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Stop triple-digit interest rates for good


Back in 2008, Arizonans voted 2:1 to stop payday lending in our state. Ever since the payday lender’s defeat at the ballot box, the industry has heavily lobbied to reinstate triple-digit interest rates.

Fortunately, military and veterans associations, faith organizations, child and family organizations, civil rights and labor leaders, and many others have beaten back attempts to reinstate triple-digit payday loans. A broad coalition continues to urge regulators and decision makers at all levels of government to rein in abusive debt trap lending practices and ensure fair, transparent, safe and affordable credit is made available to Arizonans. And for good reason.

Diane Brown

Diane Brown

The Arizona PIRG Education Fund recently reviewed nearly 10,000 predatory lending complaints from across the country in the Consumer Financial Protection Bureau database. Two and a half years worth of data revealed problems with a full spectrum of predatory products and services, including storefronts and online lenders, short-term payday, long-term payday installment loans, and auto title loans.

The analysis of consumer complaints about predatory lending to the CFPB shows a critical need to rein in high-cost lending. The Arizona PIRG Education Fund analysis of written complaints to the CFPB found significant evidence of the major problem with predatory lending: Borrowers can’t afford these loans and end up trapped in a cycle of debt. 91% of written complaints were related to unaffordability, including abusive debt collection practices, bank account closures, long-term cycles of debt, and bank penalty fees.

Kelly Griffith

Kelly Griffith

The good news is that the CFPB recently proposed a rule that takes a historic step by requiring, for the first time, that payday, auto title, and high-cost installment lenders determine whether customers can afford to repay loans with enough money left over to cover normal expenses without re-borrowing. CFPB’s proposed rule also includes a number of important provisions which allow Arizona the ability to offer stronger protections than the federal government against traditional payday lending; focus on preventing the debt trap, the most abusive aspect of high-cost lending; and include a number of provisions to prevent lenders from evading the rule.

The bad news is that as currently proposed payday lenders will be exempt from the ability-to-repay standard requirement for up to six loans a year per customer. To truly protect consumers from the debt trap, it will be important for the CFPB to close this and other loopholes. Otherwise, a weak rule will lend undeserved legitimacy to predatory products and practices and open the door once again for payday lenders to operate with impunity in our state.

 Diane E. Brown is the executive director of the Arizona PIRG Education Fund. Kelly Griffith is the executive director of the Southwest Center for Economic Integrity.


  1. Consumer advocates across the board want to rein in high-cost lending, and we did just that in 2008, effectively voting them out of business. It’s been nearly a decade since then and low-cost lending is nowhere to be found. It’s been more than enough time. Advocates need to put their money where their mouths are and come up with some alternatives. Otherwise, high cost credit is better than no access to credit at all.

  2. The solution is education, not legislation. Rather than involving the state in private financial transactions, PIRG’s resources would be better spent educating those most vulnerable in proper money management skills.

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