In Session: “Deflategate” & Virginia’s Payday and Car Title Lenders
Monday, January 26th, 2015
By now most of us have heard about “deflategate”-the discovery that the New England Patriots deflated the footballs in the AFC championship game in order to gain an unfair advantage. Some say they cheated and others say they just did an end-run around the rules. Either way, the rules have been broken and this needs to be addressed.
The Virginia General Assembly can’t do anything about the New England Patriots but they should do something about the chronic evasions of the law by payday and car title lenders.
First, a history of evasion by payday and car title lenders in Virginia
- 1998 (approximately): payday lenders come to Virginia and claim to make loans through out-of-state banks. This “rent- a- bank charter” deception was later shut down by the OCC.
- 2002 Virginia passes Payday Loan Act after payday lenders promise and law says they will not put borrowers into a cycle of debt. But payday lenders do a phony back-to-back loan scheme until the Virginia Supreme Court says NO in 2011.
- In response to constituent complaints about payday lending, the 2008 Virginia General Assembly reforms the payday loan act. Before the law goes into effect, many payday evade the new law by making “open-end” loans.
- The 2009 Virginia General Assembly passes legislation stopping payday lenders from using the open-end law evasion but many payday lenders drop their license and switched to “line of credit” loans to avoid complying with the new law.
- 2014: TitleMax gets consumer finance licenses for its car title loan locations to evade the Motor Vehicle Title Loan Act by making unregulated consumer finance loans to unsuspecting borrowers.
Will the General Assembly put a stop to this? How will your Delegate or Senator vote on these Bills? Both of these Bills will be heard on Tuesday afternoon and we’ll keep you updated on what happens.
Want more information? Read our fact sheets on this issue: