New York has been the location of much turmoil in the payday loan industry as of late. First, there were lawsuits handed to the larger payday loan companies operating out of South Dakota. The interest rates were considered to be excessive by the New York district attorney, which resulted in the pending lawsuit. While that is still being discussed in court, a new problem has arisen in the state. Some payday loan collectors in the Erie County have been ordered to pay hundreds of thousands of dollars in restitution to what the state considers victims of excess.
Payday Loan Laws in New York
Prosecutors in a state court have identified five separate payday loan companies as not following proper loaning laws. On September 30th, Erie County moved forward with punishing the five different companies by forcing them to pay upwards of $300 thousand dollars in restitution payments. Those who have been victim of high interest rates that were considered excessive by the state are receiving a portion of those funds.
It is as much a punishment as a restitution procedure. Those companies have far more money than they are forced to release with this injunction, but it is a symbolic gesture in a state that has been known for hard-nosed perseverance against the payday loan industry.
Moving Forward with Cash Advance Lending
The state of New York has brought these restitution payments on payday loan companies as a sign of the things to come. Only a month ago, the state was pursuing some of the largest tribal payday lenders in the country in order to make them stop lending in New York. The same trend is being continued and although prosecutors have come to many deals with the payday industry, it seems that public opinion is running thin.
There are millions of New Yorkers who find themselves in debt because of the payday loan industry. Most of them are poorer citizens, but in a Democratic state, it is no wonder that the cash advance industry is taking a beating. The excessive interest rates that are allowed in the 29 or so unregulated states are not welcomed in New York, which brings many problems.
Even though the poor are reliant on payday lenders in some situations, the excessive payday interest rates are causing people significant problems across the state. There is no telling whether the state will start to ban the use of payday loans outright or just place even more restrictions on them. Considering how many people utilize these loans, it would be a wonder if they did decide to stop payday lending for good.
Erie County Payday Lending
How this will impact Erie County is even harder to debate for onlookers. The state has shown significant muscle in working with payday loan companies, but they have had moments of weakness as well. It is unknown how the people of Erie County will react to this news. The restitution might make them feel justified in their ongoing use of cash advance lending.
Other people think the news and blowback might have a positive influence on their borrowing practices. If this is the case, the state of New York might be the microcosm for the rest of the country. If the laws and users band together, it is possible to reduce the profitability of the payday loan industry forever.
