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They're baaaack...

5/12/2016

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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."

1 Comment
Alex link
6/25/2020 01:25:13 am

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    News Updates

    • Archives:
    • Letter: A Payday Loan Debt Trap,Pittsburgh Post-Gazette, 05/27/13 
    • Letter: False Claims by Lending Industry, PhillyBurbs.com, 05/24/13
    • Letter: Stop Payday Lending Legislation, McKeesport Daily News, 05/20/13
    • Another Payday Loan Debate on the Horizon, Morning Call, 5/18/13
    • Editorial: Whose Payday?, Daily News, 4/12/13
    • Editorial: Stand firm against payday loans, Erie Times-News, 03/20/13
    • Letter: PA Residents: Oppose payday loans, DelCo News Network, 03/18/13
    • Payday Loan Affordability Fast Facts, Patriot-News, 03/16/2013
    • Letter: Payday loans are like financial quicksand, Morning Call, 03/07/2013
    • Payday loans easy to get into, hard to get out of, Morning Call, 03/02/13
    • Letter: Predatory lending laws create indentured servitude, PhillyBurbs.com, 02/12/13
    • Editorial: Now or later: Payday lending is bad news for PA, Pittsburgh Post-Gazette, 10/09/12  
    • Editorial: Payday lenders looking for prey among the poor, Philly Inquirer, 10/05/12
    • Letter: Lobbyists are winning, Philly Daily News, 10/01/2012
    • Editorial: Keep ban on payday loans, Scranton Times-Tribune, 09/28/12
    • Letter: Keep payday loans out of PA, DelCo Times, 09/28/2012.  
    • Editorial: Payday lending is just in-state debt trap, Towanda Daily Review, 09/28/2012
    • Letter: Payday lending legislation bad for consumers, Morning Call, 09/26/12
    • Editorial: PA Senate Should Reject Payday Loan Bill,
      Lehigh Valley Express Times, 9/24/2012
    • Editorial: It's a no-brainer, payday bill shouldn't pass, Harrisburg Patriot-News, 9/23/12
    • Payday lenders could score with loan act, Philly Tribune, 9/16/12
    • Op-ed: Rejecting Payday Loan Bill Protects Consumers, The Morning Call, 09/15/12
    • Op-ed: Payday Loans Need to Be Opposed
      DelCo News Network, 8/28/2012
    • Op-ed: Payday lending will lead to abuses
      Erie Times,
      8/19/2012
    • Why to Steer Clear of Payday Loans
      Wall Street Journal
      07/29/2012
    • PA Payday Lending: Short-Term Loans, Long-Term Issues
      Public News Services, 5/16/2012
    • Editorial: Keep payday and predatory lenders out of Pennsylvania
      Harrisburg Patriot-News Editorial, 5/08/2012
    • Payday loans may be returning to Pennsylvania
      Allentown Morning Call, 5/6/2012
    • Predatory bill: Lawmakers would victimize low-income borrowers
      Pittsburgh Post-Gazette, 04/23/2012

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This website is paid for by Community Legal Services, Inc. on behalf of its low-income clients,1424 Chestnut St. Philadelphia, PA 19102.