Las Vegas Sun

March 28, 2024

Bill tackles payday loan abuse

CARSON CITY -- The Assembly is expected to vote on two bills this week designed to curtail payday loans.

"It's time for the abuse to stop," said Assembly Majority Leader Barbara Buckley, D-Las Vegas.

Customers often pay more than 1,000 percent interest on loans taken out at various check cashing stores, which have proliferated low-income neighborhoods, she said.

The high interest was one of the myriad problems associated with payday loans that the Sun highlighted in an in-depth investigative report published March 6.

Buckley's bill, Assembly Bill 384, would limit the penalties companies can enact on payday loans. Buckley said that people routinely take small loans but get caught up in a cycle of paying late fees and enormous interest rates.

A person could easily end up paying $1,000 or $1,500 in fees on a $250 loan, she said.

Once a person has defaulted on a loan, Buckley's bill would limit the interest to the prime interest rate plus 10 percent.

Another bill, Assembly Bill 340, would allow local governments to restrict the number of payday loan shops in their area.

"It's a business that's here to stay, whether we like it or not," said the bill's sponsor, Assemblywoman Chris Giunchigliani, D-Las Vegas.

A January study by the Nevada Fair Housing Center found that the state had 16 check cashing and payday loan branches in 1998, while it had 381 in 2004.

There are 1.91 check cashing or payday loan centers for every 10,000 people in Nevada, more than any neighboring state, the study said.

Nevadans particularly use the services because they often move to the state with no family and expectations of high-paying jobs, Buckley said.

The median finance charge is $17 per $100 borrowed, the study found. It also determined that most stores were in census tracts with median household incomes of $25,000 or less.

Giunchigliani said she tried to require a statewide database of check cashing customers in her bill, so companies could tell if customers are in over their heads. But she said the idea did not fly in this session.

Buckley said the "less bad" payday loan companies haven't objected to the bill so far, and the ones who do have objections have realized the Legislature is cracking down on the industry.

If they don't, she said, "they're going to see thsemselves put out of business."

Assemblyman Bernie Anderson, D-Sparks, said the impact is also being felt in courts, where many of the loans end up.

"It has a broad impact on all of us in society," said Anderson, the Assembly Judiciary Committee chairman.

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