Overview
Predatory lending practices trap some of America’s most vulnerable consumers in spirals of debt. Florida PIRG is fighting these abusive practices in a number of industries:
Payday Lending
Borrowers at "payday lending" outfits are often middle- or low-income families who need a small boost to make ends meet. These families think they’re getting a short-term loan, but most will end up with serious, long-term debt. In New Mexico, for instance, where predatory lenders operate freely, the average borrower faces such high interest rates that they have to roll over the loan 6 times on average. A two-week loan turns into a three-month loan, and with interest rates of up to 500 percent, the borrower is quickly paying more in interest than the original amount of the loan.
Rent-to-Own
The predatory rent-to-own industry promises consumers the American dream of owning products like televisions, refrigerators and other items. But their "rentals" are actually high-interest loans, charging interest rates of up to 230 percent APR—in addition to other charges. Many states, such as Wisconsin, Vermont and Minnesota, have acted to protect their residents from rent-to-own outfits with rate disclosure requirements, while other states like New Jersey have capped interest rates at 30 percent APR. Unfortunately, other states have enacted laws that protect this predatory industry, and an industry-backed bill in the U.S. Senate—S 603, the Consumer Rental Purchase Act—seeks to preempt, or override, these strong state consumer protections.
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Several states have taken action to rein in predatory lenders, but not Florida. Florida PIRG fights to regulate the industry’s misleading promises and triple-digit interest rates, and to educate consumers on how to protect themselves.
