2014 Government Regulations & Business Summit
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PROVIDENCE – The mayors of four Rhode Island cities joined several state legislators and a coalition of advocates last week in calling for the passage of legislation aimed at freeing Rhode Islanders from a cycle of debt caused by ultra-high-interest payday loans.
At a Statehouse news conference organized by the Rhode Island Payday Lending Reform Coalition, mayors Scott Avedisian of Warwick, James Diossa of Central Falls, Alan Fung of Cranston and Leo Fontaine of Woonsocket lent their support to the legislation, which would eliminate a special exemption from the state’s usury law that has allowed payday lenders to charge borrowers triple-digit interest rates, because of the adverse effects payday lending is having on their communities.
The legislation would strip the exemption for cash-advance lenders, making them subject to the same usury laws that govern other lenders, which limit annual interest rates to 36 percent. A similar federal law applying to active military members and their families was enacted in 2006 after the U.S. Department of Defense determined that payday lenders’ predatory practices were harming military members. That bill also capped interest rates at 36 percent. Seventeen states and Washington, D.C., have similar laws.
Mayor Diossa highlighted the fact that payday lenders target single, female and minority families saying, “Payday lenders have set up shop in my town and target those who can least afford 260 percent APR loans and are more likely to get trapped in a cycle of debt.” •