Margaux Morisseau serves as co-chair of the Rhode Island Payday Lending Reform Coalition, which advocates for stricter requirements capping interest on payday loans in Rhode Island.
Morisseau also works as deputy director at the Rhode Island Coalition to End Homelessness and has 26 years of experience in advocacy work for various Rhode Island groups. She has a bachelor’s degree in business management from Rhode Island College and a certificate in community development from Roger Williams University.
PBN: What is the Rhode Island Payday Lending Reform Coalition?
Morisseau: The Rhode Island Payday Lending Reform Coalition is a group of people from faith-based, community-based, nonprofit and labor organizations who are advocating for a 36% annual percentage rate cap for payday loans, which currently carry a typical 260% APR.
PBN: When and why did the coalition start?
Morisseau: In 2009, I was made aware that payday loans were the reason that many working class people were at risk of eviction. Advance America had opened a store in the middle of the neighborhood I worked in, the same neighborhood where my family was from, and was targeting residents. Hardworking families were going to be homeless because of these debt traps.
The first reform bill, a bill that simply removed a special carve-out that payday lenders had received and would make them play by the same rules that every other lender must obey, was introduced in 2010. It vanished off the roster when it was up for a floor vote that year. We knew we needed to fight harder.
The Payday Lending Reform Coalition was formed in 2011 to push for an end to this predatory lending. In addition to the threat of homelessness, payday lending makes it very difficult for families to keep up with their basic living expenses. They get dinged by so many overdraft fees because the payday lender can zap their account on payday, that borrowers often end up losing their accounts and becoming unbanked.
PBN: The coalition recently announced results of a poll surveying R.I. voters that indicates support for payday lending reform in the state. How do you hope this poll might help to inspire the kind of reform you are looking for?
Morisseau: The recent poll showed that the findings of a poll we conducted in 2012 is still true – that R.I. voters overwhelmingly support payday lending reform. We have been working on this issue for 12 years and during this time, lobbyists have gotten richer making backroom deals while lower-income families in R.I. are losing millions of dollars each year to these predators. It’s time for this practice to stop.
If the reform does not pass this year, the coalition will make this issue a campaign issue. We will work to educate voters and to ensure this issue is discussed at debates across the state. Voters will know who held it back and why. But we are hopeful that we won’t have to take it that far. There is energy among legislators to do the right thing this year. Payday lending reform could be another positive thing to celebrate as we help rebuild our economy after the pandemic.
PBN: Legislators have been proposing various ways to crack down on payday loans in R.I., such as capping interest rates and eliminating payday lenders entirely, for many years. What, if anything, do you think makes efforts this year more likely to succeed?
Morisseau: Taking away the special exemption that payday lenders received is the easiest way to fix this problem. R.I. has a usury law on the books for a reason. We don’t want loan sharks in our state, and payday lenders charge even more than the loan sharks of the old days.
Recently, the governor and secretary of commerce said that the current 18% interest rate penalty on late taxes is bordering on usury, so if that’s the case, 260% is about 14 times that.
Furthermore, we believe that after 12 years, a bill should be allowed for a floor vote. Legislators have held it and studied it and we have talked about it and provided credible data year after year. It’s time to act. And when better to act than in an election year?
PBN: What economic effects would a cap on payday loans have in R.I., both for lenders and consumers?
Morisseau: Lenders would be welcome to stay in our state if they adhere to the 36% cap. A predatory business model may not work under that cap, but responsible lending does. As for consumers, we will save millions every year that would have been lost to predatory lenders. Families will better afford their living expenses, remain banked and use money in the local economy.
Independent studies have shown that there is a significant economic net gain when payday loan stores go away. People who had borrowed find much safer resources for meeting financial needs and are relieved the payday lenders are gone. We should remember that U.S. Sen. Jack Reed passed that Military Lending Act that banned payday loans for members of the military and their families because the stress they caused was considered a national security threat. It is time that we extend that protection to all people in our community.
Nancy Lavin is a PBN staff writer. You may reach her at Lavin@PBN.com.