California Reinvestment Coalition

Payday Lenders in California: How Predatory Lenders Trap Consumers

Important Update: In March 2015, the Consumer Financial Protection Bureau announced proposed rules for regulating payday, car title, and other high cost consumer loans. CRC's executive director, Paulina Gonzalez, testified at the hearing about the damage caused by payday loans in California.

If you have used payday, car title, or high-cost installment loans, we are asking you to share your story as part of our efforts to win stronger consumer protections.  Please share your story using this quick, easy form: SHARE YOUR STORY.

Over the last several years, CRC has been a leading advocate for reform of the predatory payday loan industry in California. We have partnered with our members and allies to launch the Campaign Against Payday Predators (CAPP). We organize local campaigns to restrict the expansion of payday loan outlets in our communities. In addition, we work at the state level to advance consumer protections from unscrupulous payday lenders by pushing for a 36% cap on the annualized percentage rate (APR) of interest on payday loans.

Click here to learn more about payday loan products. 

In addition to our work on the policy level, we are demanding that big banks stop supporting the payday industry. Wells Fargo and US Bank make triple digit interest rate payday-like loans to their customers through their respective Direct Deposit Advance and the Checking Account Advance products. CRC is advocating for these banks to cease making high cost payday loans and urging all the big banks to offer an affordable small dollar loan product that meets the needs of their customers. We are also pressing the big banks- Wells Fargo, Bank of America, JP Morgan Chase and US Bank- to stop financing payday loan corporations.

Regrettably, the state legislature has failed to enact any meaningful protections for consumers from this industry. The California Deferred Deposit Transaction Law, which authorizes payday lending, only imposes licensing obligations and disclosure requirements for interest rates and loan terms. The law does not protect borrowers from the usurious interest rates on the loans. Nor are there any regulations that would help prevent a borrower from falling into the payday loan debt trap, such as a minimum repayment period of 30-60 days, a limit of 4-6 loans per year, and, most importantly, an interest rate cap.

Recently, CRC has joined with other consumer advocates in opposing and defeating a number of industry-backed attempts to raise the maximum payday loan amount from $300 to $500. In 2011, we fought Assembly Bill 1158, introduced by Assembly member Charles Calderon (D-Whittier), and in 2010, we fought Assembly Bill 377, introduced by Assembly member Tony Mendoza (D-Artesia). It is critical that we continue and grow our efforts to build a movement against predatory payday lending.

CRC is currently active in campaigning for a local ordinance in the City of San Jose with the South Bay Coalition Against Payday Predators. 

Cities that have already enacted local land use ordinances or adopted resolutions against payday lending include Sacramento, San Francisco, Oakland, Oceanside and San Diego. 

Resources You Might Be Interested in:

1) The Payday Lender Hall of Shame Compilation of the worst practices and companies in the industry

2) Editorials Against Payday Lenders Over 50 newspapers across the US have editorialized against this industry- is your newspaper one of them?

3) Teaching California youth about predatory payday lenders 

4) Long Beach Votes to Limit Payday Lenders, Check Cashers, and Car Title Lenders

5) Want to Honor Vets? Stop Gouging Them with Payday Loans

6) Eight Reasons NOT to get an Online Payday Loan

Related Links

The interest rate on a two-week, $300 payday loan is 459% APR. Click here to learn more about payday loan products and their costs.

Newspapers across the country have written editorials AGAINST payday lenders.  You can read them here: Editorials Against Payday Lenders