Lawmakers push higher-interest loans

TALLAHASSEE — Nearly 17 years after the Legislature passed strict rules governing payday loans, a bipartisan push to loosen some of those regulations has emerged, which would push annualized interest rates up to more than 200 percent.

Critics say the move will plunge poor people who become dependent on the short-term loans even deeper into a “debt cycle.”

Such loans are “seductive” to low-income workers facing unexpected expenses or who don’t have access to traditional banks and finance options, says Alice Vickers, attorney for the Florida Alliance for Consumer Protection, a consumer advocacy group.

“Consumers are rolling these loans over and over and over and ultimately end up paying way more for these loans than the original principal amount that they received,” Vickers told a House panel Wednesday.

Bills in the House and Senate would increase the cap on payday loans from $500 to $1,000 and allow lenders to give 60- to 90-day loans. Current law only allows 7 to 31 days for such loans. The bills would also allow interest rates of 8 percent every two weeks.

As of June 30, there were 936 payday loan stores in Florida that issued 7.7 million loans in the previous 12 months, according to state data. Those loans totaled $3.06 billion, with lenders able to collect $306 million in fees.

Lobbyists for Amscot and Advance America, the two main payday lenders in Florida, note that only 1.8 percent of loans in Florida are in default. They say the bill is needed to comply with new federal rules issued by the Consumer Finance Protection Bureau in October. The rules encourage longerterm loans to give borrowers more time to pay it back and require lenders to ensure borrowers have the means to repay the loan.

“It puts in an unreasonable ability to repay standard for our consumers so that most of them would be blocked from having access to this credit,” said Carol Stewart, lobbyist for Advance America.

But the agency’s rules were developed and issued by Obama-era officials, and Mick Mulvaney, the new Trump-appointed head of the CFPB, said this week the new rules were under review, indicating the Trump administration could reverse or roll them back.

Since 2000, Amscot has given the Republican Party of Florida $797,700 and the Florida Democratic Party $293,000. It has given Gov. Rick Scott’s political committee $200,000 since 2012.

The Tampa-based company has also hired former Democratic lawmakers such as ex-U.S. Rep. Kendrick Meek of Miami and exFlorida Rep. Joe Gibbons of Hallandale Beach as lobbyists.

“Many of [payday borrowers] avoid bad credit scores because they’re able to take advantage of this product to be able to pay their rent, to be able to pay for other things that may come up as a financial emergency,” said Meek.

The House version of the bill, HB 857, passed through a committee unanimously on Wednesday and the Senate version, SB 920, passed through its first committee hurdle on Tuesday with two no votes, from Sen. Rene Garcia, RMiami, and Sen. Annette Taddeo, D-Miami.