Last week, the Monsignor John Egan Campaign for Payday Loan Reform and Woodstock Institute called for much-needed consumer protections for the currently unregulated payday installment loan industry at a press conference in downtown Chicago. These new consumer protections, included in a recent proposal by Senator Kimberly Lightford (D-Maywood), would ensure reasonable fees in an industry that has operated for years outside the consumer protections established in the 2005 Payday Loan Reform Act.
“Establishing reasonable rates that lower the cost of borrowing while keeping fair credit available is the most important provision of this proposal and our core reform principal,” said Tom Feltner, vice president at Woodstock Institute. “This proposal establishes consumer protections that will keep credit available to consumers, while eliminating practices such as back-to-back refinancing that so often contribute to a cycle of non-productive debt.”
The proposal also establishes a 36 percent rate cap for all other types of lending, ensuring that lenders cannot modify their products to evade consumer protections and preventing future loopholes.