Florida News Straight From the Source
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Florida Alliance for Consumer Protection presented Rep. Olszewski with its award for his support for legislation that promoted responsible lending products for hard working families during the 2018 legislative session. [Read more…] about FLACP Presents Rep. Olszewski With Award for Outstanding Support for Consumers in 2018 Session
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133 organizations including Florida Alliance for Consumer Protection, today sent a letter urging the U.S. Securities and Exchange Commission (SEC) to stand by its mission and longstanding policy of empowering and protecting American investors, including retired servicemembers, first responders, and teachers, by safeguarding their right to join together to hold law-breaking corporations publicly accountable in a court of law.
In recent months, Chairman Clayton has fueled speculation about a dramatic policy shift at the SEC that would threaten the security of hardworking Americans’ retirement savings and gut their legal rights by allowing publicly traded corporations to use forced arbitration clauses against their investors. These “rip-off clauses” would force investors to give up their most effective tool to fight back against securities fraud that could decimate their savings – class action lawsuits.
“Protecting the lifetime investments of all consumers, especially middle income, working Americans who have saved for retirement, should not be restricted by forced arbitration clauses,” cautions Alice Vickers, Director, Florida Alliance for Consumer Protection. “Consumers must have all tools available to address securities fraud and protect their life savings, including the ability for hardworking Americans to ban together and pursue private lawsuits.”
The letter reads in part:
“Investors rely on the SEC to promote market integrity and deter and detect fraud. But the SEC cannot fulfill this role on its own. Private shareholder lawsuits serve as an essential supplement to Commission action…Recent high-profile examples of securities fraud illustrate the devastating effect this would have. In enforcement actions against Enron, WorldCom, Tyco, Bank of America and Global Crossing, for example, the SEC recovered penalties and fees totaling $1.8 billion, while private securities class actions were able to recover $19.4 billion for defrauded shareholders – more than ten times as much.”
In addition to the letter, more than 40 national and state-based organizations, led by the Consumer Federation of America, Public Justice, and the American Association for Justice, have joined together to form the Secure Our Savings (SOS) Coalition to keep up pressure on SEC leadership.
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The U.S. Senate is poised to pass legislation that will harm some of the most vulnerable of Florida’s homebuyer population by exempting employees of manufactured housing retailers from having to comply with consumer protection laws for home loans.
The Economic Growth, Regulatory Relief and Consumer Protection Act (S. 2155), expected to come up for a vote in the U.S. Senate this week, contains a harmful provision – Section 107, “Protecting Access to Manufactured Homes” — that jeopardizes the financial security of manufactured homeowners, who are often low-income, elderly, and people with disabilities. More than 800,000 Florida families, more than in any other state, and approximately 18 million people nationwide, live in manufactured homes. These residents live in the most persistently poor communities in the country, where manufactured homes provide the main source of affordable housing. The bill is touted as help for small banks, but it promotes abuses by large corporations that own both manufactured housing dealers and lenders.
“In the name of promoting ‘economic growth,’ this bill would undo important steps taken by the Consumer Financial Protection Bureau to give manufactured homeowners the same basic loan safeguards as other homeowners,” said Alice Vickers, director of the Florida Alliance for Consumer Protection. “As a result, more Florida families will be pushed into dangerously expensive mortgages at double-digit interest rates.”
The manufactured housing market is dominated by a handful of national manufacturers and lenders and it is rife with conflicts of interest. It is common for lenders and sellers of manufactured homes to be owned by the same entity or closely affiliated with one another. This creates an incentive for sellers to promote affiliated high-cost loan products rather than marketing a competitor’s more affordable product.
For example, two of the biggest lenders, 21st Mortgage and Vanderbilt, are tied to Berkshire Hathaway, which owns Clayton Homes, the nation’s largest manufactured-home builder and retailer. Such hidden connections encourage sellers to steer buyers toward high-cost loan products from allied companies–and away from more affordable loans offered by competitors. Affiliations like these have led to reports of systematic predatory loan steering throughout the industry.
“This bill will help manufactured home sellers to steer people away from affordable loans and into expensive ones,” said Alys Cohen, staff attorney at the National Consumer Law Center’s Washington office.
The bill would perpetuate the conflicts of interest and steering of consumers to more expensive loans that plague this industry and allow lenders to pass additional costs on to homebuyers. Section 107 would also discourage new lenders from entering the market and undo important steps taken by the Consumer Financial Protection Bureau to give manufactured homeowners the same basic loan protections as other homeowners. This bill would allow sellers of manufactured homes to steer buyers to overpriced loans with onerous terms. While homeowners also would receive other referrals and written disclosures about corporate relationships, those measures can be sidelined by savvy marketing.
“If passed, this bill will do a terrible disservice to the low-and- moderate-income and elderly Americans and people with disabilities who make up a disproportionate share of the manufactured-home population. It would make homeownership more costly for those who can least afford it,” added Cohen.
“Senators Nelson and Rubio should reject this bill and continue to work to find better solutions to address affordability and competition in the manufactured housing market,” said Vickers.
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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.
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Clergy representing the Florida faith community converged on the Capitol Building in Tallahassee this morning, calling on lawmakers to reject a payday loan expansion bill and instead to cap payday lending interest rates in the state, which are currently in the triple digits. The faith leaders were compelled to show up in Tallahassee after watching a harmful bill backed by payday lenders move through one committee after another despite its harmful impact being presented to lawmakers.
“Why is it that the people who stand behind me and who have been working on this for years have not been able to have a voice, while the payday lending industry has not only been heard, it is moving rapidly through the process?” said Rev. James T. Golden, of the AME Church of Florida. “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.”
SB 920/HB 857 would allow payday lenders to make larger, longer debt traps at over 200% annual interest, adding another tool for predatory lenders operating in Florida. Payday lenders already extract over $300 million per year from the pockets of low-income families, and over 80% of payday loans in Florida go to people stuck in more 7 or more loans in a year.
Representative Tracie Davis (D-Jacksonville) joined the faith leaders at a news conference, and said, “This is a product that’s not needed at this time and I stand in solidarity with the faith-based leaders and the other organizations represented here today in opposition to this bill. Money matters and fairness in lending matters.”
Ingrid Delgado, speaking on behalf of the Florida Conference of Catholic Bishops, said, “The lending product proposed by SB 920 and HB 857 would cost consumers even more dollars in fees. This is a step backwards. However, one step in the right direction would be consideration of bills filed by Senator Baxley and Representative Bobby O, which would cap these loans at more reasonable APR rates as has been done in other states.”
“The wide span of the church, Catholics, mainline Protestants and the Black churches, have strong and clear teaching on biblical standards of economic fairness, said Rev. Dr. Russell Meyer, Florida Council of Churches. “Together we oppose these bills to create payday lending products that permit usury. Such lending takes food out of the mouths of children for luxurious wealth of the rich. It cannot be justified and to take funding from the industry is like accepting 30 pieces of silver – the price for selling out Jesus.”
“The three Abrahamic faith traditions of Islam, Judaism and Christianity all speak strongly regarding usury, the charging of excessive interest rates, and this bill brings with it annual percentage rates of 208%,” said Rachel Gunter Shapard, of the Cooperative Baptist Fellowship of Florida. “We have seen members of our congregations and those in the communities around them fall victim to the debt trap that this type of loan supported by this bill creates.”
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.
The bill is opposed by the Cooperative Baptist Fellowship of Florida, Florida Conference of Catholic Bishops, Florida Council of Churches, and 11th District Episcopal AME Church. Joining the faith community in opposition to this bill are 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.
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On Tuesday, February 27 at 11:00 a.m., clergy representing the Florida faith community will converge on the Capitol Building in Tallahassee to call on lawmakers to reject a payday loan expansion bill and instead to cap payday lending interest rates in the state, which are currently in the triple digits. The faith leaders will raise their voices on an issue that is at a critical impasse, as the payday lending bill, SB 920/HB 857, has moved quickly through several legislative committees. Representative Tracie Davis (D-Jacksonville) will join the faith leaders at the conference.
The bills would allow payday lenders to make larger, longer debt traps at over 200% annual interest, adding another tool for predatory lenders operating in Florida. Payday lenders already extract over $300 million per year from the pockets of low-income families, and over 80% of payday loans in Florida go to people stuck in more 7 or more loans in a year. SB 920/HB 857 is roundly opposed in the state by the AARP, NAACP, the Archbishop of Miami and many others.
WHEN: Tuesday, February 27, 2018, 11:00 a.m.
WHERE: Fourth floor Rotunda of the Florida Capitol, 400 South Monroe Street, Tallahassee, Florida.
WHO:
For more information, contact Rev. Rachel Gunter Shapard at [email protected].
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Contending that a federal Consumer Financial Protection Bureau rule makes legalization of a new 200% interest payday lending product necessary, Rep. James Grant pushed HB 857 through the House Appropriations committee in the Florida legislature today. But the rule is under heavy attack at the federal level which puts its future in doubt, and it is not scheduled to take effect until August 2019.
Rep. Grant also claimed that Florida families are already protected from predatory payday lending, but the reforms passed in 2001 have not been effective in stopping the debt trap. An analysis of payday lending in Florida found that payday lenders still collect over $300 million per year from customers largely trapped in long-term cycles at annual interest rates over 200%.
The payday lenders depend on this long-term cycle, with over 83% of Florida payday loans going to people stuck in a cycle of 7 or more loans per year. Because these loans are so expensive, being unable to break free of that cycle leads families into financial devastation, causing them to get behind on other bills, lose bank accounts and be more likely to have to file bankruptcy.
Rep. Grant questioned the validity of using the APR, or annual interest rate, in evaluating payday loans, an argument the industry lobbyists have long used to hide the true costs of their products.
“Lenders are required to disclose the APR of their loans to prevent just such hidden costs, so that people can compare the true cost of one financial product to another,” said Alice Vickers, director of Florida Alliance for Consumer Protection. “Of course, APR matters in payday lending, and the fact that many borrowers are stuck in one loan after another after another for weeks, months, or years makes that true cost measure all the more relevant.”
The squabble over interest rates and the harms of payday lending came at a hearing where members praised Amscot and supported legalizing a new 200% interest loan in Florida, one that legislative staff and Office of Financial Regulation point out will cost borrowers considerably more than what is currently allowed. Rep. Bruce Antone pointed out the “if you get a $1000 loan, you’re going to pay back $345 (in fees) ninety days later. That is a huge amount of money!”
“This simply adds another 200% interest tool to the toolkit of a predatory business,” said Rev. Rachel Gunter Shapard. Shapard testified at the hearing on behalf of over 50 faith leaders who signed an open letter opposing the bill.
Calls to kill the bill also came last week from the Florida AARP, the Florida NAACP, more than 50 faith leaders from across the state, and the Archbishop of Miami. The Florida Catholic Conference, National Association of Latino Community Asset Builders, Florida Prosperity Partnership, Florida Veterans for Common Sense, the Cooperative Baptist Fellowship of Florida, UnidosUS, Florida Hispanic Unity, Florida Legal Services, League of Southeastern Credit Unions and many others have also voiced their opposition.
HB 857 and its companion in the Senate, SB 920, 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.
Faith leaders and a former payday borrower spoke out in a press conference last Thursday
“On behalf of the millions of people that have actually been involved in this type of predatory lending, you start off as a customer but you eventually become a victim…I quickly found one $425 payday loan put me in a spiral to where when the next payday came the money that I had to pay to the loan would make me short somewhere else…It is just a treacherous trap and a juggling game. You are not borrowing from Peter to pay Paul, you’re borrowing from the devil to pay the devil.” — Elder Wayne Wright, Mt. Olive Primitive Baptist in Jacksonville.
“I serve in a community in one of the toughest hit areas of … I represent 236 churches throughout Florida where we have looked in our communities and found that payday lending is set up in communities least able to afford opposition to those lenders… This bill would not reform payday lending even though it is badly needed, but instead…it would add another type of high-cost debt trap payday loans to the toolkit of payday lenders.” — Pastor Lee Harris, Mt. Olive Primitive Baptist in Jacksonville.
“It is an injustice to punish those or to box persons in who find themselves needing assistance.” — Bishop Teresa Jefferson-Snorton, 5th District of the CME Church, Florida.
“I consider it an economic justice issue, it is a consumer protection issue for the poor and often the not-so-poor, who need a quick loan to cover some unexpected expense, but they’re invited to their own financial funeral and interment.” — Bishop Adam J. Richardson, 11th District of the AME Church, Florida.
“Why are Florida lawmakers listening to payday lenders and not to those of us who have our fingers on the pulse of the communities that are hardest hit by predatory lending?” — Rev. Rachel Gunter Shapard, Cooperative Baptist Fellowship of Florida.
“It seems it’s open season for vultures to take advantage of the most vulnerable members of our society…The payday lending industry raked in more than $300 million last year and we need to think of that $300 million as peanut butter and jelly sandwiches for our poorest children.” — Rev. Dr. Russel Meyer, Florida Council of Churches.
In a letter, civil rights attorney Benjamin Crump expressed opposition to the bill:
“Payday lending puts the burden of extremely high interest rates on people of extremely low means. And these loans offer no value but instead serve to systematically redistribute wealth from low-wealth communities to large, corporatized predatory lenders. And as with so many other issues, this is one that has a devastating impact to the fabric of Black and Latino communities… We cannot in good conscience let a sophisticated means of exploitation, especially one that can be resolved with such a simple solution, continue to destroy good and decent people. Florida lawmakers should reject this new product and instead pass a usury cap on payday loans – just as people across this state are asking them to do.”
Rev. James T. Golden, social action director of the AME Church in Florida, gave committee members an impassioned plea:
“The reality is that on a per annum basis, all of the products that have been produced for consideration by the legislature in Florida have triple-digit interest rates. While we debate this in the two hours that have been granted, there are people who have to live with this for six months, or for a year. And the reason we complain is that they live with this much longer than that because these products keep them in debt, keep them from being able to move beyond the sad state that they find themselves in….
…I find it very difficult to be sympathetic to multi-millionaires sitting in here saying to you, we need help, when you all know that the resources this preacher and I bring to bear on this situation doesn’t come with one campaign contribution. But it comes with a heartfelt plea to you to do the right thing by the people who couldn’t come here today. Do the right thing by the people who couldn’t lift their voices because they’ve been too busy paying off these loans they’ve gotten from the industry.
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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.
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Despite strong and vocal opposition to predatory payday lending from consumer, faith, seniors, civil rights, veterans, and community organizations, Florida senators are considering allowing payday lenders to introduce a new predatory product to a state already flooded with harmful, debt trap loans.
Senate Banking and Insurance Committee has scheduled a hearing for 4 p.m. on Tuesday, January 16, the day following the MLK holiday, on SB 920, a bill that 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. Senator Anitere Flores (R-39) chairs the Committee, and the bill is co-sponsored by Senator Rob Bradley (R-5) and Senator Oscar Braynon (D-35).
The Florida AARP, UnidosUS, the 11th Episcopal District of African Methodist Episcopal Church, and the Cooperative Baptist Fellowship of Florida, 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.
“The payday lenders believe they can sneak this one in, but we’re not having it,” said Alice Vickers, of the Florida Alliance for 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, and its companion bill 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.
Floridians for Responsible Lending 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 and Jacksonville.
“This is an economic assault on the poor by the payday lending industry and there is an absence of meaningful legislation protecting the most vulnerable among us. The faith community has been called to stem the tide of heartbreak, despair, and hopelessness caused by payday lending,” said Rt. Rev. Adam Jefferson Richardson, Presiding Prelate, The 11th Episcopal District, African Methodist Episcopal Church at a prayer walk around payday loan stores this summer.
“We are faith leaders who have seen up close and personal how payday loans trap people in our congregations and communities in a cycle of never-ending debt,” said Rachel Gunter Shapard, Associate Coordinator for Cooperative Baptist Fellowship of Florida.
Legal aid offices and credit unions also oppose predatory payday lending in Florida.
“Payday loans are extremely high-cost loans for which the lender holds the borrower’s bank account captive. These loans tend to trap borrowers in a never-ending cycle of debt,” said Lynn Drysdale, Division Chief, Consumer Advocacy and Litigation Unit, Jacksonville Area Legal Aid.
For more information about payday loans in Florida, click here.
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