Washington State’s year-old law limiting payday lenders has backfired, some of its supporters say, forcing some consumers to find even more predatory loans online. That realization is pushing some of the law’s former backers to suggest a repeal, according to a story by the Tacoma News Tribune.
The law is pushing low-income borrowers into “the wild west” of unregulated online loans, which often have higher fees and no credit limits than traditional payday loans, Washington State Rep. Steve Kirby told the newspaper.
“The evidence would seem to indicate that consumers are seeking higher cost, unregulated products,” said Kirby, a Democrat from Tacoma.
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The law, passed in 2009, limited each borrower to a maximum of eight payday loans in a year, and limited the amount they can borrow to $700 or 30% of their monthly income, whichever is lowest.
Consumer advocates worry that repealing the law may be an overreaction. They support increased education about the dangers of payday loans, and new laws that could make online loans more affordable.
“Let’s attack the problem in a direct and focused way,” Beverly Spears of the Statewide Poverty Action Network told the News Tribune. “Let’s build on the existing law and pass new protections on internet loans.”
Kirby has introduced a bill to repeal the measure. It remains in committee.
Image: Gregory F. Maxwell, via Wikimedia Commons