Introduction
Predatory lenders prey upon Rhode Islanders through a number of schemes charging triple-digit annual interest rates. Although one would think that those with the highest income and wealth would be the primary targets of schemers, the truth is that those with the fewest resources and options often make for the best targets for extracting money. Even when individuals have much better options, they often remain unaware of these and can be lured into seemingly painless short-term solutions causing long-term pain.
Over the last decade or so, many have become familiar with the scourge of storefront payday lending, but there are other problematic practices that deserve the attention of policymakers. Some of these practices possibly violate existing laws and can be investigatedby the Office of the Attorney General. Policymakers can also strengthen existing statutes to protect Rhode Islanders from predatory practices. This policy brief explains three types of predatory lending – storefront payday lending, rent-a-bank lending, and Earned Wage Advances – and presents solutions to address these schemes.