Attorney General Neronha Joins Lieutenant Governor Matos, Secretary of State Amore, and Treasurer Diossa in Urging Immediate Predatory Payday Lending Reform
PROVIDENCE, RI: The Economic Progress Institute (EPI) today is announcing that Attorney General Peter F. Neronha has joined the effort urging both chambers of the Rhode Island General Assembly to hold floor votes this session on legislation to halt allowing payday lenders to continue to charge fees that are the equivalent of annual percentage rates (APR) up to 260%.
AG Neronha becomes the fourth Rhode Island General Officer to sign a letter circulated by EPI and the Rhode Island Coalition for Payday Lending Reform, joining Lieutenant Governor Sabina Matos, Secretary of State Gregg M. Amore, and General Treasurer James A. Diossa along with two city councils, nearly 60 community, business, labor, and religious organizations, and more than 200 Rhode Islanders from eight municipalities. These include six cities where payday lenders have stores: Cranston, East Providence, Pawtucket, Providence, Warwick, and Woonsocket.
“It has been a top priority for my Office to protect Rhode Island consumers from predatory and deceptive practices,” said Attorney General Peter F. Neronha. “Despite proponents’ claims that payday lending is a necessary pipeline to credit, in reality, these loans are notorious for high interest rates, which can often trap borrowers into a never-ending cycle of debt — disproportionately impacting communities of color and lower-income Rhode Islanders. Rhode Island is now the only state in New England to allow exceedingly high-interest payday loans, and we continue to hear from our community partners about the need for adequate regulation of these predatory practices. Payday lending reform in Rhode Island is absolutely necessary and long overdue, and I hope this is the year we can commit to making changes that will keep Rhode Islanders’ hard-earned money in their pockets and out of the grasp of usurious lenders.”
“EPI commends Attorney General Neronha for his moral leadership in seeking to end the legislative carve-out allowing predatory payday lenders to victimize vulnerable borrowers,” said EPI Executive Director Weayonnoh Nelson-Davies, Esq. “We are grateful to him, Lieutenant Governor Matos, Secretary of State Amore, and Treasurer Diossa for sending a clear message that payday lenders should not be allowed to play by special rules, which end up costing Rhode Islanders an estimated $250,000 in fees a month going to one out-of-state corporation.”
In the existing carve-out referred to by Nelson-Davies, payday lending companies are designated as “check cashers” even though they are providing loans. Unlike banks and credits unions, which are subject to a 36% maximum APR for loans of $300 or less, and 30% APR for loans over $300 and up to $800, payday lenders are exempt from these rules. This has cost Rhode Island communities and borrowers dearly. Through 2023, the payday lending industry has made an estimated $90 million in fees from Rhode Islanders caught in the debt trap set up intentionally by the industry, according to EPI calculations based upon data provided by the Rhode Island Department of Business Regulation.
Representative Karen Alzate (Pawtucket, Central Falls) and Senate Deputy Majority Whip Ana B. Quezada (Providence) have introduced legislation (H-7211 and S-2141) to eliminate predatory payday lending in Rhode Island. The House voted 70-2 last session to reform payday lending. This is the 15th straight year that legislation has been introduced to repeal the carve-out for the payday lending industry. Better short-term loan options already exist for Rhode Islanders from local credit unions, banks, and community financial groups all offering small loans, with low fees and interest rates ranging from 5% to 30%.