***For Immediate Release***
February 21, 2017
Contact, Jeff Sheldon
Communications Director, Nebraska Appleseed
Office: (402) 438-8853
Mobile: (402) 840-7289
Email: jsheldon@neappleseed.org
New report reveals history of non-compliance with state law by payday lenders
With long record of violations, state must implement reforms for lenders
LINCOLN — A new report released today by Nebraska Appleseed reveals a history of legal compliance issues among payday lenders in Nebraska, highlighting the need for state-level reform that protects customers and improves transparency.
The report, “The Payday Lending Problem in Nebraska,” exposes that Nebraska payday lenders have been found in noncompliance with state laws and on the receiving end of a disproportionately higher number of enforcement actions compared to other financial institutions in the state.
The report revealed that since 2006, the Nebraska Department of Banking and Commerce executed 318 separate enforcement actions against payday lenders for being out of compliance with state law. These actions cover thousands of separate violations.
The violations took numerous forms including:
- Failure to document that payday lenders were not unlawfully rolling a previous unpaid loan into a new loan,
- Failure to properly maintain customer records,
- Attempting to collect two penalties from customers for the same transaction,
- Holding customer checks in excess of the allowable aggregate amount,
- Holding customer checks for a longer time period than is allowed by law.
One payday lender, which was investigated five times in a seven-year period, was found to have committed 140 separate violations.
Nebraska Appleseed Economic Justice Director James Goddard, one of the report’s authors, said Nebraska should implement reforms to improve accountability for payday lenders. One such reform, LB 194, would create stronger customer protections, increase transparency, and lower the high interest rates and fees charged by payday lenders. Nebraska currently allows payday lenders to charge one of the nation’s highest rates, at an average of 461 percent APR.
“Based on the nature and number of instances of violations, it’s clear that many lenders have a history of compliance issues,” Goddard said. “Nebraska must adopt payday lending reforms like LB 194 that protect consumers and make lenders act with fairness and transparency to borrowers.”
LB 194 was scheduled for a hearing by the Legislature’s Banking, Commerce, and Insurance Committee on Tuesday afternoon.
“All Nebraskans need access to credit,” Goddard said. “The common-sense reforms of LB 194 would bring Nebraska’s payday lending rules in line with neighboring states like Colorado to make sure hard-working Nebraskans can get credit on fair and reasonable terms.”
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