Payday loan industry sues consumer office, less than a month after industry expansion in Florida
The payday loan industry is suing to block a Consumer Financial Protection Bureau rule less than a month after the industry used the rule as an excuse to significantly expand its loans in Florida.
The federal lawsuit, filed in Texas by the Community Financial Services Association of America, claims the CFPB rule is “draconian” and “would virtually wipe out” the payday lending industry, according to the Washington Post.
But that’s the excuse payday lenders have used to convince lawmakers this year to change Florida law, the first significant expansion in the industry since it was licensed to operate in the state in early 2000s.
The new law, which will come into force next year, circumvents the rule by allow industry to provide loans which are twice as large and carry costs which are also potentially twice as large.
If the industry wins its case, the result would be a giveaway for companies like Tampa-based Amscot, the state’s largest payday lender: it could offer much larger loans without the nuisance of consumer protection rules. consumers.
Amscot led the charge to change the rule this session, even fly pastors on private jets to lobby on their behalf.
The founder of the company is also a member of the board of directors of the Community Financial Services Association of America.
Amscot said in a statement that it was “only one member among hundreds of members from 30 states” that make up the trade association.
“As we said before, Amscot appreciates the hard work of Florida lawmakers and Governor Scott for enacting effective law that will benefit countless Florida consumers,” the company said. “This new Florida law does not change the nefarious course taken by the federal agency, and the association’s lawsuit has been ongoing for years.”
It is highly unlikely that the legislature will overturn the law in the next session. This year’s bill passed with overwhelming bipartisan support.