Harmful predatory lending practices trap consumers in debt. To protect consumers, Georgia Watch will promote the introduction of legislation:
- Requiring small-dollar lenders to evaluate the borrower’s ability to repay any credit that is extended – including an analysis of both the borrower’s income and expenses;
- Requiring car title lenders to give borrowers the surplus from selling a repossessed vehicle, giving any funds remaining after repaying the principal amount and fees to the borrower;
- Renaming the Industrial Loan Act, the “Small Consumer Finance Loan Act” and moves car title lending under this Act so that these products are regulated at small-dollar loans that are subject to Georgia’s usury law;
- Transferring authority to govern small dollar loans, including title pawn loans, to the Department of Banking and Finance, rather than the Department of Insurance or municipalities, respectively;
- Capping interest rates on small-dollar loans at 36% APR for all consumers to reflect the federal interest rate cap for military service members and their families; and
- Supporting a ban on live checks that amount to predatory lending.
Past Georgia Legislation and Activity: During the 2017-2018 Legislative Session, Representative Earl Ehrhart (R – Powder Springs) sponsored House Bill 902, which would transfer authority to govern loans under $3,000 from the Industrial Loan Commissioner to the Department of Banking and Finance. In Georgia, the Industrial Loan Commissioner is also the Commissioner of Insurance in the Office of Insurance and Safety Fire Commissioner. Georgia Watch believes that transferring governance of these loans from the Office of Insurance and Safety Fire Commissioner to the Department of Banking and Finance is a commonsense move. HB 902 also would change the title of the Georgia Industrial Loan Act of 1955 to the “Small Consumer Finance Loan Act”. The bill would change the name of loans under $3,000 from “Industrial Loans” to “Small Consumer Finance Loans”. We believe that this renaming is a much-needed update that would provide clarity on these products. Georgia Watch’s Executive Director Liz Coyle testified in favor House Bill 902 during a hearing in House Banks & Banking Committee, but unfortunately, this bill did not advance during the Session.
Additionally, Senator Elena Parent (D-Atlanta) introduced Senate Bill 198 with bipartisan support during the 2017-2018 Legislative Session. The bill would prohibit lenders from sending deposit-able checks or money orders to Georgians without an existing contract. Georgia Watch testified on February 22, 2017 in support of SB 198. We supported SB 198 because it would have protected Georgia consumers from unknowingly taking out high-cost loans. Unfortunately, this bill did not advance further during the Session.