Georgia payday-loan bill goes to governor

ATLANTA (3/8/05)--A compromise version of Georgia's payday-loan bill--which would shut down already illegal payday loans--passed the state House and Senate Thursday, reports Georgia CU Affiliates (GCUA). The bill, effective May 1, is headed for Gov. Sonny Perdue's office for signature.

The credit-union-supported bill, originally sponsored by Johnny Floyd (D-Cordele), requires licensing of payday lenders, with permits based on the needs of the community. It also caps their interest rates at 60% a year or 5% a month--in line with the state's usary law. And it provides law enforcement the tools to prosecute lenders who issue short-term loans of $500 or less at interest rates that sometimes reached 1,000%.

Payday loans already are illegal in Georgia because they violate the state's usury cap of 60% a year; however, because the offense was a misdeanor with light penalties, there was little incentive to prosecute (Atlanta Journal Constitution (March 4). The new bill allows prosecutors to charge violators with racketeering, which carries a penalty up to 20 years in prison. Also, victims can file class action suits, which often can involve substantial amounts of money.

According to Cindy Connelly, senior vice president of advocacy with the GCUA, Georgia's credit unions actively worked with the House and Senate Banking Committee chairs, the Attorney General, the Insurance Commissioner and the Department of Banking and Finance to address abusive lending practices (News Now Feb. 11).

Payday lending has proliferating in the state, especially near military bases. Payday lenders have been criticized for charging vulnerable military personnel and their families exorbitant interest rates for loans of a few hundred dollars.

  Resource Link
Statement Stuffer: Payday Loans: The Hard Truth about Some Easy Money


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