PROVIDENCE – Legislation that would require payday lenders to offer a no-charge extension for customers who are unable to pay their balance in time has been approved by the state Senate and is under consideration in the House.
The legislation – 2008-S 2610a, sponsored by Sen. Juan M. Pichardo, D-Providence – would also require payday lenders to offer customers the right to rescind a payday advance transaction before the close of the following business day.
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That means that a customer would be allowed one business day to return the full amount of borrowed funds and cancel the transaction at no additional cost. This proposal is also listed by the Community Financial Services Association of America as a CFSA “best practice.”
The check-casher disclosure laws would also be revised, requiring that the boards that outline the laws be posted in languages deemed appropriate by the director of the R.I. Department of Business Regulation.
“Payday loans and the extremely high [interest] rates associated with them have the potential to financially destroy vulnerable individuals and families,” said Pichardo. “It is for this reason that we should take every step necessary to ensure consumers are protected and informed when getting these types of loans.”
Under the no-charge extension portion of the measure, payday lenders in Rhode Island must allow customers who are unable to repay their balance by the agreed-upon due date an additional term of no less than 13 days to repay the balance at no additional charge. This extension would be made available to a consumer only once within any a 12-month period.
The bill – co-sponsored by Sen. Paul V. Jabour, D-Providence; Sen. Walter S. Felag Jr., D-Warren, Bristol and Tiverton; Sen. Daniel J. Issa, D-Central Falls, Cumberland and Pawtucket; and Sen. Joshua Miller (D-Cranston and Warwick – has been referred to the House of Representatives for consideration.
The Community Financial Services Association of America is a trade group promoting consumer protection and responsible regulation of the payday-advance industry through its CFSA Best Practices. To learn more, visit www.CFSA.net.
Additional information from the R.I. General Assembly, including the House and Senate calendars and listings of measures introduced each day, is available at rilin.state.ri.us.
