H.R. 1214 would amend the Truth in Lending Act to establish additional payday loan disclosure requirements and other protections for consumers.
Detailed Summary
Payday Loan Reform Act of 2009 - Amends the Truth in Lending Act to require a creditor to make specified disclosures when making a payday loan to a consumer.
Prohibits a creditor from making a payday loan to any consumer unless: (1) specified notices are posted conspicuously in English and Spanish in the creditor's public lending area, or, if the loan is made using the Internet, fax or other means, posted conspicuously on the creditor's public internet site relating to any such payday loan; and (2) the creditor offers the consumer an extended repayment plan that meets specified requirements.
Sets forth prohibited lender practices, including: (1) requiring a consumer to pay interest and fees that, combined, total more than 15 cents for every dollar loaned in connection with a payday loan; (2) threatening or seeking to have the consumer prosecuted in criminal court to collect the loan; and (3) taking or attempting to take an interest in any of the consumer's personal property to secure the loan.
Authorizes a consumer to cancel future payment obligations on a payday loan, without cost or finance charges, by: (1) informing the creditor in writing within two days after executing the loan agreement that the consumer wants to rescind the loan; and (2) returning to the creditor the cash amount of the loan principal.
Empowers state attorneys general to enforce this Act.
Status of the Legislation
Latest Major Action: 2/26/2009: Referred to House committee. Status: Referred to the House Committee on Financial Services.
Points in Favor
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Points Against
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Visitor Comments
Jon
March 6, 2009, 12:50am (report abuse)I used to work for a Payday loan company and they are lobbying very hard to stop these types of acts from moving forward. The reality is - they prey on the poor and do not help the consumer very much...sometimes they do but for the most part - its all about preying on people and giving them the impression that there will be legal action if they don't pay the loan back. Its an unethical industry no matter how they try to spin it.
Michael M.
March 25, 2009, 11:13am (report abuse)Expecting a loan to be paid back is unethical? I really don't follow. It's like any other credit, to be used wisely, otherwise, not at all. I have the same problem with my credit cards, but they expect me to pay the money back.
Cedarlady
June 18, 2009, 5:03pm (report abuse)I work with people every day who are in over their heads with payday loans. The industry will do anything it can to entrap our most vulnerable consumers. One of my clients has developmental disabilities and a caseworker, but that did not stop payday lenders from making him multiple loans. They treated my client like royalty until he decided to break the cycle. Once we got him out of debt, the lenders started calling him and telling him he could get more money. One even hopped out of his car in a drive through to try to persuade my client to take out another loan. Over the holidays, he got calls nearly every day. Payday lending is the most reprehensible business model you will ever find, and I have listened in as they threaten to take borrowers to jail if they won't pay.
Chad
July 11, 2009, 11:45pm (report abuse)I see that most of the people writing these letters have never worked for a cash advance company. I work for Advance America in indiana and we don't do a number of the things in these letter that people are accusing the payday industry of doing. By indiana state law we are not allowed to raise the interest rate on our loans, but you see the produts you buy everday going up in price. I will charge $15.00 for a $100.00 loan. If you overdraft your bank account by 50 cents and the bank gives you a 50 cent loan how much do they charge, $20.00 or maybe $30.00. Seems to me that banks are charging a lot more for their loans then payday lenders do. I would say that most of the people bad mouthing payday lending have never used the product itself. And, for the harrassing phone calls, where I work we are not be allowed to do such a thing. We would be terminated for that. And, to refer to the response about giving payday loans to the disabled, it would be against state law to deny them.