New Report Documents Payday Lenders’ $8 million Investment
A bill that creates a new predatory lending product passed out of the Senate Rules Committee Thursday morning and heads to the Senate Floor. A companion bill is already headed to the House floor. SB 920 and HB 857 would double the amount lenders may loan to each borrower and increase the cost to the consumer for the loans, with annual interest rates over 200%. Senator Anitere Flores (R) and Senator Jose Javier Rodriguez (D) voted against the bill.
“The payday lending expansion bill shot through the committee process,” said Alice Vickers, of the Florida Alliance for Consumer Protection. “You would think a product that is so damaging to the financial stability of so many households would give lawmakers pause. But they seem only to have ears for the payday lenders.”
A new report released this morning by the Florida Consumer Action Network and Every Voice Counts, “Payday Lender Influence in Florida,” documents the dollars payday lenders have spent in Florida. The report found that between campaign contributions and lobbying expenditures, payday lenders have spent at least $8 million in Florida since 2007.
Payday lenders claim they need a new product in Florida to avoid falling under a rule by the federal Consumer Financial Protection Bureau, which is meant to protect people from long-term debt traps. But the CFPB rule is under attack in Washington and may never take effect. Regardless, SB 920 and HB 857 would expand payday lending in Florida, which relies on trapping borrowers in a cycle of high-cost loans.
Reform passed in 2001 failed to stop the cycle of debt that payday lending intentionally creates. Payday lenders obtain 75% of their revenue from customers caught in 10 loans per year. In Florida, over 83% of loans go to people with seven or more loans per year, and the payday lenders suck over $300 million annually out of Florida’s economy.
At a Tuesday press conference, Rev. James T. Golden, of the AME Church of Florida said, “While I do not begrudge any business from making a profit, I do not think that it is fair that most of the profit from this business comes from the backs of people who can least afford it. If you want to provide a service, provide it. But if you want to create a situation where people are just not able to get beyond where they are, the payday lending industry is for you.”
Jared Nordlund with UnidosUS, opponents of the bill said, “We do not see usurious loans as a valid alternative for any consumer. Our communities are targeted by these businesses, and we should not be a haven for these predatory lenders.”
“We cannot support loans that place borrowers in a cycle of debt with 50% of these loans going to borrowers with 12 or more loans per year,” said Marucci Guzmán, Executive Director of Latino Leadership. “We look to our legislators to do a better job helping our community meet its financial needs.”
Calls to kill SB 920/HB 857 continue from the NAACP Florida State Conference, Cooperative Baptist Fellowship of Florida, Florida Conference of Catholic Bishops, Florida Council of Churches, and 11th District Episcopal AME Church, Latino Leadership, Florida Prosperity Partnership, Florida Veterans for Common Sense, UnidosUS, Florida Hispanic Unity, Florida Legal Services, League of Southeastern Credit Unions, Catalyst Miami, Solita’s House, Jacksonville Area Legal Aid, Beaches Habitat for Humanity and a growing list of other organizations in Florida.