May, 13 2010, 01:14pm EDT
For Immediate Release
Contact:
Leah Plunkett – National Consumer Law Center: 617-542-8010
Jean Ann Fox – Consumer Federation of America: 928-772-0674
Gail Hillebrand – Consumers Union: 415-431-6747, ext 136
Scorecard Shows Consumers Pay Steep Rates for Small Loans
Financial Reform Should Include a Strong Consumer Financial Protection Agency
WASHINGTON
Many states are failing to provide adequate protections for consumers against extremely expensive credit according to a new report by
the National Consumer Law Center, Consumer Federation of America, and
Consumers Union. The Scorecard updates a 2008 report and grades states
on how well they protect consumers from excessive interest charges on
small loan products. It illustrates why Americans need a strong
Consumer Financial Protection Agency as part of the financial reform
package currently under consideration in the Senate.
"Steep rates for short-term small loans trap borrowers in
unaffordable debt," said Jean Ann Fox, director of financial services
for Consumer Federation of America. "As consumers struggle to make ends
meet in a tight economy, they need protection against rate gouging."
States traditionally regulate the rates and terms for nonbank small
loan products. The report evaluates how well states are doing on
curbing usury by examining the statutory maximum annual percentage rate
(APR) of interest and fees for four typical small-dollar loan products
and whether these products' APRs are limited by the state's criminal
usury cap. The four loan products evaluated in the report are payday
loans; auto title loans; six-month, $500 unsecured installment loans;
and one-year, $1,000 unsecured installment loans.
States received a "Passing" grade if the loan product's APR was 36
percent or less or if they prohibited payday or auto title loans.
States that did not have a cap on the loan product's APR or those that
allowed a loan product's APR to exceed 36 percent received a "Failing"
grade.
"The 2010 Scorecard shows that consumers need effective loan
protections at both the state and federal level," said Gail Hillebrand,
manager of Consumers Union's DefendYourDollars.org campaign. "Congress
should make sure that financial reform includes a strong, independent
watchdog in Washington to protect consumers from unfair lending
practices no matter what state they live in. And states should have the
power to enforce the law and enact even stronger safeguards."
Legislation was introduced in both the House and Senate in 2009 to
cap the cost of credit at 36 percent (S. 500 Durbin and H.R. 1608
Speier). In 2006, Congress enacted a 36 percent rate cap to protect
Service members and their families from abusive lending. Thirty-six
percent is the limit set by the FDIC's Responsible Small Dollar Lending
Guidelines and is double the cap for federally-chartered credit unions.
The 36 percent rate cap on small loan lending became a part of civil
law in most states by the mid-twentieth century to address the
widespread problem of loan sharking.
Based on a review of state laws governing the four loan products, the report found that:
* Eight jurisdictions protect consumers against abusive lending
practices for all four small dollar loan products: Arkansas,
Connecticut, District of Columbia, Maryland, New Jersey, New York,
Pennsylvania, and Vermont. In addition, Massachusetts and West Virginia
come close to earning a perfect score but fees added to low interest
for $500 unsecured installment loans in those states push the APR to 37
and 38 percent, respectively.
* Fifteen states currently fail to protect consumers against abusive
lending for all four products: Arizona, Delaware, Idaho, Illinois,
Minnesota, Mississippi, Missouri, Montana, Nevada, New Mexico, South
Carolina, South Dakota, Tennessee, Utah, and Wisconsin. When Arizona's
payday loan law sunsets July 1, 2010, the state will get a passing
grade on that product.
* States scored the worst when it came to payday loans. Thirty-six
states fail to protect consumers against high cost payday loans.
Thirty-one states fail to protect consumers from high-costs for
six-month, $500 unsecured installment loans and twenty states fail to
protect consumers against expensive auto title loans.
* States scored better when it came to protecting consumers against
expensive one-year, $1,000 unsecured installment loans. Twenty-eight
states and the District of Columbia received a "Passing" grade.
* Five states set no usury caps for small loans, including Delaware, Idaho, South Dakota, Utah, and Wisconsin.
* Since states were graded in 2008, voters in Ohio and Arizona
rejected triple-digit rates charged by payday lenders. New Hampshire
imposed 36 percent rate caps for both payday and car title loans. The
Arkansas Supreme Court ruled that payday lending violated the state's
constitutional usury ceiling and the Attorney General shut down payday
lending. This year, Maryland closed a loophole to prevent online payday
lenders from evading that state's small loan protections.
"Now more than ever, consumers are finding it hard to make ends
meet," said Leah Plunkett, National Consumer Law Center. "States must
vigorously exercise their historic responsibility to protect consumers
from falling prey to abusive practices if they take out small dollar
loans. Predatory loans do consumers more harm than good. Many states
have risen to the challenge. States that fail to enact and enforce
reasonable rate caps permit both consumers and the economy to be
harmed."
A copy of the Scorecard can be found online at:
https://admin.consumerfed.org/elements/www.consumerfed.org/File/Updated%20Scorecard%205-12-10%20FINAL.pdf
and https://www.nclc.org/reports/content/cu-small-dollar-scorecard-2010.pdf
A copy of the Statutory Backup can be found online at: https://admin.consumerfed.org/elements/www.consumerfed.org/File/Updated%20Scorecard%20backup%205-12-10%20FINAL.pdf
and https://www.nclc.org/reports/content/cu-small-dollar-scorecard-backup-2010.pdf
LATEST NEWS
Environmental and Indigenous Groups Mobilize to Stop 'Alligator Alcatraz'
"This scheme is not only cruel, it threatens the Everglades ecosystem that state and federal taxpayers have spent billions to protect," said Eve Samples, executive director of Friends of the Everglades.
Jun 30, 2025
As Florida's Republican government moves to construct a sprawling new immigration detention center in the heart of the Everglades, nicknamed "Alligator Alcatraz," environmental groups and a wide range of other activists have begun to mobilize against it.
Florida's Republican attorney general, James Uthmeier, announced last week that construction of the jail, at the site of a disused airbase in the Big Cypress National Preserve, had begun. According to Fox 4 Now, an affiliate in Southwest Florida, construction has moved at "a blistering pace," with the site expected to be done by next week.
Three environmental advocacy groups have launched a lawsuit to try to halt the construction of the facility. And on Saturday, hundreds of protesters flocked to the remote site to voice their opposition.
Opponents have called out the cruelty of the plan, which comes as part of U.S. President Donald Trump's crusade to deport thousands of immigrants per day. They also called out the site's potential to inflict severe harm to local wildlife in one of America's most unique ecosystems.
Florida's government has said the site will have no environmental impact. Last week, Uthmeier described the area as a barren swampland. He said the site "presents an efficient, low-cost opportunity to build a temporary detention facility because you don't need to invest that much in the perimeter. People get out, there's not much waiting for 'em other than alligators and pythons," he said in the video. "Nowhere to go, nowhere to hide."
But local indigenous leaders have said that's not true. Saturday's protest was led by Native American groups, who say that the site will destroy their sacred homelands. According to The Associated Press, Big Cypress is home to 15 traditional Miccosukee and Seminole villages, as well as ceremonial and burial grounds and other gathering sites.
"Rather than Miccosukee homelands being an uninhabited wasteland for alligators and pythons, as some have suggested, the Big Cypress is the Tribe's traditional homelands. The landscape has protected the Miccosukee and Seminole people for generations," Miccosukee Chairman Talbert Cypress wrote in a statement on social media last week.
Environmental groups, meanwhile, have disputed the state's claims that the site will have no environmental impact. On Friday, the Center for Biological Diversity, Friends of the Everglades, and Earthjustice sued the Department of Homeland Security in the U.S. District Court for the Southern District of Florida. They argued that the site was being constructed without any of the environmental reviews required by the National Environmental Policy Act.
"The site is more than 96% wetlands, surrounded by Big Cypress National Preserve, and is habitat for the endangered Florida panther and other iconic species. This scheme is not only cruel, it threatens the Everglades ecosystem that state and federal taxpayers have spent billions to protect," said Eve Samples, executive director of Friends of the Everglades.
Governor Ron DeSantis used emergency powers to fast track the proposal, which the Center for Biological Diversity says has left no room for public input or environmental review required by federal law.
"This reckless attack on the Everglades—the lifeblood of Florida—risks polluting sensitive waters and turning more endangered Florida panthers into roadkill. It makes no sense to build what’s essentially a new development in the Everglades for any reason, but this reason is particularly despicable," said Elise Bennett, Florida and Caribbean director and attorney at the Center for Biological Diversity.
Reuters has reported that the planned jail could hold up to 5,000 detained migrants at a time and could cost $450 million per year to maintain. It comes as President Trump has sought to increase deportations to a quota of 3,000 per day. The majority of those who have been arrested by federal immigration authorities have no criminal records.
"This massive detention center," Bennett said, "will blight one of the most iconic ecosystems in the world."
Keep ReadingShow Less
Kristi Noem Took Personal Cut of Political Donations While Governor of South Dakota: Report
"No wonder Pam Bondi gutted the public integrity section of DOJ. To protect utterly corrupt monsters like Kristi Noem."
Jun 30, 2025
The investigative outlet ProPublica revealed Monday that Kristi Noem secretly took a personal cut of funds she raised for a nonprofit that boosted her political career—and then did not disclose the income when President Donald Trump selected her to serve as head of the Department of Homeland Security.
ProPublica reported that in 2023, while Noem was governor of South Dakota, the nonprofit group American Resolve Policy Fund "routed funds to a personal company of Noem's that had recently been established in Delaware." The company is called Ashwood Strategies, and it was registered in June 2023.
"The payment totaled $80,000 that year, a significant boost to her roughly $130,000 government salary," according to the outlet. "Since the nonprofit is a so-called dark money group—one that's not required to disclose the names of its donors—the original source of the money remains unknown."
Experts told ProPublica that the arrangement and Noem's failure to disclose the income were unusual at best and possibly unlawful.
"If donors to these nonprofits are not just holding the keys to an elected official's political future but also literally providing them with their income, that's new and disturbing," Daniel Weiner, a former Federal Election Commission attorney who now works at the Brennan Center for Justice, told ProPublica.
Noem's lawyers denied that she violated the law but did not reply to ProPublica's questions about whether the Office of Government Ethics was aware of the $80,000 payment.
Unlike many Trump administration officials, Noem is not a billionaire. But "while she is among the least wealthy members of Trump's Cabinet, her personal spending habits have attracted notice," ProPublica observed, noting that she was "photographed wearing a gold Rolex Cosmograph Daytona watch that costs nearly $50,000 as she toured the Salvadoran prison where her agency is sending immigrants."
"In April, after her purse was stolen at a Washington, D.C. restaurant, it emerged she was carrying $3,000 in cash, which an official said was for 'dinner, activities, and Easter gifts,'" the outlet continued. "She was criticized for using taxpayer money as governor to pay for expenses related to trips to Paris, to Canada for bear hunting, and to Houston to have dental work done. At the time, Noem denied misusing public funds."
Political scientist Norman Ornstein wrote Monday that it was "no wonder [Attorney General] Pam Bondi gutted the public integrity section of DOJ."
"To protect utterly corrupt monsters like Kristi Noem," he added.
Keep ReadingShow Less
Caving to Trump, Canada Drops Tax on US Tech Firms
One journalist accused Canadian Prime Minister Mark Carney of chickening out.
Jun 30, 2025
Acquiescing to pressure from the Trump administration, the Canadian government announced on Sunday that the country will rescind the digital services tax, a levy that would have seen large American tech firms pay billions of dollars to Canada over the next few years.
The Sunday announcement from the Canadian government cited "anticipation of a mutually beneficial comprehensive trade arrangement" as the reason for the rescission.
"Today's announcement will support a resumption of negotiations toward the July 21, 2025, timeline set out at this month's G7 Leaders' Summit in Kananaskis," said Canadian Prime Minister Mark Carney in the statement.
The digital services tax impacts companies that make over $20 million in revenue from Canadian users and customers through digital services like online advertising and shopping. Companies like Uber and Google would have paid a 3% levy on the money they made from Canadian sources, according to CBC News.
The reversal comes after U.S. President Donald Trump on Friday blasted the digital services tax, calling it a "direct and blatant attack on our country" on Truth Social.
Trump said he was suspending trade talks between the two countries because of the tax. "Based on this egregious Tax, we are hereby terminating ALL discussions on Trade with Canada, effective immediately. We will let Canada know the Tariff that they will be paying to do business with the United States of America within the next seven day period," Trump wrote. The United States is Canada's largest trading partner.
Payments from tech firms subject to the digital services tax were due starting on Monday, though the tax has been in effect since last year.
"The June 30, 2025 collection will be halted," and Canada's Minister of Finance "will soon bring forward legislation to rescind the Digital Services Tax Act," according to the Sunday statement.
"If Mark Carney folds in response to this pressure from Trump on the digital services tax, he proves he can be pushed around," said Canadian journalist Paris Marx on Bluesky, speaking prior to the announcement of the rescission. "The tax must be enforced," he added.
"Carney chickens out too," wrote the author Doug Henwood on Twitter on Monday.
In an opinion piece originally published in Canadian Dimension before the announcement on Sunday, Jared Walker, executive director of the progressive advocacy group Canadians for Tax Fairness, wrote that all the money generated for the tax could mean "more federal money for housing, transit, and healthcare transfers—all from some of the largest and most under-taxed companies in the world."
Walker also wrote that the digital service tax could serve as a counterweight to the so-called "revenge tax" provision in Trump's sprawling domestic tax and spending bill.
Section 899, called "Enforcement of Remedies Against Unfair Foreign Taxes," would "increase withholding taxes for non-resident individuals and companies from countries that the U.S. believes have imposed discriminatory or unfair taxes," according to CBC. The digital services tax is one of the taxes the Trump administration believes is discriminatory.
"If 'elbows up' is going to be more than just a slogan, Canada can't cave to pressure when Donald Trump throws his weight around," wrote Walker, invoking the Canadian rallying cry in the face of American antagonism when it comes to trade.
"But this slogan also means the Carney government has to make sure it is working on behalf of everyday Canadians—not just the ultra-rich and big corporations that are only 'Canadian' when it's convenient," Walker wrote.
Keep ReadingShow Less
Most Popular