A new study released by the federal Consumer Financial Protection Bureau confirms decades of other research finding that payday loans put borrowers at risk. Thankfully, Pennsylvania's laws effectively keep these predatory two-week 300% APR payday loans out of its borders.
The findings, shown in the graphic to the left, reveal what has long been known: the terms of the payday loan product combine to create a debt trap by design. The CFPB study was based on an analysis of 15 million payday loan transactions over a 12 month period - data that was provided by the payday lenders themselves.
The study confirms the importance of upholding Pennsylvania's strong laws, which effectively prevent the payday debt trap from flooding into our neighborhoods. Data revealed that:
With these findings confirming not only the decades of research by others, such as the U.S. Department of Defense, Pew Charitable Trusts, Center for Responsible Lending, but also the experiences from states that, unlike Pennsylvania, have legalized 300% APR, two-week payday loans, it is more important than ever to uphold Pennsylvania's existing strong laws.
- Payday loans carry on average a 339% APR
- 1 out of 4 payday borrowers borrowed against their public benefits, such as Social Security Income, or retirement funds as collateral for the loan.
- The average borrower is stuck in payday loan debt - with a single company - for nearly 200 days.
- Borrowers taking out 10 or more loans a year account for 75% of payday lenders' revenue.
Right now, Pennsylvania's neighborhoods are free from payday loan storefronts that trap Pennsylvanians in a long-term cycle of debt.
As the new legislative session gets underway, out-of-state payday loan companies, and their high-paid lobbyists, are pushing hard to legalize 300% APR payday loans in our state.
Join us to help protect Pennsylvania's existing strong laws and prevent storefronts like these from flooding our communities.
Thanks to all of you, the bill to authorize 300% APR payday loans in Pennsylvania stalled in the Senate. It did not even have enough support to advance out of the Banking and Insurance Committee. Thanks to all of you, our communities will not be flooded with payday storefronts and high-cost dangerous payday loan debt. In a recent recap of the bill status in the Patriot News, committee member Senator Pat Vance (R-Cumberland County) noted
her opposition to the bill stemmed from hearing the concerns of a broad coalition of what she considered worthwhile groups representing the military, churches, senior citizens and low-income residents. Thank you, Senator Vance, for hearing these concerns! Groups in Philadelphia, such as the Philadelphia Unemployment Project shown above, have been personally thanking members of the Philly delegation for their opposition to the bill, including committee members Senator Farnese, Senator Stack, and Senator Williams.
Other committee members who publicly expressed their opposition include Senator Earll, Senator Greenleaf, Senator Rafferty, and Senator Boscola. Thank you, Senators, for keeping high-cost debt out of the Commonwealth! Thanks to all of you, Pennsylvania's Senators heard and followed the concerns of their constituents
rather than the those of the out-of-state payday lenders who want to peddle 300% APR loans in your community. Please thank your Senators for making the right decision to stop payday loans by stopping HB 2191!
Senators need to hear from you
– this is not acceptable.
In their aggressive push, payday lenders are willing to say anything to disguise the predatory terms of the product they seek to legalize. They’re claiming legalizing 300% interest rate loans is “consumer protection.” Really? Let your Senators know
that you see right through the payday lenders’ smoke and mirrors, and they should too. Play this to see the truth behind payday lenders' outrageous claims:
As Senators prepare to return to Harrisburg for the final days of the legislative session, the payday lenders are ramping up their aggressive push to legalize 300% APR loans in Pennsylvania.
Call your Senator today
. Tell your friends. Have them call too. Act today, before your Senator returns to Harrisburg, where the big payday lenders will circle their office day in and day out.
Let them know that voters at home think 300% interest rates are wrong. Plain and simple. No amount of smoke or mirrors can hide that fact.
Play it. Learn the truth.
Last week, the House approved 300% interest rate debt to come flooding into the state. The House passed a bill to legalize predatory payday loans by a slim margin. (See how your representative voted here
.) Now, the decision now rests in the hands of your Senator. Call today to urge them to oppose these predatory payday loans.
Let your Senator know that Pennsylvania voters don’t want to see these high-cost unsustainable payday loans coming into the state. These types of loans are already highly regulated in the Commonwealth, even for loans made over the internet. HB 2191 is unnecessary regulation that worsens the problems it creates to solve. Call your Senator today to reject this unnecessary legislation.
In other states with laws like HB 2191, the long-term payday loan debt trap is the norm. Where payday lending is legalized, just like HB 2191 seeks to do, the typical borrower is indebted for more than 200 days a year. And, the long term debt trap is the core of the business model as they generate more than 60% of their revenue from loans to borrowers with more than 12 loans a year. Tell your Senator to oppose HB 2191 because it writes the debt trap into state law.
Let your Senator know too that the media is watching too. Just recently the Pittsburgh Post Gazette
, Butler County Eagle, Lancaster Sunday News
, and Bucks County Courier Times
issued strong editorials urging the Senate to reject HB 2191, and the Pennsylvania Military Officers Association of America’s letter to the editor
urged legislators to stand with veterans by opposing HB 2191. Call your Senator today to urge them to oppose predatory payday loans
This week, the House of Representatives is scheduled to debate and vote on HB 2191, a bill which will legalize 300% interest rate debt for the first time in the Commonwealth's history. The vote could occur as early as Tuesday
. Click here to contact your legislators today know that voters oppose this predatory bill!
Pennsylvania is paying attention. Editorial boards from the Pittsburgh Post Gazette, the Patriot News
, the Lancaster Sunday Times
, the Philadelphia Inquirer
, and columnists and editors in the Morning Call, the Erie Reader, and the Unionville Times have called on legislators to vote against this bill. And, letters to the editor such from the St. Vincent DePaul Society of Pittsburgh
and from the Keystone Research Center
are showing up around the state. Click here to let your legislators know today that this bill will not go unnoticed. The out-of-state payday lenders are hoping to push this bill through quicker than the blink of an eye, but statewide opposition is mounting just a quickly. In a recent poll, 80% of Pennsylvania voters opposed allowing 300% interest rate limits. Even after hearing arguments used by supporters to justify these high costs, 69% of voters still said they would be less likely to vote for a legislator that supported 300% interest rates, as HB 2191 would allow. Click here to let your legislators know today that you are one of these voters who oppose HB 2191.
Who will your legislator stand with? Out-of-state predatory lenders peddling 300% interest rate debt or the millions of Pennsylvanians opposing a legalized debt trap? Click here to tell your legislators today to oppose HB 2191!
A growing number of religious grous, veterans, and community leaders
across Pennsylvania are asking legislators to oppose HB 2191, a measure that will authorize 300% payday loans in the Commonwealth. Click below to hear Stephen Drachler, Executive Director of United Methodist Advocacy in Pennsylvania, make the case against predatory lending
Payday loans typically carry triple-digit interest rates and trap borrowers in a cycle of repeated borrowing. Under HB 2191, payday lenders are allowed to charge annual interest rates of over 300% for a typical $300 loan. In states with similar laws to HB 2191, a typical borrower is indebted for more than 200 days a year.
Yesterday, the House Consumer Affairs committee approved HB 2191, which will legalize 300% interest rate debt in the Commonwealth for the first time in its history. Amendments were added to the bill, but nothing was done to address the excessive interest rate and predatory terms of the payday loan product. The amended bill does nothing to stop the debt trap and allows 300% interest rates to flood into the state over the internet and in store fronts. The committee passed the amendment despite growing opposition from Pennsylvanians around the state, and despite a letter from the Navy Marine Corps Relief Society that stated the amendments to HB 2191 did nothing to mitigate the already harmful aspects of the bill.
Here is information about HB 2191 as it now stands:
- HB 2191, as amended, Quick Facts
- HB 2191, as amended, Doesn't Stop the Debt TrapFor a quick recap of the hearing (which was not recorded and held in a small, standing room only room) and a debunking of the arguments made the, please see this post by Mark Price at the Keystone Research Center.Please thank Rep. Parker, Rep. Jesse White, Rep. Neuman, and Rep. DePasquale for standing with millions of Pennsylvanians and voting against 300% interest rate payday loans. And, continue contacting your own legislators to let them know you oppose this bill.
Click here to take action
In the last few weeks, mounting opposition to predatory payday loans as grown across the state. Meanwhile, payday lenders are hoping to move this bill as fast as possible, hoping we won't notice. HB 2191 is scheduled for a committee vote this Wednesday at 10:15 a.m. Click here to tell your legislators today that 300% interest loans are unacceptable and certainly won't go unnoticed.
Here is what we mean by growing opposition.
Just this morning, the Harrisburg Patriot-News Editorial
urged legislators to reject HB 2191: If his bill passes, Pennsylvania will have businesses such as “Cash N Go” and “Cash America” in most strip malls
and street corners in poor areas of town. Some say it will bring jobs, but at what cost? We’re likely talking about minimum
wage jobs to charge outrageous interest rates on fellow citizens who are desperate for money. That’s not job
creation,that’s community destruction.
It’s just like the mortgage lending mess. If it sounds too good to be true, it is. Perhaps Pennsylvania lawmakers have
forgotten how the payday loan industry used to target the U.S. military. It got so vicious that President George W. Bush
signed a law in 2006 forbidding loans to servicemen and their families above 36 percent because the 400 percent
plus loans were so devastating to our military. Is this the industry we want to invite into Pennsylvania to target our low
income populations and elderly?
There will never be enough protections on a person getting a 400 percent loan. All it does is make a bad financial situation
worse once these lenders get first priority to people’s bank accounts. Pennsylvania would have to be crazy to invite the
payday loan industry into our midst.
Last month, the Pittsburgh Post-Gazette said the same thing - that legislators should reject HB 2191
Mr. Ross argues in a memo that HB 2191 has "the strongest consumer protections available in other states that regulate
the practice." Sounds like the same assurance foxes give farmers before prowling the henhouse.
Fortunately, eight legislators who originally supported the bill have withdrawn their backing upon further study of the plan.
With borrowers carrying record levels of debt and too many people without jobs, this is no time to increase the
financial burden on Pennsylvanians.
These media voices join the growing chorus of Pennsylvanians across the state opposing predatory payday loans at 300% annual interest rates. View the full list of opposition here, and note its diversity of stakeholders - veterans groups, United Way, faith-based organizations, credit counseling agencies, community development financial institutions, and more.
Last week, representatives of Pennsylvanians opposing HB 2191 testified at a public hearing - AARP, Action Housing, Lutheran Advocacy Ministry of Pennsylvania, and Community Legal Services. The only people who showed up in support of HB 2191 was an out-of-state payday company and out-of-state consulting firms which conduct studies paid for by the payday lenders. For a great recap of the hearing, see this article in the Allentown Morning Call, in which after attending the hearing, the reporter concluded:
Our leaders think the way to stop what seems to be a relatively small problem is to expose the greater public to the potential
hardships of payday loans by permitting lenders to set up shop in poor cities like Allentown....I agree that working-class
families may not have many options for getting fast cash or paying emergency bills, but I don't see payday loans as the
Despite this growing opposition - or perhaps because of it - the payday lenders are seeking to move this bill as fast as possible. We must act now to urge our legislators to vote against it. The bill is scheduled for a vote in the Consumer Affairs committee, this Wednesday at 10:15 a.m., please contact your legislators today to tell them to reject HB 2191, reject 300% interest rate loans.