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November 27, 2009

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Assembly passes bill to regulate high-interest check loan firms

Tuesday, April 20, 1999 | 11:40 a.m.

Commerce and Labor Chairwoman Barbara Buckley, D-Las Vegas, says the bill is aimed exclusively at companies that loan people money against their upcoming paycheck.

Testimony during hearings on the measure showed that often, the annualized interest rate on those loans can be thousands of percent with multiple penalties that those who get the loans don't understand.

Witnesses said some people roll the loans over from payday to payday unaware of how much debt is accumulating - to the point where they owe thousands of dollars which results in loss of property.

Buckley told the Assembly that AB431 "is an attempt to ensure that customers are not put on a debt treadmill."

Its provisions include a requirement that the terms of the loan be explained to the customer in that customer's native language - primarily aimed at Hispanic customers. It requires the loan agreement spell out the terms of the loan including all fees and interest to be paid.

And it requires a statement in large print saying that nonpayment can be cause for a civil action, but the person cannot be arrested or prosecuted criminally. That was included after the committee heard stories of people being threatened with arrest and jail for not paying.

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