Bill reignites controversy over payday lending reform

PROVIDENCE – A state senator wants payday lenders out of Rhode Island.

Sen. Harold Metts, D-Providence, submitted legislation earlier this month that would eliminate provisions for payday lenders – known as “deferred deposit providers” – from state ordinances.

Metts has proposed similar bills every year for at least the last six years, without success. He’s not hopeful for the latest iteration either.

The reason? Bill Murphy, the former House speaker turned lobbyist earning $30,000 a year from Advance America, the payday lender with the largest Rhode Island presence.

- Advertisement -

“He has a lot more contacts than I have,” Metts said of Murphy.

Others involved in longstanding payday loan reform efforts also named Murphy as a barrier to success.

“Until Bill Murphy retires, we’re not going to see state legislation pass,” said Margaux Morisseau, director of community building and engagement for NeighborWorks Blackstone River Valley and an early leader in the state’s payday lending reform coalition.

Asked for a response, Murphy said, “Consumers in Rhode Island should be able to have a choice.”

While the coalition has in prior years led the charge to cap interest rates on payday lenders – also a bill proposed this year – it has now turned its attention to the federal government in hopes of a fix.

A bill introduced in the U.S. Senate in 2019, co-sponsored by Sen. Jack Reed, D-R.I., calls for extending the Military Leave Act to all consumers, essentially capping interest rates for all loans at 36%. Payday lenders in Rhode Island can currently charge up to 261% interest.

A dozen states – including Massachusetts and Connecticut, as well as Washington, D.C. – have banned payday lenders or never allowed them to begin with, according to data collected by the National Conference of State Legislatures.

Jamie Folmer, senior vice president of external affairs for Advance America, said any legislation to ban or cap interest rates on payday loans would essentially drive out the industry, forcing people to turn to an unregulated market for short-term, small loans.

But Andy Posner, founder and CEO of Capital Good Fund, which offers small, 12-month installment loans as an alternative to payday loans, called Folmer’s argument weak.

“What it really means is thousands of Rhode Islanders won’t end up stuck in the debt cycle,” Posner said of the impact of eliminating or capping interest rates on payday lenders.

Regardless of the success of his legislation, Metts pledged to continue fighting against what he framed as preying on poor people.

Nancy Lavin is a staff writer for the PBN. Contact her at