Evizda

The Florida law being held up by Democratic National Committee chair and U.S. Rep. Debbie Wasserman Schultz as a model for the pending national crackdown on predatory payday lenders has in fact drained “millions in fees from those that can least afford it”—perpetuating the debt cycle rather than preventing it, according to a new study.

The findings, revealed late last week by the Center for Responsible Lending (CRL), indicate that under Florida’s “lender-designed” law, payday loan stores have flourished, extracting a whopping $2.5 billion in fees from Sunshine State borrowers since 2005.

“Federal regulation designed after Florida’s payday law would continue to line the pockets of payday lenders with borrowers’ hard-earned wages.”
—Marisabel Torres, National Council of LaRaza

Today, payday lenders in Florida are more commonplace than Starbucks and charge an average 278 percent annual percentage rate (APR), the report states.

What’s more, the high-interest industry is targeting Florida’s Black and Latino communities, as well as senior borrowers age 65 or older, the CRL analysis found. “With 83 percent of payday loans going to people stuck in seven or more loans per year, it’s easy to see how Florida’s law is failing consumers,” said Brandon Coleman, co-author of the report and a CRL policy counsel.

All this suggests that Florida’s “regulations” do little to rein in payday lending or its ramifications.

Still, Wasserman Schultz insists “Florida’s model and experience can be instructive” to the Consumer Financial Protection Bureau (CFPB) as it considers its national rulemaking, as the six-term congresswoman’s communications director recently told the Miami Herald. 

Advocates disagree. “Federal regulation designed after Florida’s payday law would continue to line the pockets of payday lenders with borrowers’ hard-earned wages,” said Marisabel Torres, senior policy analyst at the National Council of LaRaza, last week. “Struggling communities and minority borrowers cannot afford to be targeted with products that are designed to drain their wealth. We need a strong payday rule that will end the debt trap once and for all.”