Mar 17, 2014 Philip Burgess
Lawmakers throughout the United States have criticized the short term lending industry as an unsavory market. Some officials have wrongly accused these companies for employing predatory methods, while others have lauded them for their ability to provide constituents with quick financial stability. Regardless, some state legislators have banned the practice.
Opposition from the east coast
TribLIVE reported that ACE Cash Express is only allowed to cash checks, sell money orders and process bill payments for consumers in Pennsylvania, which has outlawed short term lending - the corporation's primary discipline. However, business executives heavily involved in the industry are pushing for statewide legalization. The article noted that a bill is currently under review by the state senate that could authorize the practice.
Diane Standaert, senior legislative counsel at the Center for Responsible Lending, stated that many legalization efforts are continually rejected by lawmakers throughout the country. She also noted that many states employing loose regulations on the industry encounter success.
State Rep. Chris Ross, however, supports the initiative, stating that the Pa. government would be able to monitor and regulate the practice, particularly the interest rates and other fees often tacked on to these types of products. He also stated that implementing such fees may ultimately discourage consumers from employing the services of these companies - in turn, putting the organizations at financial risk.
Not a hint of surveillance
In contrast, lawmakers in South Dakota recently rejected a bill that would have imposed additional regulations on the industry. South Dakota Public Broadcasting reported that state Rep. Steve Hickey was the primary sponsor of the proposed legislation, named House Bill 1255. The official stated that the measure sought to protect desperate consumers from alleged debt entrapment.
If it had passed, House Bill 1255 would have placed a maximum loan cap of $700 on borrowers and created a database allowing lenders to access and monitor their customers' loan statuses.
Other representatives, such as Dan Henderson, claimed that consumers are more knowledgeable of short term lending than Hickey would believe.
"We spell it all out on a contract. They know what they're getting, they know what they're signing. But you're going to take a choice away from them." said Henderson, "You take a choice away from people that redirects them in desperation times."
As the industry is already regulated in the state, if that had been approved, the additional measures would have inhibited struggling constituents from obtaining assistance.