Alabama remains one of the most popular states for the payday loan industry. Thousands of payday loans are made every year, and payday loan businesses generate a lot of revenues. (http://www.al.com/news/index.ssf/2016/04/alabama_house_committee_approv_7.html
Following the Consumer Financial Protection Bureau (CFPB)’s clampdown of the payday loan industry, the Alabama government has decided to follow suit and take its own actions. The state is mulling over the establishment of a payday lending task force, which has garnered mixed reactions from citizens, the payday loan industry and some members of public office.
The reactions have been split after Alabama Governor Robert Bentley created a task force to tackle the issue of payday lending practices across the state. The governor signed an executive order on Tuesday that launches the Alabama Consumer Protection Task Force (ACPTF).
Reports say that the task force will include 33 experts who will examine the state’s consumer credit laws, which could be improved to “protect citizens from predatory lending practices.”
The Alabama Arise Citizens’ Policy Project was one of the groups chosen to have a member serve on the task force. Although Stephen Stetson, a consumer rights policy analyst with the organization, conceded that he’s pleased to be part of the task force, he doesn’t think such a thing is needed to end predatory payday lending. Instead, good old fashion laws will assist the state.
“The solutions are not mysterious,” he said. “We’ve been studying this for years, we have countless narratives from borrowers, and solid reform bills have been coming through the legislature. We were one day away from passing a reform bill in the legislative session.”
Dejerilyn Henderson, Troy Councilwoman, says the task force is an “excellent idea” as it is the right first step to combat Alabama’s payday loan industry. She feels that perhaps the task force could be the start to urge lawmakers to institute brand new requirements on payday lenders.
Meanwhile, Henderson believes that the state legislature still needs to address the Payday Loan Reform Bill in addition to initiating a task force, warning about how low-income community are deeply affected by payday loan stores, which she says trap consumers into spiraling debt.
Troy Councilwoman Dejerilyn Henderson praised the task force as an “excellent idea.”
“It’s a step forward to how Alabama needs to handle the industry. I’m hoping the task force can be a catalyst to let legislators know that the requirements placed on these lenders are too lenient,” she said. “You see them in low-income communities. Or communities where the Hispanic population is higher. They’re target people who can’t do any better.”
The CFPB introduced a proposal earlier this month that would establish a federal regulatory framework, the very first of its kind. It would mandate payday loan businesses to conduct income checks and would limit the number of payday loans customers can take out in a short period of time.
Critics argue that payday loans should be restricted or banned entirely because they function as a debt trap and hurt consumers more than they can help. Proponents, however, present the case that people who use payday loans are desperate and have no other credit options at their disposal.