Payday Loans: Heavier Regulations

An OppLoans eBook


Payday Loans: Heavier Regulations

In 2009, the South Carolina Deferred Presentment Services Act (SCDPSA) [13] sought to regulate payday loan providers by requiring them to prove a net worth of $25,000 before granting any business licenses. Potential payday loan business license applicants also pay $1,500 in non-refundable fees to the state per license request. While banks, savings institutions, credit unions, and businesses providing retail sales of goods or services are excluded from this particular licensing process, all operations which accept a check and hold it for future deposit are required to follow the SCDPSA requirements.

Other states, such as Tennessee, have enacted similar legislation [14]. The laws are used to regulate the practices of deferred presentment service providers while simultaneously generating additional revenue for the state through licensing fees.

Thirty-seven states currently have specific statutes that allow for payday lending, but laws are constantly in a state of flux. Eleven jurisdictions do not have specific payday lending statutory provisions and/or require lenders to comply with interest rate caps on consumer loans:  Connecticut, Guam, Maryland, Massachusetts, New Jersey, New York, Pennsylvania, Puerto Rico, Vermont, Virgin Islands and West Virginia. Arizona and North Carolina allowed pre-existing payday lending statutes to sunset. Arkansas repealed its pre-existing statute in 2011. New Mexico repealed its payday lending statutes in 2017. The District of Columbia repealed its pre-existing statutory provision in 2007. [17]

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