On the state level payday loan lenders are facing new crackdowns and regulations. New York is a prime example, New York state has limits on interest rates which effects any payday loans provided to residents of New York State. On August 11th of 2014 Manhattan prosecutors filed criminal charges against a 12 companies that violated New York’s laws on interest rates. The 12 companies in question are owned by one individual, Carey Vaughn Brown. According to prosecutors Carey Vaughn Brown set up a “a payday loan syndicate, setting up dummy corps in the West Indies to try and avoid the long arm of the law, as well as setting up corporations in other states that have little regulation for payday lending but still targeting New York lenders.
In Idaho Republican Gov. Butch Otter signed legislation signed a bill that came before his desk that will prohibit payday lenders from making loans that will exceed more than 25 percent of the borrowers monthly income. The bill also prohibits payday lenders from trying to cash a borrowers check more than twice, as many payday lenders will take a borrowers check that has bounced the first time and keep trying to cash it over and over again causing multiple NSF fees and check bounces of the same single check even when informed by the borrower that the check will bounce.
Other states are also entering the fray against unfair payday loan practices. In Maine payday lenders who are not licensed in the state can be fined under a new bill signed into law by Republican Gov. Paul LePage. In Utah a bill was passed by Republican Gov. Gary Herbert that now gives borrowers 10 weeks to pay off loans after making high interest payments, which prevents the loan from needing to be rolled over and over again. On the issue of loan re-rolling, Missouri passed a bill which now eliminates renewals on payday loans and lowers the allowable interest rate considerably.
While many states saw laws improving consumers rights, some states considered bills to change payday lending but these bills were struck down in state legislature. In Alabama for example a bill to set up a data base on payday loans and to cap the interest rates was struck down and the state Banking Department set up the data base anyway. The loan industry sued to stop the data base. Mississippi stuck down a law that would have limited payday loans to only 25% interest rates, the bill never made it past a Senate committee. Louisiana struck down a bill that would have severely limited payday loan sharks operations in the state, the bill being defeated largely due to outside pressure from the payday loan industries lobbyist activities, stating that any efforts to limit the industry would in effect kill the industry.
The year 2014 has seen many regulation changes and attempts at regulatory reform of the payday loan industry. The year of 2015 it is up to debate if any meaningful regulatory changes will be passed in the Republican led house and senate, but one thing is certain and that is that on a state level the industry will definitely face more uphill battles as the war for regulation of an ever increasingly powerful lobby and payday lending group fights to maintain it’s iron grip on predatory lending.