Mississippians who use payday lenders will notice some changes in how business is done.
Gloria Warner says she borrowed $200 from a payday loan company to pay some bills. She couldn't afford to pay back the loan in full. So, Warner says she wrote more loans and was struggling emotionally.
"You know how you feel like you're drowning and there's no way out and no matter what you do it's doesn't work for you. That's how I was beginning to feel," said Warner.
Warner says Hope Credit Union showed her how to pay off the $1,500 she racked-up in one year. Now, the Consumer Financial Protection Bureau has issued new guidelines to prevent what it calls the "payday debt trap." The changes include: determining if the person can afford to repay the loan, provide a 30 day cooling off period after a person makes three loans right away, and lenders can debit a customer's account twice. Then they have to get new authorization. Ed Sivak is with Hope Enterprise Corporation. He thinks the loans are debt traps with annual percentage rates of 300 percent or higher.
"Knowing that 4 out of 5 payday loan borrowers reborrow after a month, or that 1 in 4 reborrow nine times a year, it clearly shows that the purpose here isn't to help an individual out of an emergency situation," said Sivak.
Jamie Fulmer with Advance America, a payday lending company, says they give people all the information needed to make an informed decision. He thinks the regulations are overreach.
"The premise of the rule is flawed. The research that the bureau used in its analysis was deeply flawed. The bureau relied heavily on consumer advocacy groups and ignored the perspectives of actual folks in the industry who were offering these products," said Fulmer.
Fulmer says they're urging Congress to take up the issue. The new guidelines go into affect in 2020.
