RICHMOND, Va. --- New national limits proposed for payday and car-title lending are winning praise from lower-income Virginians and their advocates.

The Consumer Financial Protection Bureau has issued the new rules after years of discussion. One rule would require many lenders to make sure borrowers can pay the loan back before making it.

Del McWhorter, who chairs Virginia Organizing, said loans with interest rates as high as 600 percent are designed to keep borrowers paying for years on what initially were small loan amounts. She said many payday lenders take their fees and interest payments off the top.

"Those are loan-shark rates," she said. "Right now, they can simply take the money, regardless of whether that leaves the borrower anything to pay rent or buy medicine or food."

The industry insists it is serving people who would not otherwise have access to credit. The CFPB now is taking public comment on the regulations. According to Virginia Organizing, the average payday or car-title loan is less than $400 and goes to a borrower who makes less than $30,000 a year.

The group said many borrowers are unable to pay off the initial debt and have to roll it over into another loan, which can end up costing thousands of dollars over time. Debra Grant of Virginia Beach, a board member of Virginia Organizing, said she and members of her family have been stuck in that situation.

"It was good in the beginning," she said, "but then we got trapped into that cycle, so we had to do what we had to do."

A big part of the problem is that some borrowers don't have access to conventional bank loans. Grant said the one bank she could get to easily turned her down -- and, in her neighborhood, she doesn't have grocery stores that have branch banks or ATMs. However, there are plenty of high-interest lenders.

"Probably about half a mile, we can count at least six to seven payday loans, car title loans, pawn shops," she said, "and there's not a viable grocery store that you can go to."

More information is online at virginia-organizing.org. The proposed CFPB rules are online at files.consumerfinance.gov, and an analysis of them is at stopthedebttrap.org.


get more stories like this via email

The world's richest 1% took home almost twice as much wealth as the bottom 99% combined during the pandemic, according to a new Oxfam International report.

Morris Pearl, chair of the group Patriotic Millionaires, said current tax codes are not cutting it anymore. The rich keep getting richer while people who work for a living are making daily sacrifices on essentials such as food, which is not good for families, or for investors who want to make money.

"Because money does not trickle down, money trickles up," Pearl pointed out. "As people pay their bills, for their iPhone and their rent every single month, that is how rich people make money and get richer. And if people don't have enough money to do that, that's not good for any of us."

The report said a 5% tax on the world's multimillionaires could raise enough money to lift 2 billion people out of poverty. Wyoming tax codes are pointed in the opposite direction. The state does not tax corporate or individual income. Wyoming has a higher sales tax, which falls hardest on low-wage earners, than at least forty other states. And only eleven states collect lower property taxes.

While families in Wyoming struggled with rising gas and grocery prices, the report found profits for 95 top energy and food corporations more than doubled in 2022, with 84% of those gains going directly into the pockets of wealthy shareholders.

Pearl argued people who earn their living by working for wages, with taxes taken right out of their paychecks, have been left behind.

"The system is rigged against them, and we have to unrig the system," Pearl stressed. "We have to change the system so they are not holding the bag for everything that the government needs to do. And we need to make the rich pay some of the taxes too."

Three-quarters of the world's governments plan on making nearly 8 trillion dollars in cuts to public-sector funding, including health care and education, over the next five years.

Pearl noted taxes make it possible to provide for the nation's common defense, hire firefighters and police, and build schools, hospitals and highways.

"And things like that have, for the history of this nation, been done by people putting their resources together, and doing things together that they just can't each do individually by themselves," Pearl added.

January is Human Trafficking Awareness Month and Iowa is working to address the problem by educating businesses about the potential signs and dangers.

Although officials say it is hard to pinpoint exact numbers, the frequency of reported trafficking cases is on the rise. Half of the calls to a human trafficking hotline are reports from minors asking for help.

Iowa Secretary of State Paul Pate has enlisted businesses in an aggressive awareness campaign. He said because they come into contact with so many people every day, they can often be the first line of defense.

"They have eyes and ears everywhere," said Pate. "The idea that they can reach out to their own employees - so they, too, can be watching for trafficking and they, too, can help prevent it, or intervene - or whether it be their customer base, how many people a typical business might interact with in a day."

Pate said fast-food restaurants, gas stations and truck stops are especially important partners because they're so busy.

Iowa started the new year with 600 businesses as part of the coalition to combat trafficking, and Pate said he hopes to grow that number.

Pate's office also runs a confidential program for survivors of sex trafficking, domestic violence, assault and stalking.

Teresa Davidson, CEO of the Cedar Rapids-based anti-trafficking group Chains Interrupted, said when a person is recruited into a trafficking operation, it can be very hard for them to get out.

"First, they have to recognize that they are being exploited," said Davidson, "because so many times, human trafficking is manipulation and coercion, and they don't even realize that they're a victim. They think that they're in a relationship and that this is a partnership."

The group is having a webinar for businesses January 17 at 10 a.m.

Davidson says nationally, 74% of trafficking victims report having been in the foster-care system. She said the problem touches all 50 states and continues to grow.

Some Nebraska judges are failing to follow state laws related to cash bail, court fees and court fines, according to a two-year study in Douglas and Lancaster counties.

The report by the ACLU of Nebraska found defendants are not always being asked about their ability to pay bail and court costs, nor are they being informed of alternatives if lacking the funds.

Sam Petto, communications director for the ACLU of Nebraska, said they noticed issues in about 40% of the cases they observed. He pointed out cash bail disproportionately affects lower-income Nebraskans and is, ultimately, a type of "debtor's prison."

"So, if you imagine someone with the exact same circumstance, charge, etc., and they just have an extra thousand dollars in a bank account, that person might be back out in the community at their job, with the support structure they need - while the other person sits in jail."

Petto also mentioned the "collateral consequences" when someone who can't afford to pay bail or fees spends time behind bars from losing a job, to not being able to arrange child care or fulfill caregiving responsibilities. The report recommendations include "bench cards" for judges, with specifics related to bail and fees, and legislative action including eliminating cash bail.

Petto noted the 2017 Nebraska bail reform law was aimed at keeping people charged with nonviolent crimes from spending time in jail due to their inability to pay for bail and fines.

"And many Nebraskans do not know that they have the right to say, 'Hey, I can't afford that,' or to request things like a payment plan, community service, or having the judge entirely waive that fee or fine," Petto outlined.

The study also found the largest number of people in jail in Douglas and Lancaster counties were there on a pretrial basis, with persons of color significantly overrepresented. Petto explained in addition to the human cost, the current system plays a large role in the overstressed status of Nebraska jails.