Regulators in Kentucky will have new power to pursue unscrupulous payday lenders starting Friday, as parts of a law passed in March take effect.
The law raises license fees for payday lenders and gives state officials more power to punish lenders who violate laws. In July, the law provides for a statewide database to keep anyone from taking out two simultaneous loans totaling 500 dollars or more.
The Kentucky Coalition for Responsible Lending has fought for tighter restrictions on payday lenders. Coalition attorney Anne Marie Regan says the law doesn’t go far enough, and she would rather see legislation cap payday loan interest rates at 36%.
“This new law does nothing to address the high cost of the lending and also does nothing to address the cycle of debt that people get into with these kind of loans,” she says.
Lenders say they provide tax revenues to states and a vital service to responsible adults, and argue that the average loan is paid off at an interest rate under 20%.