If Congress and President Trump won’t do their jobs, Virginia must.

SB 624 and SB 625 will update Virginia law to address online lending abuses.

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 It’s no secret that every year the payday loan industry finds new ways to exploit legal loopholes and skirt regulators. Once new rules are implemented, they try another tactic to dodge them.

The Virginia Poverty Law Center has made great strides in recent years in making lenders fairer to consumers, but the industry is as persistent as ever in circumventing existing laws.

In this year’s General Assembly session, loan sharks and their allies are fighting bills that would regulate the newest segment of this industry: internet lending.

Internet lenders provide the same predatory and reckless loans of storefront payday and car title loans. Same obscene interest rates, same deceptive business practices, same unbreakable cycle of debt for vulnerable consumers. On top of that, even more abuse of borrowers due to the sale of their personal financial information.

These online lenders are problematic across the country. Here in Virginia, the VPLC and the state’s Attorney General have sued numerous internet lenders for skirting usury laws with one unlawful scheme after another.

And while internet lending is a relatively new segment of the industry, VPLC recently sued one internet lender that has done nearly $100 million of business in Virginia over the past four years. This problem is only going to get worse over time. We can do better.

This year, SB 624 and SB 625 put a stop to internet lending abuses. These regulations are necessary because:

  • A Shark is a Shark.

They can call it whatever they want — internet lenders are absolutely no different from brick-and-mortar loan sharks. These predatory businesses have long been debated in the General Assembly, and lawmakers from both parties as well as consumers from every corner of Virginia strongly support regulating this industry. Put simply, this is the latest loophole the industry is unfairly exploiting, and everyone should play by the same set of rules.

  • Internet Lending is like the Wild West.

In many ways, online sharks are more reckless and dangerous to consumers than their storefront counterparts, because interstate online commerce is regulated differently than standalone businesses. Internet lenders largely refuse to comply with state-specific interest rate caps, with some going as high as 950 percent a year – all the more reason to pass bills that treat them the same as brick-and-mortar businesses.

  • The Federal Government won’t do their job.

In recent weeks, the Consumer Financial Protection Bureau (CFPB) dropped a federal lawsuit accusing internet lenders of misleading consumers by failing to properly disclose the true cost of their loans, indicating their plans to roll-back the payday loan rule. This is forcing individual states to regulate online loan sharks themselves. If Congress and President Trump won’t act, the General Assembly must. States like West Virginia, Maryland, Arkansas and Colorado have already passed similar legislation.

 Tell your lawmakers: Rules apply to internet lenders, too.

Internet lenders should be treated the same way as their counterparts. We strongly urge our Governor and elected officials to insist that online loan sharks are regulated like brick-and-mortar payday and car title loan businesses. Please support SB 624 and SB 625.

In the absence of stronger rules throughout the entire industry, VPLC asks that internet lenders be required to follow the same rules that are already in place for payday and car title lending.

Contact your legislator today to fight for fair lending in Virginia!