New law may mean more transparency to “payday loans”
October 2, 2017
• Will make a critical report public among other changes
• “This type of loan can quickly snowball into a family financial crisis”
Oversight of “payday lenders” in California is expected to crank up some through a new law authored by Assemblywoman Cecilia Aguiar-Curry, D-Winters.
The measure strengthens the tools that the Department of Business Oversight uses to oversee, regulate, and review lenders’ reports.
“These businesses can provide low-income Californians under a financial pinch with an option for a temporary fix when in need of money, but this type of loan can quickly snowball into a family financial crisis,” says Ms. Aguiar-Curry. “Our government can only root out bad players by having access to information that will highlight predatory business practices. AB 1636 will improve consumer protection by providing more public insight into the practices of payday lenders and their borrowers.”
Under existing law, payday lenders are required to submit an annual report to the DBO on certain information regarding their business in the past year. In addition, the Department conducts a voluntary survey to supplement that data. However, the reports are exempt from the Public Records Act, and no enforcement authority exists to compel responses to the survey. As a result, consumers, financial experts, and legislators cannot review the information. AB 1636 makes payday lenders’ reports public, and expands DBO’s authority to require and expand companies’ reporting.
“It doesn’t take a rocket scientist to figure out that the businesses most likely to voluntarily respond to regulators’ requests are those least likely to prey on the most vulnerable customers,” says Ms. Aguiar-Curry. “It’s time we made all payday lenders subject to the same kind of public scrutiny and data gathering as other lenders.”