LEXINGTON, Ky. - Consumer advocates say too many Kentuckians can't escape the payday lending debt trap, and want state lawmakers to consider a cap on the interest rates and fees those businesses charge. Dozens of Kentucky groups are putting a stamp of approval on a plan for a 36 percent interest rate cap on those short-term loans.
Jason Bailey, research and policy director with the Mountain Association for Community Economic Development, says information from Kentucky's real-time payday lending database shows lenders are racking up millions in fees from borrowers who can least afford it.
"Folks who take out payday loans are very often underwater and they're caught in a debt trap where they have to take out loan after loan after loan, and that is the source of this industry's revenue for the most part."
The state's database shows Kentuckians have paid more than $80 million in fees so far this year from payday loans, with up to 400 percent annual interest rates. Brigitte Blom Ramsey, special projects director with the Kentucky Youth Advocates, says that database reveals how families searching for a quick financial fix still end up short-handed.
"Many borrowers take out multiple loans in a year's time. And the database for the first nine months of 2010 showed that on average, Kentuckians are taking out 8.6 loans per borrower in that period of time."
Ramsey says the identity of the typical customer who struggles to repay the two-week loan may come as a surprise.
"The majority of payday loans go to unmarried women with dependent children. And the payday lending model was put together supposedly to support an emergency need, but in fact, because of the short repayment period and the fees, families and individuals are forced to repeat that borrowing to make ends meet."
Ramsey says the database shows more than 95 percent of payday lending revenue comes from customers with multiple loans, with the remainder mostly coming from borrowers who took out only one loan. Since 2008, the number of payday lenders in the state has declined from 781 to 667.
Federal law already puts a 36 percent cap on payday loans made to military families. Payday loan companies say the interest rates and fees are justified for the high-risk loans they grant, and that their loans fill a need, since traditional banks won't help people with bad credit. In some states where caps have been placed on the loans, payday lenders say they've been forced to close.
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Lawmakers in Olympia this session moved to add more protections for consumers against predatory loans.
Washington state lawmakers passed Senate Bill 6025 unanimously in both chambers, closing a loophole companies were using to evade caps on the amount of interest charged on loans.
Sam Leonard, an attorney in Seattle, said tech companies providing financial services such as loans would charter out of state banks, especially in Utah, where lenders can charge unlimited interest rates.
"These fintech lenders a lot of times will charge 150, 200% interest on relatively small dollar loans, $3,000, $5,000 and the like," Leonard explained.
Washington state has a set of protections called the Consumer Loan Act to shield people from predatory loans. Leonard said capping interest rates at the federal level would help people across the country.
However, he emphasized the bill goes a long way to increase protections for Washingtonians.
"Not a lot of states at this time have passed similar legislation," Leonard pointed out. "Washington is out in front of the curve with regard to protecting low-income Washingtonians or other Washingtonians that might enter into these predatory loan products."
Leonard added the issue with predatory loans is they keep people in continuous debt cycles.
"Loan products like these essentially strip low-income individuals' ability to improve their economic situation," Leonard noted.
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While there's snow in the immediate forecast, the spring storm season has arrived in Minnesota and state officials said with complaints related to homeowner insurance claims on the rise, it is important to monitor changes in policies.
The Minnesota Commerce Department said complaints from policyholders, largely stemming from their claims being denied, have more than doubled since 2020.
Julia Dreier, deputy commissioner of insurance for the Minnesota Department of Commerce, said under a changing climate, the nation is seeing plenty of extreme weather events resulting in wind and hail damage, and insurance companies are adjusting to what's happening.
"Insurance costs are going to increase," Dreier pointed out. "We do want to make sure that Minnesotans are prepared."
As some carriers narrow what is covered or require higher deductibles, Dreier urged consumers to carefully review their policy when it is up for renewal, to avoid surprises when they have to file a claim. The department acknowledged changes can slip under the radar when consumers rely on paperless statements sent via email, or with busy schedules preventing them from reading all the fine print in documents they receive.
The department emphasized it is a complicated process in getting complaints resolved, noting some can be partially reversed in favor of the homeowner. Dreier noted they work closely with the industry to make sure a company's actions are within the letter of the law.
"One of our jobs is to make sure that insurance companies aren't doing something unethical when they're submitting their policy forms to us and their rates to us for review," Dreier added.
The department does have a new video on its YouTube channel, which offers more details on how to better prepare yourself ahead of any future claims, including knowing whether your policy offers flood protection and assessing the value of items in your home.
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Wisconsin has announced a big development in trying to establish more digital equity around the state.
Gov. Tony Evers and the Public Service Commission say Wisconsin's blueprint for digital equity has been accepted by the National Telecommunications and Information Administration.
That means the state is eligible for up to $30 million to implement its approach over the next five years.
Martha Cranley - state director for AARP Wisconsin - called it a robust plan, noting that older populations continue to face challenges in being connected to the digital world.
"We know that at least 15% of people 50-plus in Wisconsin are not connected," said Cranley, "either because the wires simply don't come to their house, or they don't have a device, or they don't know how to use it."
Cranley said the lack of connection is especially concerning in rural areas across northern Wisconsin, where aging communities have limited resources.
Stakeholders also note an infusion of new aid is helpful with the federal government's Affordable Connectivity Program - which provides discounts on monthly internet bills for eligible households - in danger of running out of money.
Cranley said the state's plan came together following extensive public outreach, in which her organization helped convey the need for improved internet access for those 50 and older.
"They certainly heard from older people about how important this is to connect to their doctor," said Cranley, "and to connect to government services, and frankly, find employment."
Overall, Evers says the plan's federal approval means more than 410,000 homes and businesses will be better positioned to be connected to new or improved high-speed internet service.
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