On-line lenders who are not tribal or offshore claim that they need the same lack of oversight that the tribal and onshore on-line lenders are getting. Otherwise, it isn’t fair to them. Hmmm….. Fairness is as fairness does. Keep in mind that these on- line loans:
- accrue interest at twice the rate of storefront payday loans or about 800-1,000% per annum, and
-are designed so the fee is paid automatically out of the customer’s bank account, …over and over again, but the loan principal is never repaid.
Lenders now request that we stop hurling derogatory epithets at them, such as er, “payday loan.” They provide no explanation of why these loans are not payday loans but ask that we now call them “short-term, small dollar loans. Why we would call a loan like this (that is frequently kept out for months if not years) a short-term loan is beyond me.
Lenders are spending millions to lobby Congress to exclude these loans from state payday loan legislation and transfer all oversight of on-loan payday lenders from states to the Office of the Comptroller of Currency. Hello preemption! The prosed bill would also “loosen the rules for how short-term lenders disclose the total costs of the loans to consumers,” according to a Bloomberg story, by excluding any loan with an initial term of less than a year from the Truth in Lending Act. That way, I guess, customers would not know the loans carried interest rates of 800-1,000% and this would be further “fair” to these lenders.
With 35% of the payday loan market now in on-line loans, this is an incredibly important bill…to defeat. Let’s hope for a race to the top, not the bottom.
