May 12, 2016

In advance of a forthcoming industry-backed bill to legalize high-cost, long-term payday loans in Pennsylvania, the Philadelphia City Council took the first step toward fending off their attempts by passing a resolution today, calling on members of the General Assembly to oppose any such legislation.

Members of the Coalition to Stop Payday Loans in Pennsylvania testified in favor of the resolution, applauding Philadelphia City Council for standing up for our most vulnerable, and thanking Councilwoman Cherelle L. Parker for her leadership on this issue.

The full press release is available below.  Video available at this link.

The payday lenders are back in Harrisburg, lobbying legislators to weaken our state law.  Just as in prior sessions, they claim their legislation would create a responsible credit product, but at the core of their business model and their proposal is a debt-trap loan.  This year, the payday lenders have a new strategy:  they are using the federal Consumer Financial Protection Bureau (CFPB) as a Trojan horse to bring their predatory loans into Pennsylvania.

A memorandum (link is external) is being circulated in the Pennsylvania Senate to garner support for legislation to legalize a new loan product in Pennsylvania, called the “Pennsylvania Financial Services Credit Ladder.”  The memo cites CFPB proposals as a model for the legislation, but fails to mention that, unlike Pennsylvania, the CFPB cannot set a limit on the cost of credit. Changing our state law by adopting the CFPB proposals in Pennsylvania will legalize high-cost payday loans.

The CFPB is working to combat the worst payday lending abuses nationwide, but it has one hand tied behind its back because it does not have the authority to issue a rate cap on interest and fees, the most effective way to curtail predatory lending. The CFPB has released a working draft of proposals it is considering for a forthcoming national rule. While the preliminary proposals have some strong provisions, they also contain loopholes that would allow payday lenders to continue making unaffordable, predatory loans in states where they are legal.  The rule remains in development, and the CFPB should craft regulations that are broad and strong enough to put an end to debt-trap lending across the country.

Importantly, the national CFPB rule would not preempt or supersede Pennsylvania’s stronger state interest rate cap.  Unless the payday lenders convince state legislators to use the CFPB rule as cover for significantly increasing the costs of credit in our state, our critical protection against predatory lending will remain.

Replacing Pennsylvania’s rate cap with the CFPB proposal would weaken our state law. That’s why the payday lenders, who oppose the CFPB rulemaking at the national level, appear to be supporting its implementation in Pennsylvania.  State legislators should reject the payday lenders’ Trojan horse. 

For more information, review the new report from Community Legal Services, "Predatory: How Payday Lenders are Using Trojan Horse Tactics to Weaken Consumer Protections in Pennsylvania."

Click here to take action now to oppose SB 975.

In a closely divided 8 to 6 vote, the Senate Banking and Insurance moved a bill, SB 975, legalizing 300% APR loans to the Senate floor despite the opposition of veterans, seniors, and faith groups and many others present to oppose the bill.
Today's hasty vote comes on the heels of the 48 page bill being filed just last Friday. The committee noted many unanswered questions in the ambiguous bill drafting,  in addition to the concerns that this will open Pennsylvania's borders to 1,000 payday storefronts.  

Both Pew Charitable Trust and the U.S. Department of Defense have noted that the state's laws are among the strongest in the country to keep out predatory payday loans. A 2010 Pennsylvania Supreme Court case held that loans made in violation of existing law are illegal, even when made on-line. SB 975 rolls back the state's longstanding protections against predatory payday loans.

It is for these reasons, in addition to the harm caused by the payday loans that will be ushered in under SB 975 --such as increased likelihood of bankruptcy and payday lenders gaining direct access to borrowers' bank accounts-- that the bill faces opposition from Pennsylvanians around the state.  In his closing statements at the hearing, Democratic Chairman Stack made a passionate plea for the Committee to do what veterans and others have asked: to reject this bill and keep our existing, strong consumer protections in place. 

Please thank those Senators  who stood with Pennsylvanians to oppose this bill: Senators Michael Stack, Lisa Boscola, Larry Farnese, Anthony Williams, Patricia Vance, and John Rafferty. 

We are disappointed in those who voted to support the payday lenders by voting yes: Senators Pat Browne, Don White, Mike Brubaker,  Kim Ward,  Jake Corman,  John Eichelberger, Joseph Scarnati, and Jim Brewster.

Click here to take action now to ask your Senator to oppose SB 975.

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:

• 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. 

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. 

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! 

 

_ 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.   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:

_Play it. Learn the truth.  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.

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.