Legislation to Expand Payday Lending
On Thursday, March 3, two bills were introduced in the Michigan Senate to allow the expansion of payday lending products offered in the state. The bills, SB 842 and 843, are modeled on products offered in Ohio and allow loans under the Credit Service Organization Act.
The proposed legislation allows payday loan storefronts to operate as Credit Service Organizations. They help customers secure a loan at the legal rate under the Regulatory Loan Act, but then are allowed to add on extra fees. As it is currently written, the legislation does not limit the fees they can charge or the length of the loan. In Ohio, the fees equate to anywhere from 150 – 500% APR. More information about this lending model is available here.
These loans are marketed as a quick financial fix, but are instead a long-term debt trap for borrowers. At its core, loans authorized under SB 842 and 843 are payday loans with excessive rates that will last months, or even years. Payday lenders will still get access to the borrower’s bank account and have no regard to whether the loan is affordable or not. This is nothing more than a payday loan that sends people into a longer debt cycle.
- The bills will be up for testimony on Tuesday, March 8 at 2:30 pm in the Senate Banking and Financial Institutions Committee. Please contact committee members and let let them know your opposition to the bills, especially Chairman Booher. A committee roster and contact information is available here.
- It is important we have a strong showing of opposition to these bills. If you would like to testify, the committee hearing will be at 2:30 pm in room 100 of the Farnum Building (123 W Allegan St, Lansing). If you cannot make it in person and would like to convey your opposition, I can coordinate with you and turn in a card on your behalf.