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Consumer, Faith and Civil Rights Groups Strongly
Oppose A Bill Creating More Expensive Debt Traps

Payday lenders have scored another committee hearing for a bill that would make some of their high-cost predatory loans even more expensive than they already are in Florida.  The bill has moved through the banking committees of both the House and Senate despite this opposition, and the Senate Commerce and Insurance Committee has scheduled a hearing on SB 920 for Monday, January 29 at 3:30 p.m.
Advance America and Amscot have made generous donations to state and federal lawmakers in their efforts to protect and expand the legalization of a business model based on turning short-term loans into long-term debt traps. The companies are pushing a proposal that would add a new debt trap product to their repertoire in Florida. 
SB 920/HB 857 would allow loans twice as large as the current limit, up to $1,000, with 60- to 90-day terms and annual interest rates over 200%. According to an analysis from the Florida Office of Financial Regulation, a borrower in debt for 60 days currently pays $110 in fees for $1,000, but would pay $214.68 under SB 920. And payday loans financially devastate borrowers because they are structured to keep them paying the triple-digit fees over months or years, whether they are short or longer-term loans.
Payday lenders are claiming they need this new product to evade the Consumer Financial Protection Bureau’s new payday lending rule. That rule, which requires payday lenders to assess the ability of borrowers to repay the loan and still meet living expenses, as most lenders already do, has been put into jeopardy because of actions by some members of Congress and the new director of the Consumer Bureau. If it does survive these challenges, it will not take effect until August 19, 2019.
Lawmakers have so far ignored strong and vocal opposition from consumer, faith, seniors, civil rights and community organizations.
“I am extremely disappointed in those Senators who supported a bill [last week] 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.” said Rev. James T. Golden, social action director of the AME Church in Florida, who talked personally with senators about his concerns.
“The fact that payday lenders are trying to evade a consumer protection rule that may not even go into effect is really beyond the pale,” said Alice Vickers, director of the Florida Alliance for Consumer Protection. “They are basically acknowledging that they will refuse to meet the commonsense standard of making loans to people who can actually afford the terms. And on top of that, they want to add a new predatory product that will in effect simply add another tool to their debt trap toolkit.”
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.. 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.
“I was extremely disappointed to see the news last week that many of our state legislators are siding with the payday lenders, over the objections of well-trusted constituents such as AARP, veterans groups, faith leaders and many others,” said Kris Knab, retired executive director of Legal Services of North Florida, in an opinion editorial. “Why are payday lenders so intent on passing legislation this year? They are trying to design loopholes to get around future consumer protections.” 
For more information about payday loans in Florida visit stopthedebttrapflorida.org.