An alliance of consumer advocates has fired back at Florida’s delegation to the U.S. House of Representatives over its support for the payday lending industry.
“We disagree strongly with any perception on your part . . . that Florida’s regulatory structure provides Florida consumers with a loan that protects them from economic harm,” the advocates wrote in a June 2 letter to Florida’s representatives.
More than twenty groups signed the letter including the United Way of Florida, the Florida Consumer Action Network, the Legal Aid Service of Broward County and Dade Legal Aid.
Payday loans are a form of high-interest credit usually taken out by low-income people who aren’t able to borrow from traditional banks. Many consumers access the loans online. Critics say the loans can be predatory.
In April, all but one member of Florida’s House delegation signed a letter to the U.S. Consumer Financial Protection Bureau criticizing new, more restrictive rules that the agency had proposed for payday lenders. The legislators urged regulators to instead model their reforms on Florida’s payday lending laws, which they said protect consumers from borrowing too often or paying exorbitant fees.
But the consumer advocates said state laws are not strong enough to protect Floridians from falling into a never-ending “debt trap” in which they are compelled to take out a new loan to pay back the old one.
Floridians who use payday loans take out an average of about nine loans a year, according to research conducted by the Center for Responsible Lending, a nonprofit that calls for stronger regulations on the payday industry. The average loan is $250 with an annual interest rate of 312 percent, the center found.