Guest post: this post was originally written by the Maryland Consumer Rights Coalition.
While most of us are looking for ways to beat the summer heat, the U.S. House of Representatives is threatening to turn up the heat on vulnerable consumers by giving predatory rent-to-own stores and payday lenders more power to take advantage of customers through two very troubling bills.
Please call or write your member of Congress today to ask him or her to stand up for consumers by rejecting these dangerous bills. You can call the switchboard at the House at 202.224.3121.
Read on for details about these two bills, and why they are such a threat to consumers:
Fewer restrictions on rent-to-own rip-offs
The Consumer Rental Purchase Agreements Act (H.R. 1588) would replace the strong laws states like Minnesota, New Jersey, and Vermont now have to protect consumers against rent-to-own abuses with weak, industry-backed federal regulation of the industry. The bill passed the House Financial Services Committee in June. If it passes into law, it could pre-empt future efforts to do more to protect Marylanders as well.
Earlier this year, MCRC’s “Profiting from the Poor” report documented how rent-to-own stores hurt low and middle-income Maryland families with high fees, outrageous interest rates, and predatory collection practices. Consumers need real protections against such abuses — including caps on RTO fees and more time to reinstate purchases if they miss a payment – not toothless industry-backed regulations.
For more on how the RTO industry harms Maryland consumers, see the full rent-to-own report here.
Letting payday lenders return to Maryland
The Federal Financial Services and Credit Companies Charter Act (H.R. 1909) threatens to expose consumers to equally abusive practices from small lenders that regularly hurt consumers with short-term, high-interest loans that can quickly become debt traps. By creating a special federal charter for payday lenders, check cashers, car-title lenders and other non-bank financial services, the bill would allow them to escape strong scrutiny from the federal Consumer Financial Protection Bureau and state banking regulators.
It would also break with 40 years of consumer protection tradition by exempting small lenders from the requirement that they disclose the APR of all loans and other basic consumer protections.
Maryland’s strong small-loan laws have kept payday lenders out of our state for decades and, in 2010, MCRC worked with other consumer advocates to block efforts to let them operate in Maryland. But H.R. 1909 would open the door for federally-chartered payday lenders to take advantage of Maryland consumers.
To learn more about the dangers of H.R. 1909, read the protest letter from the Center for Responsible Lending, the Consumer Federation of America, and US PIRG here.
As vulnerable consumers struggle to emerge from four years of economic crisis, the last thing they need is for Congress to make them more vulnerable to financial predators.
This post is intended to present an opportunity for citizen engagement and does not necessarily represent the mission of CPHA.