AARP opposes Florida bills to expand payday loans
The measures would double the amount that could be borrowed.
For those who think the problem with payday loans is too many government restrictions, bills in the Florida Legislature aim to please by doubling to $1,000 the amount that can be lent at a time.
Folks who call such products “predatory” might be more inclined to cheer on a senior advocacy group that raised a fuss online Monday.
“Some borrowers end up in a ‘debt trap’ and lose everything, even their homes,” said AARP Florida state Director Jeff Johnson in an email to members. “In fact, payday lenders have already stripped more than $2.5 billion in fees from Floridians since 2005, with more than $311 million collected last year alone. Wealth stripping affects us all and negatively affects our communities.”
An industry executive told The Palm Beach Post on Monday that new rules are necessary to update for inflation a $500 limit that has been in place for 17 years. Another
reason: to keep the loans viable in Florida under federal regulations that have been put on hold in the Trump administration, but have not been formally ruled in or out.
“One million people in
Florida use this product every year,” said Ian A. MacKechnie, executive vice chairman of Amscot Financial Inc. “The safe thing is assuming the ( federal) regulation is going to be effective.”
MacKechnie characterized reports of harm to borrowers as overblown and said default rates are only about 1.8 percent in Florida.
Opponents say fees can quickly amount to an annual interest rate of more than 200percent, far higher than anything generally found with homes, cars or credit cards. The borrowers are typically lower- income people, including a number of seniors, who can get mired in a series of loans to pay of mounting costs, AARP says.
Johnson urged members to contact legislators to oppose HB 857.
Nationally, payday loans often run between $ 200and $ 1,000, due when a borrower receives the next paycheck.
Generous political contributions seem to be paying of for payday lenders. They gave more than $ 62,000 in campaign contributions to Trump administration budget director and interim Consumer Financial Protection Bureau chief MickMulvaney when he was a congressman, accordingto gift- tracker opensecrets. org.
Mulvaney suspended tougher federal rules about togo in to effect, placing them under review in January. Legislative efforts at the state level, launched partly in anticipation of tighter U.S. regulations, have continued in Florida.
“The fact that payday lenders are trying to evade a consumer protection rule that may not even go into effect is really beyond the pale,” said Alice Vickers, director of the Florida Alliance for Consumer Protection, which opposes the bill.
The sponsor of the Senate version, SB 920, Sen. Rob Bradley, R- Fleming Island,
said the industry offers a valuable source of credit to many Floridians and if regulations get it wrong, it could mean “10,000 jobs threatened.”
Industry supporters say consumers could pay less under certain circumstances compared to current law, though the bill would let lenders in some instances roughly double their fees per $ 1,000 borrowed, from $ 110 to $ 214.68, according to a Senate staffff analysis.