MONSIGNOR JOHN EGAN CAMPAIGN FOR PAYDAY LOAN REFORM
For Immediate Release: April 17, 2008
Contact: Lynda DeLaforgue 312/427-2114 x 3
Illinois State Senate Casts Vote to Close Loophole in Payday Loan Reform Act
SB1993 passes out of Illinois State Senate SPRINGFIELD - Today, the Illinois State Senate moved to pass SB1993 on a unanimous vote. The bill, championed by Senator Kimberly Lightford (D – Maywood), will now move to the Illinois House of Representatives. SB 1993 removes “a term of 120 days or less” from the definition of products subject to the Payday Loan Reform Act ensuring the Act covers the lending it was always intended to cover. It also allows a consumer to prepay a payday loan without penalty. SB1993 extends the important consumer protections in the Payday Loan Reform Act to all payday lending in Illinois including: • • • • • Loan amounts indexed to borrower’s ability to repay Loan term and renewal limits enforced through consumer reporting service Limit on finance charges and fees Available interest free repayment plan No attorney fees; no mandatory arbitration
In 2005, after several years of hard work, the Illinois General Assembly voted overwhelmingly to pass comprehensive legislation to regulate payday lending and protect consumers from the worst abuses of the industry. This was a major victory for working families of Illinois. Now, less than three years since the law went into effect, the payday loan industry moved to evade the important protections included in the Payday Loan Reform Act leaving unsuspecting customers vulnerable to the very abuses the General Assembly worked to prevent. “Illinois families are already struggling through predatory mortgages, as well as increasing gasoline, energy, food, and healthcare costs. They do not need to risk losing their hard earned assets by taking out one of these high cost long term payday installment loans”, said Dory Rand, Supervising Attorney, Sargent Shriver National Center on Poverty Law. Payday lenders are working hard to evade the Payday Loan Reform Act offering payday installment loans instead which are expensive and dangerous. Since the Payday Loan Reform Act regulates loans of 120 days or less, the Illinois payday loan industry is primarily marketing and offering their customers payday installment loans with terms of 121 days or more. These new “look alike” loans, called payday installment loans, have
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PAGE 2 of 2—PAYDAY LOAN VOTE many of the same features as installment loans offered before the Act, but with a significantly higher price tag. “The payday loan industry in Illinois has a long history of adapting its loan products to ensure that they are not subject to the short term loan consumer protections adopted by the General Assembly and state regulators. The vote cast today is the first step toward once again reigning in the runaway Illinois payday loan industry. We applaud the Illinois State Senate for standing up for consumers,” said Lynda DeLaforgue, co-director of Citizen Action/Illinois. -30The Monsignor John Egan Campaign for Payday Loan Reform was convened by the late Monsignor John Egan in 1999 after hearing the story of one of his parishioners who was victimized by a payday loan. Monsignor Egan was outraged at the story and took on payday loan reform as one of his last fights for social justice. Monsignor Egan convened a group of religious leaders, consumer advocates, public interest organizations, and social service organizations to form the Campaign for Payday Loan Reform. The Campaign was renamed after Monsignor Egan on October 2, 2001.