consumer Financial Protection Bureau report finds. [More]
Bank may have exited the payday lending business this month, but that doesn’t mean their next foray into small dollar loans will be any less predatory. That’s why the National Consumer Law Center is urging banks to show leadership in developing affordable credit options for consumers. [More]
The small victories are adding up in the battle against predatory loans this week. Wells Fargo and U.S. Bank announced they will discontinue high-risk payday lending programs. [More]
Arizona is about to say goodbye to predatory payday lenders who issue loans with annual interests exceeding 460%. On Thursday a decade-old law will expire, capping interest rates at 36%. The predatory lenders begged to keep the law in force, but voters and the legislature just sat back and gave the industry a big, slow, deserved punch right in the face. [More]
Do you need cash right now, but are worried that you might lose your job in the next two weeks? Guarantees for customers who lose their jobs have worked for Hyundai, Ford, GM, and Sears, so now the practice has expanded to the payday loan industry.
A House subcommittee wants to legalize payday loans with interest rates of up to 391%. Lobbyists from the payday industry bought Congress’ support by showering influential members, including Chairman Luiz Gutierrez, with campaign cash. The Congressman is now playing good cop, bad cop with the payday industry, which is pretending to oppose his generous gift of a bill.
Ohio payday lenders, still smarting from their punch in the face, are turning to lies and deceit to qualify a ballot initiative that would overturn the state’s recently approved usury limits. The industry’s petition gatherers are telling people that the initiative would “lower interest rates,” even though it would raise the maximum allowable APR from 28% to an astounding 391%. They’re also giving dollars to illiterate homeless people who sign the petition.
Consumers in Washington D.C. have apparently flocked to credit unions since the district outlawed payday lending last year. Payday lenders whined that lending without 300% APRs was utterly unaffordable, but credit unions are proving that it’s possible to make long-term, low-dollar loans with interest rates as low as 16%.
Gov. Ted Strickland, of the great state of Ohio, has signed a bill that punches the rapidly growing payday lending industry in the face. As we’ve mentioned before, the bill will cap interest rates at 28% and limits consumers to 4 payday loans per year. A typical payday loan charges around $15 per $100 borrowed on a 2 week loan, which works out to an interest rate of 391%.
The Columbus Dispatch says that Ohio lawmakers…
The FDIC has announced a program designed to study and encourage small dollar lending programs designed to compete with payday lenders. Under the program banks would offer “loan amounts of up to $1,000, mandatory savings components, payment periods that extend beyond a single pay cycle, interest rates below 36 percent, low or no origination fees, no prepayment penalties, prompt loan application processing, and access to financial education to help with asset building.”