Industry Regulation and recent legislation


A number of states from coast to coast are trying to impose further rules on the payday loan industry, but without much success in many cases. Consumers pay loans have generally argued against the stricter measures and restrictions which would limit their access to payday loans. And in the meantime, the payday loan industry continues to grow in both number of loans and dollar amounts of loans issued.

In Washington State, there were no fewer than 14 bills introduced during the 2004 -2005 Legislative Assembly, with specific intent tight control Payday Loans industry. Nine of the most aggressive proposals stalled in committee. If passed, these bills would lower payday loan growth and reduced the maximum amount that the borrower could access.

It heavily against the proposal to establish a statewide database of payday loans, which gives both the industry and the state a way to look at how many payday loan borrower already had when he or she applied for another. This measure was designed to prevent borrowers seeking loans from many lenders. Some analysts viewed the proposal as a dangerous intrusion into people’s personal finances. The payday loan industry believed that lower interest rates and put a lower cap on the amount of credit would significantly damage their business.

Most of the regulations proposed in Washington were stalled in legislative committees and never reached the floor of the legislature.

A bill passed two years ago in Washington already provided a number of consumer protection. The government requires, for example, borrowers have the right to cancel the loan within one business day. A borrower ‘payment plan’ was also obliged, to require that the borrower has received four loans from the same lender, he or she is allowed to work out a repayment schedule of at least 60 days.

state Oregon has also passed in the payday loan disputes including attempts to limit the industry is largely unregulated in the state. The bill proposed the 2004-2005 legislative session, would have imposed a mandatory 31-day maturity, effectively preventing the implementation of rollovers.

More than 1500 customers only one payday lender wrote encourage the Oregon legislature to pass the proposed restrictions. Generally, these individuals said they felt it was important to access short loans quickly and easily time, without having to rely on the good will of family or friends when they ran into emergency cash situation. They also indicated that they did not consider the interest rate fair.

At the same time, the amount of loans Payday provided in Oregon has grown by 285 percent in the last five years, the number of loans has grown 138 percent over the same period.

In New Mexico, the state House of Representatives introduced a bill that would limit payday loans to $ 1,000 and placed restrictions on some fees and charges. Although the legislation does not prevent Rollovers, specified that the loan was forgiven when the customer had paid twice the amount that was originally borrowed. Consumer groups and state Attorney General pushed Payday loan interest rate cap. The governor of Arizona has declared that he will not sign the measure because it fails to provide adequate protection for borrowers.

On the other side of the United States, in the State of Maine, lawmakers have been asked to approve amendments to the existing law that would allow significant expansion of the payday loan industry. Under current state law, fees are capped at $ 15 for a loan of up to $ 250, and $ 25 for loans in excess of $ 250. One of the proposed changes in the condition would allow lenders to charge as much as 17.5% on the week, that would amount to $ 17.50 per $ 100

In addition, payday lenders in Maine would be exempt from the current state consumer credit numbers . They would be allowed to use advertising methods that are now prohibited, and to have more flexibility collection methods in the event of default.

The US military believes the soldiers are disproportionately targeted by payday loan companies and lenders adjacent to military bases charge higher interest rates. A recent study lends some validity to that perspective.

Most recent legislation aims to regulate payday loans throughout the country, but is intended to in-state, storefront business, rather than based lenders. It may be that Internet payday lenders have not been targeted as hard because they tend to be much more competitive, offering lower interest rates and longer repayment terms.


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