July 08, 2015
July 08, 2015
With the media frenzy over Shark Week, it’s easy to forget the real predators lurking in our communities: Payday loan sharks. On average, sharks in the ocean injure 15 people per year, but payday loan sharks bleed $7 billion in fees out of more than 12 million hard-working Americans struggling to make ends meet.
All payday loans have a few things in common: Outrageous triple digit interest rates (600% APR or higher in Ohio), steep fees and a deceptive structure that’s designed to keep borrowers trapped in a cycle of debt and desperation for months. Since the 1990’s, Ohio has allowed small dollar short-term lending. Since then, payday lending has exploded. One in 10 Ohioans has had a payday loan. Despite attempts to regulate the industry, these loans have created a feeding frenzy on the budgets of financially vulnerable families. A typical payday loan takes one-third of the borrower’s paycheck, leaving little for the borrower to live on. It’s no wonder our state has the 3rd highest number of consumer complaints to the CFPB on payday loans.
Consumers need affordable, fair access to credit, not predatory loans that leave them financially vulnerable. This fall, the Consumer Financial Protection Bureau (CFPB), the federal personal finance regulator, will release a rule regulating small-dollar loans. The CFPB has the power to stop the worst abuses by payday loan sharks and make room for responsible lenders. While the industry is spending millions lobbying Congress to weaken the rule, there is still time for consumers to engage.
This Shark Week, let’s sound the alarm and let the CFPB know we expect a strong, broad rule that will protect struggling families. Visit the Shark Week Campaign to Stop Payday Loan Sharks’ website to learn more, share your story and tell the CFPB what you think. Let’s turn the tide by getting the real sharks out of our wallets.
Kalitha is Policy Matters policy liaison.
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