The issue of payday lending has become one of the Florida-centric issues in Florida's U.S. Senate campaign. Recently, Rep. Patrick Murphy, who's running for the Democratic nomination, conducted a conference call with reporters, and when the discussion of payday lending came up, Murphy told the press that Florida was one of the better states in the country when it came to consumer protection regulations, and that Florida regulations should be used as a model by other states.
On the conference call, Murphy said that Florida’s regulations on the payday lending industry are "stronger than almost any other state." Our partners at PolitiFact took a look at this claim to see if it was true. PolitiFact reporter Joshua Gillin says that Murphy's claim rates FALSE on the Truth-O-Meter. Gillin said that there's a distinction between federa and state laws, and the effectiveness of each.
"We talked to a lot of consumer advocates and research groups when we started looking into the payday lending industry," said Gillin. "What we found was that the federal laws are best for consumers. State laws, on the other hand, are not as strict, and don't really live up to Murphy's claim."
Gillin noted the following:
- In Florida, there is a cap on the amount of fees that you can be charged for this type of loan. That fee is capped at $35. Other states have different caps or no caps at all.
- When it comes to the interest rate, Florida law leaves it completely unregulated.
- The average interest rate on these loans in Florida is around 278% annually.
Gillin also said that those same consumer groups wanted to emphasize that the extrememly high interest rates are what they're fighting. While Florida's payday law may be better that laws in other states, there's no evidence to show that it's stronger than almost any other state. Because of that lack of evidence, Muprhy's cliam that Florida payday lending regulations are "stronger than almost any other state" is rated FALSE on the Truth-O-Meter.
SOURCES: Tough Florida payday lending industry laws?
- Politifact article
- Govtrack, Consumer Choice and Protection Act, Referred to a House committee Nov. 16, 2015
- Florida Alliance for Consumer Protection, Press release, May 6, 2015
- Center for Responsive Politics, Payday lenders, Accessed March 28, 2016
- Center for Responsible Lending, "Perfect storm: Payday lenders harm Florida consumers despite state law," March 16, 2016
- Center for Responsible Lending, "Payday lending abuses and predatory practices," September 2013
- Journal of Economics and Business, "Do state regulations affect payday lender concentration?" 2015
- Consumer Financial Protection Bureau, "CFPB Considers Proposal to End Payday Debt Traps," March 26, 2015
- Consumer Financial Protection Bureau, Monthly complaint report, March 2016
- Florida Office of Financial Regulation, Payday lenders, Accessed April 11, 2016
- U.S. Rep. Patrick Murphy and most of the Florida delegation, Letter to Richard Cordray, April 28, 2015
- Americans for Financial Reform, Letter to Congress from multiple groups opposing H.R. 4018 , Dec. 15, 2015
- Pew Charitable Trusts, Fact sheet on payday lenders, April 2014
- Pew Charitable Trusts, Small dollar loans research project, Accessed April 8, 2016
- Pew Charitable Trusts, "State Payday Loan Regulation and Usage Rates," Jan. 14, 2014
- Orlando Sentinel, "New Laws To Rein In Payday Loan Rate," June 1, 2001
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- Tampa Bay Times The Buzz, "Florida's payday lender law is no model, report concludes," March 24, 2016
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- New York Times, "House Republicans Clash With Consumer Protection Unit Chief," March 17, 2016
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- PolitiFact Florida, "Debbie Wasserman Schultz attacked for bank donations and position on payday loan bill," March 30, 2016
- Naked Politics, "U.S. Rep. Debbie Wasserman Schultz bashed on billboards over payday loans," April 4, 2016
- Interview, Sam Gilford, Consumer Financial Protection bureau spokesman, April 7, 2016
- Interview, Diane Standaert, Center for Responsible Lending director of state policy, April 8, 2016
- Interview, Alex Horowitz, Pew Charitable Trusts senior officer with the small-dollar loans project, April 8, 2016
- Interview, Joshua Karp, Patrick Murphy Senate campaign spokesman, April 10, 2016
- Interview, James Barth, Auburn University finance professor, April 8, 2016
- Interview, Steven W. Bradley, Baylor University associate professor of Management and Entrepreneurship, April 8, 2016
- Interview, Frederick F. Wherry, Yale University sociology professor, April 8, 2016