02 March 2014
State Laws Moving In On Payday Loan Industry
Over the past year or so there have been many new regulations introduced into state laws regarding payday loans, short-term loans, and cash advances. Often these regulations and laws are put into place to help protect consumers, as well as to set up oversight on the industry, and in some cases even produce additional revenue for the states. However, some states have put laws into effect only to realize that they've created loopholes that not only help the industry to continue operating with business as usual mentality, but even hurt consumers in some cases because the lenders moved their practices into open-ended loans where there weren't as tough of regulations as the payday loan industry.
For example, over this pass week, Kentucky passed a new law creating a database to help track the state's payday loans. The reason they did this was because last year they passed laws allowing only 2 loans at any given time, but did nothing to enforce or track it and so companies were left to police themselves, which they may or may not have been doing well. Now they moved to set up a database to help track the loans and make sure that companies and individuals are following the laws.
Another state had passed a law last year that banned payday loans, only to let companies create open-ended loans which were higher interest and hurt the consumer more. The State of Virgina passed a new law this week putting more restrictions on open-ended loans and made it harder for a company to flip-flop between offering short-term loans and open-ended loans.
These new laws are going into place to help expand an already heavily regulated industry, and it looks to continue over the next year or so as the economy continues to take a down turn and people are looking for alternative loan sources to get the cash they need today. If you want to know more about payday loan laws you can visit our payday loan laws section.