Payday-loan repeal sought
January 26, 2006 - Richmond, Virginia
A bill repealing Virginia's Payday Loan Act is one of several consumer-oriented bills to be considered by state lawmakers today.
Other measures coming before a House of Delegates subcommittee would allow consumers to freeze the release of their credit reports and require those making tax-refund loans to display terms and fees.
Del. John M. O'Bannon III, R-Henrico, sponsored the repeal measure at the request of the Henrico County Board of Supervisors. Although payday lenders, which grant loans paycheck to paycheck, contend they are following good business practices, the law is not working, he said.
The General Assembly in 2002 passed the law allowing such businesses. It set an interest-rate ceiling of $15 per $100 borrowed, a maximum of $500 borrowed, and a minimum length of seven days. Until then, there were few payday lenders in Virginia, and those that existed were able to because they found a way to fall outside state purview.
Since the law was enacted, the number of payday-lending businesses in Virginia has exploded. According to state regulators, 88 payday lenders operate 748 offices.
"It is predatory lending. There is nothing wrong with saying we made a mistake [in passing the 2002 law]," O'Bannon said.
Linda Robinson, who lobbies for Henrico at the Capitol, said none of the states around Virginia allows payday lending. North Carolina had a payday-lending law but let it expire.
Robinson said Henrico has received support for the legislation from the Defense Department, the Navy, the AARP, community organizations and consumer groups.
She and Irene Leech, president of the Virginia Citizens Consumer Council, said payday lending has been a particular problem around military bases. Given how important the military is to Virginia's economy, lawmakers would be wise to get rid of it, Leech said.
In 2004, the latest year for which information is available, 387,686 Virginia consumers borrowed $988 million in payday loans. More than 76,068 people took out 13 or more loans. The average annual interest rate was 373 percent.
Also on the House Commerce and Labor subcommittee's agenda today are bills by Dels. Robert Tata, R-Virginia Beach; Kenneth R. Plum, D-Fairfax, and others that would allow consumers to place a freeze on their credit reports. In the case of a freeze, a credit-reporting agency would be prohibited from releasing personal information without a consumer's permission.
Some of the proposals would allow the credit agencies to charge consumers fees for freezing or unfreezing their reports. Among opponents to the bills are banks and retail merchants, Tata said.
The panel will also consider a bill by Plum that would require credit-reporting agencies to provide individuals access to their credit reports once a month for a fee of not more than $2 per month.
The measure also would require agencies that collect personal information to notify them when a security breach has caused unauthorized release of the information. After a breach, the reporting agency would have to provide credit reports to the individuals at no charge for two years.
A bill by Del. Harvey B. Morgan, R-Middlesex, would require those making loans on a borrower's anticipated tax return to make the fees and terms clear.
Richmond Times-Dispatch, Greg Edwards, Staff Writer
Related Stories - Virginia
- Who would span the payday lending gap? [December 17, 2006]
- Payday loan measure killed in committee [December 6, 2006]
- Avoid the loan sharks [December 4, 2006]
- Virginia delegates push payday loan reforms [October 7, 2006]
- The Payday Mayday: Faith communities join to curb predator practices [September 22, 2006]
- Virginia trying to set spending limits [August 13, 2006]
- Lawmaker takes interest in car-title, payday loans [August 4, 2006]
- Virginia payday loan reform is past due [May 24, 2006]
- Norfolk aims to curb number of payday lenders [May 16, 2006]
- Payday lending now has 1 billion dollar foothold in Virginia [May 4, 2006]
- Military loses to payday lenders [February 20, 2006]
- Payday-lending bill is pulled [February 14, 2006]
- Payday-loan repeal sought [January 26, 2006]
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