Federal legislation would protect payday lending industry at the expense of Maine consumers

March 9, 2016 by

Jody Harris blog 11-16-2015MECEP has joined hundreds of civil rights, consumer, labor, faith, veterans, seniors, and community organizations across the nation to strongly urge its Congressional Delegation to oppose H.R. 4018, the “Consumer Protection and Choice Act.”

Don’t let its title mislead you. This bill has nothing to do with protecting consumers.

This proposed legislation would upend a federal process underway to protect Mainers from abusive payday lenders. This bill will hurt Maine women’s economic security, leave our seniors vulnerable, and allow our deployed military personnel to be trapped into crippling debt.

A payday loan is a small, short‐term loan marketed as a quick and easy solution to deal with cash emergencies. The loan repayment is generally due in full, plus fees, timed to match the borrower’s next pay check. The lenders charge usuriously steep interest rates (sometimes as high as 600% APR). And because the entire loan amount is due, borrowers already struggling to make payments, take out another loan, creating a vicious cycle of debt.

The federal Consumer Financial Protection Bureau (CFPB) wants to stop the worst of the payday lending industry’s practices and have the same rules apply to them as any bank or credit union, or even auto financiers. Right now, payday lenders are not required to check a borrower’s ability to pay. They do not have to determine whether the borrower has outstanding loans with other lenders. They are not prohibited from issuing another loan if the borrower has been delinquent on a payment.

Now, an industry-backed bill would stop the CFPB’s work to implement stronger consumer protections against the payday lending industry. H.R. 4018 would delay the Bureau’s attempt to write stronger industry regulations by two years and would nullify strong state laws that are already in place.

What You Can Do

Payday lending lobbyists have been so successful because they have spent millions on campaign contributions for elected officials across the country.

We believe Maine’s elected officials want to stop predatory lending but they need to know you’re listening and watching. They need to know you care about this issue. Call or write your Congress Member and tell them to let CFPB do its job.

Click here for contact information for Maine’s Congressional Delegation.

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