PROVIDENCE – State lawmakers are once again considering cracking down on payday lenders.
Legislation introduced in both chambers of the General Assembly and discussed in recent finance committee hearings would ban payday lenders – referred to as “deferred deposit providers” – from operating in the state.
A hearing before the House Finance Committee on May 25 drew a number of supporters who backed the proposal through both written and verbal testimony.
In a letter submitted in support of the bill, the Economic Progress Institute wrote that Rhode Islanders face an estimated $7.6 million in fees from payday loans each year – about 93% of all payday lending fees paid across New England. This is because state laws on the books now let payday lenders charge up to 261% interest on their loans.
Across the country, 18 states and Washington, D.C., have capped payday loan interest rates at 36%, mirroring federal policies for active military personnel under the Military Leave Act. Rhode Island and Delaware are the only two Northeast states with no limits on payday lenders, according to the Economic Progress Institute.
Other groups who supported the bill included Capital Good Fund, Rhode Island KIDS COUNT and the Rhode Island Commission for Human Rights.
However, Cincinnati-based Axcess Financial Services, which offers payday loans in Rhode Island, fought back. President Kenneth Judd in a letter said the bill would make it more difficult for people who need to cash checks and access credit, while eliminating the jobs that payday lending institutions provide. The bill also does not apply to financial technology and international firms that are not licensed by the state, Judd wrote.
Attempts to eliminate or set more legislative requirements on these predatory lenders in Rhode Island date back at least half a dozen years but typically fail to make it beyond committee hearings. Whether the new set of more-progressive lawmakers this session will finally act upon these proposals is unclear. Bills introduced by Rep. Jean Barros, D-Pawtucket, and Sen. Ana Quezada, D-Providence, remained in their respective finance committees as of May 28.
Nancy Lavin is a PBN staff writer. You may reach her at Lavin@PBN.com.
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