UnidosUS (formerly NCLR) joined its Florida Affiliate organizations, Hispanic Unity of Florida, COFFO and Latino Leadership, this week to denounce congressional efforts, led by Florida Congressmen Alcee Hastings (D-FL) and Dennis Ross (R-FL), to strip payday lending rules put in place to protect consumers from predatory lending practices. According to a study by the Center for Responsible Lending, since 2005, in the state of Florida payday lenders have made more than $2.5 billion in fees on loans that average an 278% APR. The exorbitant fees are good business for the lenders but leave consumers paying extremely high interest rates and trapping many in a cycle of debt when they are unable to pay back the initials loans on time.
As a result of rampant abuse in the industry, the Consumer Financial Protection Bureau (CFPB) had issued rules in October to protect consumers from predatory payday lending in some important ways: 1) Restrict lenders from making high-interest loans they know borrowers cannot afford to repay; 2) Provide longer repayment timelines for borrowers and 3) Limit the number of consecutive loans that can be taken out (in Florida, the average payday loan customer takes out eight loans per year).
“For customers who find themselves in desperate or emergency situations, a payday loan can seem like a lifesaver. The reality is that these lenders trap their customers in an unending cycle of debt. Florida’s payday law has done little to curb the worst of the abusive lending practices, and has left financially vulnerable Florida families exposed to a lending practice that puts them in a much worse financial situation than they were in when they first sought help. This is why we need our representatives in Congress to support the CFPB’s rule, not try to weaken our consumer protections,” said Marucci Guzman, Executive Director of Latino Leadership.
“Our communities can’t afford to be targeted by predatory lenders like payday businesses; we need a strong CFPB payday rule. Between 2005 and 2016, payday lenders had stripped more than $2.5 billion in fees from Floridians. In 2015 alone, these predatory practices cost Florida families $311 million,” said Josie Bacallao, Executive Director of Hispanic Unity of Florida.
“Payday loans increase the likelihood that people will experience bank penalty fees, bankruptcy and loss of their bank account. The CFPB’s payday rule would keep bad actors from trapping Florida consumers in a cycle of high-cost debt that makes them unable to keep up with their other bills,” said Arturo Lopez, Executive Director of COFFO.
“The CFPB has issued rules that are critical to helping working families stay out of the cycle of debt they face when taking out these short-term, high interest loans. To strip these rules would mean reverting to a system where payday companies can exploit vulnerable families in financial need. Florida’s leadership should not cave into this abusive industry and should instead fight for the long term financial stability of our working families by protecting them from predatory lenders and expanding their access to mainstream financial tools,” said Lindsay Daniels, Associate Director, Economic Policy Project, UnidosUS.
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