RI Coalition-Payday Lending Reform: In Wake Of Rhode Island House Committee Passage, State Leaders/Community Members Ask Rhode Island State Senate to End Predatory Payday Loans

House Committee Passes Reforms To Payday Loan Industry Today

House Committee on Corporations Passed Bipartisan Payday Lending Reform Bill  7-1: Representative Brian Kennedy The Lone Dissent

From The Economic Progress Institute

Secretary of State Gregg M. Amore, State Representative Karen Alzate (District 60), State Senator Ana B. Quezada (District 2), Alan Krinsky, Director of Research and Fiscal Policy of the Economic Progress Institute, Margaux Morisseau, Deputy Director, the Rhode Island Coalition to End Homelessness, Rev. Dr. Donnie Anderson, Chair of the Democratic Women’s Caucus, Weayonnoh Nelson-Davies, Executive Director of the Economic Progress Institute, and community members called on Senate Leadership for a vote to end predatory payday loan practices that target Black and Latino communities.

“For too long Rhode Island has allowed payday lenders to target our Black and Latino communities with outrageous rates and terms that trap residents in a cycle of debt,” said Weayonnoh Nelson-Davies, Executive Director of the Economic Progress Institute. “Rhode Islanders have been asking the State House for more than a decade to take action to end predatory loan practices. With the existing overwhelming support of residents, we expect the Senate to pass these long overdue reforms this year.”

The House Committee on Corporations passed the bipartisan payday lending reform bill that will align Rhode Island with every other state in New England on Tuesday, June 13. A national standard for payday loans was established when Congress capped payday loan interest at 36% for members of the military and their families in 2006. The Rhode Island Senate has not yet set a hearing or a committee vote for the bill before the end of the current session.

“Payday lending traps borrowers in cycles of debt, making it difficult for them to solidify their own finances and limiting future opportunities such as starting or growing a business,” said Secretary of State Gregg M. Amore. “We should be creating more pathways to financial stability, not allowing for continued predatory lending practices that perpetuate inequity.”

The Rhode Island Coalition for Payday Reform has been organizing to close the loophole that allows payday lenders to play by special rules that allow them to issue loans with annual interest rates of 260%. Payday loans, such as those permitted in Rhode Island, are high-cost loans structured to perpetuate an ongoing cycle of debt. In 2018, payday lenders drained $7.5 million in fees from Rhode Islanders.

“We have been working hard for 13 years and it is far past time that we end the 260% APR that predatory payday lenders are charging,” said Margaux Morriseau, Deputy Director of the Rhode Island Coalition to End Homelessness. “I am relieved that Speaker Shekarchi has let this important issue come to a vote, and I urge Senate President Ruggerio to do the same. More than twenty other states and the military are already protected from these awful loan products and it is time for Rhode Island to end this usury.”

Ending predatory payday lending practices has broad majority support across the political spectrum in Rhode Island. A 2022 poll conducted by the Center for Responsible Lending showed that Rhode Islanders from all political parties supported a 36% rate cap on all loans by a 49-point margin.

Better short term loan options already exist for Rhode Islanders from local credit unions, banks, and community financial groups all offering small loans, with low fees and interest rates ranging from 5% to 30%.

The Rhode Island Coalition for Payday Reform is a coalition of community groups that work to end the predatory practices of the payday loan industry that trap Rhode Islanders in a cycle of debt.