Assembly action will crack down on predatory payday lenders, protect consumers
Recently, I was proud to join with 58 other state representatives—Democrats and Republicans—to approve The Responsible Lending Act, long-overdue legislation that will regulate the payday loan industry and protect Wisconsin consumers.
I’ve been committed to this kind of reform for years because I’ve seen these lenders prey on people in need—leaving some financially devastated.
I used to think that shutting down all of the payday loan shops was the way to go. But I know that times are tough, and banks don’t lend to people with bad credit. So it makes sense to leave an emergency option available.
The real keys to protecting people from predatory lenders are limiting their profits and giving consumers the information needed to make smart decisions. That’s what we’re doing with The Responsible Lending Act.
Under this bill, the most a borrower could ever owe a payday lender is $615—including the lender’s fees and charges.
The Responsible Lending Act also stops people from taking out more than one payday loan at a time. A statewide database, overseen by the Department of Financial Institutions, will ensure that people cannot take out multiple loans at multiple locations.
The legislation also prohibits lenders from rolling a borrower’s existing debt into a new, larger loan. This predatory practice of rollovers accounts for nearly 90 percent of all payday lenders’ profits and can trap a borrower in a destructive cycle of debt.
Also critical is the ban on auto title loans. In these agreements, if a loan is not repaid, a borrower’s car could be seized. And all too often, when you lose your car, you also lose your ability to get to work—and to ever repay a loan.
This legislation requires payday lenders to tell people exactly what they’re getting into. Lenders would have to disclose the real cost of the loan and give the borrower a chance to cancel the loan without penalties.
And payday lenders who violate these rules will be subject to fines of up to $1,000, six months in jail and civil lawsuits.
Over the next few weeks, Assembly Democrats will be pushing hard for the Senate and Gov. Jim Doyle to join us in backing The Responsible Lending Act. Wisconsin families need these protections now.
Really, protecting your pocketbook is a part of the bigger goal we’ve been working this whole session to achieve: a stronger Wisconsin economy.
Assembly Democrats have worked quickly to extend unemployment and health care benefits for displaced workers—so many of them, our friends and neighbors. We’ve approved more funding for training programs that are preparing workers for careers in new, growing fields. We created $200 million worth of credits and incentives that have helped save Wisconsin businesses and attract new companies to our state.
We will continue our work to create opportunities for Wisconsin businesses and Wisconsin workers. My focus must be on what’s really important—getting our economy back up and running and getting more of you back to work.
Rep. Mike Sheridan, D-Janesville, serves as Assembly speaker and represents Wisconsin’s 44th Assembly District. He can be reached at P.O. Box 8953; Madison, WI 53708; phone 1-888-947-0044; e-mail rep.Sheridan@ legis.Wisconsin.gov.