On the federal level many politicians will decry deceptive or abusive payday loan policies, but few Republican senate and congressmen are acting on it. Payday loan lenders will see likely see little federal political push due to the republicans taking control of both the house and the senate, but there is a political shift happening on the state level thanks in large part to consumer advocacy groups that are pushing for wide spread reforms of the industry. With an estimated 12 million working Americans making use of payday loans every year and with annual interest rates that can approach 600 to 700 percent, many States and Cities are now taking notice thanks to consumer advocacy groups. Actions have been taken in many states in 2014 and insiders expect many more states to take on the challenge of curbing payday loan lenders abusive and predatory lending practices.
With the industry facing a political shift on the state level, it is having to use it’s resources to combat legislation across many states to combat the bills in question. They have been successful in many of these cases such as managing to defeat a bill in Louisiana that would have reined in payday lending, which would have capped the interest rate at 36 percent annually. The bill was defeated thanks in part due to actions and money spent by the Louisiana Cash Advance Association, a lobbyist group for payday loan lenders in Louisiana. What this means for the industry is that it is ever more on the defensive side now and must make use of their lobbyist groups to buy sell out politicians votes to keep their businesses running as usual. The chief tactic being used by the payday loan lenders to combat ANY bill is to make claims that any changes would fatally harm the industry.
So what does this mean for payday lenders in 2015? It means their advocacy groups such as the Community Financial Services Association must push harder and raise more money between members of the group to combat the bills that are going before state governments and to combat any regulations that the Consumer Financial Protection Bureau tries to enact. The industry is very aware they are on the defensive as more and more private advocacy groups sign up for the fight against payday loan lenders. 27 States still allow single repayment loans with APRs of 391 percent or higher.
The battle-lines are drawn now on the war against payday lenders. The payday loan industry however is very powerful, much like the Tobacco industry in the 1970s and 1980’s. It remains to be seen which side will win, but one thing is for certain and that is that the industry is fighting and pushing back hard against any legislation that will interfere with their predatory business practices in an era where more and more states are siding with the people. It also means the industry must keep finding new loopholes to exploit, much as it did for the 2007 Military Lending Act where the industry managed to bypass the law by creating new ways around the bill. It also means the industry is fighting a battle on two fronts, one against new potential laws to limit their businesses and the other front combating the very advocacy groups fighting to limit payday lending practices.