Consumer, Faith and Civil Rights Groups Strongly
Oppose The Bill Legalizing a New 200% Interest Loan
Despite strong and vocal opposition to predatory payday lending from consumer, faith, seniors, civil rights and community organizations, a Florida senate committee approved a new predatory product today, just days into the new session.
The Banking and Insurance Committee heard testimony on the bill backed by payday lenders AMSCOT and Advance America, voting in favor of advancing the bill.
Senators voting for 200% APR payday loans were: Senators Flores, Steube, Bracy, Bradley, Braynon, Broxson, Gainer, Grimsely, and Thurston.
We are thankful to Senators Garcia and Taddeo for their votes opposing the payday lenders’ dangerous bill.
Payday lenders are lobbying aggressively, attempting to drown out the voices of individuals and groups who understand the harmful impact of a business model based on trapping people in repeat, triple-digit interest rate loans.
The Florida Alliance of Consumer Protection spoke for many groups today in asking the senators to reject the proposal. The coalition calls on the House Insurance and Banking subcommittee to reject matching bill HB 857 when that bill comes before them on Wednesday.
SB 920/HB 857 would authorize up to 208% annual interest rates for loans that are larger and have longer terms than the payday loans Florida law currently allows. The senate committee that heard testimony is chaired by Senator Anitere Flores, and the bill is co-sponsored by Senator Oscar Braynon II and Senator Rob Bradley. HB 857 will be heard in the house subcommittee chaired by Rep. Danny Burgess and sponsored by Rep. J.W. Grant and Rep. Janet Cruz.
“I am extremely disappointed in those Senators who supported a bill today that negatively impacts Black and Brown people in this state. They voted against the interest of Black and Brown people. There are too few people who have too much power to impact the lives of too many people with no power, when you define power as having the money needed to control the outcome. But, I have great faith, that before the end of this legislative session that enough people without money will demonstrate the power of faith.” says Rev. James T. Golden, social action director of the AME Church in Florida, who spent time talking with the Senators about his concerns.
The FL NAACP, the FL AARP, Florida Veterans for Common Sense, the Cooperative Baptist Fellowship of Florida, the League of Southeastern Credit Unions are among the many groups who oppose legalizing a product that would snare borrowers in a debt trap even deeper and more damaging than traditional payday loans.
“Florida is already flooded with harmful, debt trap loans. The payday lenders believe they can sneak this one in, but we’re not having it,” said Alice Vickers, director of the Florida Alliance of Consumer Protection. “Loans that are designed to trap people in long-term debt at triple-digit interest rates are counter to what any person or group wants if they have the best interests of Floridians at heart. Payday lenders, unfortunately, are not among those groups.”
SB 920/HB 857 would allow payday lenders to make loans up to $1,000 with terms of 60 to 90 days. Research documents that these longer-term loans create the same cycle of repeat loans that traditional payday loans create, making borrowers worse off than when they took the first loan. Payday borrowers often experience multiple overdraft fees that end in closed bank accounts and even bankruptcy. They are often unable to keep up with other bills once caught in the costly cycle of debt.
The coalition supports a bill that would stop the cycle of harmful debt through a rate cap of 30%. 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. Over 83% of loans go to people with seven or more loans per year, and the payday lenders suck $311 million annually out of our state’s economy – from those who need those dollars the most.
Faith groups marched for an end to payday lending abuse last October in a prayer walk in St. Petersburg.
Legal aid offices and credit unions also oppose predatory payday lending in Florida.
For more information about payday loans in Florida visit stopthedebttrapflorida.org