More than 100 activists from 25 states converged Monday on Speedy Loan, a payday lender in Milwaukee, to call on Speedy Loan Corp. owner and president Kevin Dabney to stop trapping families in 500-percent-interest, debt-trap loans.
Monday’s action comes midway through the 90-day public comment period on a proposal to issue the first-ever national rules by the Consumer Financial Protection Bureau (CFPB) to regulate the payday and car title lending industry.
Wisconsin, like most states in the country, has no meaningful restrictions on payday or car title loans. As a result, borrowers here typically face a 574 percent annual percentage rate on these loans. That adds up to an annual fee drain of over $8 million from payday loans and nearly $102 million in car title fees out of the pockets of the most economically vulnerable citizens and communities, many of them people of color. Nationally, these lenders drain from customers more than $8 billion in fees each year.
During a heated fight to keep a common sense 36 percent rate cap from passing in the Wisconsin state legislature in 2010, Mr. Dabney was among the payday lenders who poured in so much money that they not only succeeded in defeating the measure, but went afoul of campaign finance law in the process. Mr. Dabney was fined $6,000 for violating campaign finance limits.
“Predatory payday lenders line their pockets by using abusive and deceptive practices to trap families in a never ending cycle of debt,” said Jay Johnson, board president of People’s Action. According to the CFPB’s research, 75 percent of all payday loan fees are paid by borrowers trapped in more than 10 loans a year, and 80 percent of all car title loans paid by borrowers are trapped in more than seven loans a year. “We’ve been fighting to stop the debt trap for years, and we’re not stopping now.”
“My faith says taking advantage of people when they’re down is wrong, said the Rev. Willie Brisco, president of WISDOM, a statewide interfaith justice coalition and also a member of the board of Citizen Action of Wisconsin Education Fund. “It is immoral to allow payday loan-sharking predators connected to Wall Street to bleed our community of what little financial resources we have. Our state leaders have failed to cap their outrageous interest rates, so we are here today to urge the federal government to act.
“The new common sense rules from the CFPB will go a long way towards stopping the debt trap, but they need to be strengthened to make sure no family is saddled with unaffordable loans. Milwaukeeans and people across the country should visit StopPaydayPredators.org today to let the CFPB know we want strong rules to stop the payday debt trap.”
“People from across the country are fighting for strong rules, including families in New Jersey,” said Phyllis Salowe-Kaye, executive director of New Jersey Citizen Action. “Our strong New Jersey state law is supposed to keep the predators out, but weak rules from the CFPB would make it harder to keep payday and car title lenders from their constant efforts to weaken our laws. We won’t let that happen.”
The federal rulemaking from the CFPB is an opportunity to enact common sense rules that will stop the most predatory business practices. People’s Action Institute is encouraging the public to make a comment by the October 7 deadline calling on the CFPB to enact strong rules without loopholes at StopPaydayPredators.org/PeoplesAction.