The failure to pass payday loan reform is a failure of democracy

"We’re choosing out-of-state corporations, and we’re choosing the lobbyists who take millions out of our state to prey upon our vulnerable populations."

EPI Executive Director Weayonnoh Nelson-Davies

For 15 years, advocates have sought to repeal a law that has allowed storefront payday lenders to charge usurious 260% interest rates to vulnerable Rhode Islanders. Despite massive support for repeal, the General Assembly has refused to act, primarily due to the efforts of industry lobbyists, including former Speaker of the House William Murphy. Lobbyist Murphy is paid $50,000 a year¹ to schmooze General Assembly leadership so sleazy companies like Advance America can continue to siphon millions from vulnerable communities.

United as the Rhode Island Coalition for Predatory Lending Reform², advocates gathered in the State House Library to spotlight the statutory loophole that has permitted the industry to target and ensnare cash-strapped Rhode Islanders — many of whom are consumers of color — in cycles of debt for 15 years.

This practice drains around $3 million in fees a year from consumers and the local economy—and sends most of that money out of state, mainly to one company located in South Carolina. No other New England state has a statute nearly as anti-consumer and pro-industry, with 93% of all payday lending fees a year in New England originating in Rhode Island.

Legislators have offered two sets of bills this year to protect consumers from predatory lenders. Representative Karen Alzate’s and Senator Ana Quezada’s bills, H5042 and S0229, would repeal the law that allows the 260% APRs (annual percentage rate). Other bills, H6055 and SB0386, target “rent-a-bank” schemes that out-of-state lenders use to evade Rhode Island’s interest rate caps and charge Rhode Island consumers triple-digit interest rates. Representative Brandon Potter and Senator Melissa Murray are the sponsors.

In 2024, all five of Rhode Island’s General Officers — Governor Daniel McKee, Lieutenant Governor Sabina Matos, Secretary of State Gregg Amore, Attorney General Peter Neronha, and General Treasurer James Diossa — signed a letter circulated by the Economic Policy Institute (EPI) and the Coalition for Payday Lending Reform urging up-or-down floor votes on payday lending reform. In 2023, Speaker Joseph Shekarchi facilitated a floor vote that saw the House of Representatives vote to reform payday lending by a vote of 70-2.

EPI Executive Director Weayonnoh Nelson-Davies said the failure of our elected leaders to act on this immoral practice is a failure of democracy. Here are her full remarks, edited for clarity:

“I’m not going to repeat why reform is needed when it comes to predatory lending. We know it is needed. We know it is the right thing to do. I want to talk about democracy because we’re not talking about reform; we’re talking about democracy in Rhode Island. Predatory lenders, under the democratic system that we have, are allowed to take advantage of a loophole and rob vulnerable communities in our state—legitimized theft.

“We know this. We’ve heard the arguments year after year, yet here we are. This is one of the issues that can leave us discouraged. I’m looking at those in the room who have been fighting for this for years. You’re feeling discouraged, not about the reform in and of itself, but by the democratic process as we’re practicing it in this State House - because that is what this issue is about.

“This fight leaves people feeling betrayed by those who are supposed to have the best interest of vulnerable communities at heart. That is what we’re feeling. We’re choosing out-of-state corporations, and we’re choosing the lobbyists who take millions out of our state to prey upon our vulnerable populations. It is a shame in this climate where Rhode Island allows this to happen, even as we join forces to call on Washington, DC, not to do the same thing. It doesn’t make sense that we continue this argument in Rhode Island.

“What I want us to take away from today is that we are still here. We have decided not to give up on this fight for reform or the ideal of democracy in Rhode Island. We are refusing to step back and let vulnerable populations continue to be preyed upon.

“260%? Come on now. Do not tell me that you are allowing this robbery to happen because you care about where people can [get money] to fix their cars. That’s not true. We need to start telling the truth in this State House. It’s not true. 260% interest on people who are struggling every day. Why? Because democracy is not being allowed in the State House.

“What I want us to take away is that we refuse to sit silently aside. We hope that this year, as we’re all screaming, “Democracy is at risk,” will be the year that committees are allowed to call for a vote. I’m hoping that this will be a year in which we’ll follow the House leadership in 2023 and bring it to the floor because we know what will happen if this is finally brought to the House and Senate floor. I’m hoping we allow democracy to have a place in this State House when it comes to predatory lending this year.

“I’m feeling differently about this campaign this year. This is a year that requires courage. This is a year that requires leaders of courage. It’s not just calls to protect workers and democracy in Washington, DC. It requires courage right here in Rhode Island and this State House. We are tired of the excuses. We hope every elected legislator will join our legislative champions with the courage to stand against this legitimized theft. We need those with the courage to stand up against these corporations and stand for people.

“I hope our general assembly members have the courage to stand for democracy. When you stand for democracy, even when it hurts or might impact you, that is the courage we need in 2025, not just for this reform but for many issues that would protect families in Rhode Island.

“I thank you all for being here again, staying the course, and standing up in a year when we need everyone to hang in there and have courage. We will not give up on democracy, and we will not give up on predatory lending reform.”

Here’s the press conference video:

1

2. Membership in the Rhode Island Coalition for Predatory Lending Reform includes the Economic Progress Institute (EPI), Navigant Credit Union, which offers low-interest alternatives to payday loans, and the Interfaith Coalition to Reduce Poverty.