Merkley and Bonamici Celebrate Sixth Anniversary of Landmark Payday Lending Law in Oregon by Calling for National Action - New report shows consumers have saved $41 million per year
Portland, OR – Oregon’s Senator Jeff Merkley and Congresswoman Suzanne Bonamici marked the sixth anniversary of the landmark law curbing predatory payday loans that they helped pass in the Oregon legislature by calling for national action to end payday lending and close online payday lending loopholes. They were joined by consumer protection advocates at the Oregon Food Bank to highlight a new report by Economic Fairness Oregon that details the millions in savings to consumers that resulted from Oregon’s ban.
“When families are in dire straits, there are plenty of great people and organizations like the Oregon Food Bank and Economic Fairness Oregon ready to help them,” Merkley said. “Unfortunately, there are also plenty of others ready to rip them off. Six years ago we put an end to one of the worst abuses – predatory loans that trap families in a vortex of debt. Today, Oregon consumers have $160 million more in their pocket as a result. That’s a record of success that we need to expand nationally.”
“Six years ago I joined with then-Speaker Jeff Merkley to put a stop to the abusive practices of payday lenders in Oregon,” Bonamici said. “Today we've joined together in a new effort to expand these consumer protections to the rest of the country and stop online payday lenders who seek to subvert Oregon's law. The report released today shows that these laws work. It is time to give all Americans the protections they deserve against predatory payday lenders.”
Senator Merkley is leading the effort in the Senate to crack down on predatory payday lending. He is the lead sponsor of the Stopping Abuse and Fraud in Electronic (SAFE) Lending Act, which would close the loopholes that fuel the worst practices of the online payday lending industry and give states more power to protect consumers from predatory loans. He is also a cosponsor of the Protecting Consumers from Unreasonable Credit Rates Act which mirrors Oregon’s legislation and would eliminate nationally the excessive rates and fees that some consumers are charged for payday loans, car title loans and other types of credit.
"Oregon's payday loan law has stopped millions of dollars from being drained from our wallets by predatory lenders but more needs to be done," said Angela Martin, executive director of Economic Fairness Oregon. "We call on our elected officials to support the strong consumer protection laws necessary to put families on more stable economic ground."
The report that Economic Fairness Oregon released today offers the first look at how Oregon consumers have benefited from the 2007 state laws that regulated payday loans. The key findings include:
· $165 million reduction in total loan fees paid by consumers in the first four years; average annual savings of $41.25 million a year.
· The payday loan business model largely depends on repeat borrowing. Loans that are unaffordable are renewed, causing the borrower to pay additional fees for no new money. The Oregon law reduced repeat borrowing and the average loan volume dropped by 73%.
· Prior to the Oregon law’s implementation, Oregon courts were flooded with lawsuits from payday lenders who used the judicial system as their de facto collections office. Since the law was put in place, there has been a 99% reduction in collection lawsuits.
· 82% reduction in storefront lenders as big out-of-state lenders exit Oregon.
The SAFE Lending Act and the Protecting Consumers from Unreasonable Credit Rates Act are supported by 40 national and state groups, including the Americans for Financial Reform, Consumer Federation of American, the National Consumer Law Center, the Center for Responsible Lending, and Consumers Union.
For a full copy of the Economic Fairness Oregon report, click here.