The House Labor and Consumer Protection Division approved two bills Feb. 29 that would more heavily regulate payday lending. They both await action in the House Commerce and Labor Committee.
Payday lenders provide short-term, high-interest loans for people, who repay the money out of their next paycheck.
Rep. Jim Davnie (DFL-Mpls) sponsors HF3533, which would require payday loan companies to operate under 1995 legislation created for them instead of operating as industrial thrift and loan companies, as most do.
“This is a loophole that allows them to operate not under the intent of this Legislature,” Davnie said.
The legislation would also:
• eliminate the lender’s ability to charge finance fees and establish limits for charges;
• provide a 21-day cooling off period between loans;
• prohibit the threatening of criminal process to collect a loan;
• require the lender to offer the option of repayment if the loan is for $75 or more; and
• give the borrower the right to sue for $1,000 per violation of these laws, plus attorney’s fees.
Brad Rixmann, president of Minnesota-based PayDay America, said if this legislation passes, his 11-site company would go out of business.
Rep. Steve Simon (DFL-St. Louis Park) sponsors HF3511, which would bring the state’s payday lending statutes in line with those already federally mandated for military personnel. This would restrict the interest rate on these loans to an annual percentage rate of 36 percent, as well as a $5 administrative fee.
“It seems that there is little logic in protecting our soldiers from payday loans, while allowing the same persons, when they become civilians to be gouged,” said Erin Anderson, legislative director for Minnesota Association of Community Organizations for Reform Now.
The Senate companions, SF3197, sponsored by Sen. Sandy Pappas (DFL-St. Paul), and SF2838, sponsored by Sen. Linda Higgins (DFL-Mpls), await action by the Senate Commerce and Consumer Protection Committee.
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