Governor McKee Joins Effort Urging Immediate Predatory Payday Lending Reform in RI
PROVIDENCE, RI: The Economic Progress Institute (EPI) today announces that Governor Dan McKee has joined the effort urging both chambers of the Rhode Island General Assembly to hold floor votes this session to stop out-of-state payday lenders from continuing to charge fees to borrowers that are the equivalent of annual percentage rates (APR) up to 260%.
Governor McKee becomes the fifth 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, Attorney General Peter F. Neronha, 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.
“Targeting vulnerable populations with astronomical interest rates is indefensible, and stopping predatory lending practices in Rhode Island, here and now, simply is the right thing to do,” said Governor Dan McKee.
“EPI salutes Governor McKee for his moral leadership in seeking to end the legislative carve-out allowing predatory payday lenders to continue victimizing vulnerable borrowers,” said EPI Executive Director Weayonnoh Nelson-Davies, Esq. “We are grateful to him, Lieutenant Governor Matos, Secretary of State Amore, Attorney General Neronha, and Treasurer Diossa for sending a clear message that payday lending companies 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 such as Advance America 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%.