A new report by the Center for Responsible Lending says "payday" lending fees cost Florida residents $2.5 billion over the past decade. "Payday" lending refers to high-interest loans made primarily to low-income residents that gives the lenders access to the borrowers' bank accounts. Critics of the practice say the loans are predatory and create cycles of increasing debt. The report argues that payday regulations passed in 2001 in Florida failed to protect borrowers, noting the state now has more payday lending stores than Starbucks.
"This report shines a very bright spotlight on predatory lending," noted Eric LeCompte, executive director of the religious debt watchdog group Jubilee USA. "Payday lending hurts people and families living paycheck to paycheck."
According to the report, 83% of payday loans are made to customers who already have 7 or more existing loans. Many consumers take on payday loans to pay off previous payday loans and enter a cycle of increasing interest rates. The report notes that payday lenders in Florida charge an average annual interest rate of 278%.
The Consumer Financial Protection Bureau is considering new regulations on payday loans. Florida representatives from both major parties introduced legislation to stop new federal regulations.
"All levels of government have an obligation to protect vulnerable communities from predatory behavior," stated LeCompte. "Interest rates in the triple digits are simply immoral."
Jubilee USA Network is an alliance of more than 75 US organizations and 550 faith communities working with 50 Jubilee global partners. Jubilee USA builds an economy that serves, protects and promotes the participation of the most vulnerable. Jubilee USA has won critical global financial reforms and more than $130 billion in debt relief to benefit the world's poorest people. www.jubileeusa.org