As Executive Director of Opportunity For All Floridians, I believe in our mission to advocate for economic opportunity and fairness for all Floridians. All Floridians deserve a fair economic playing field with consumer protections that shield us from deceptive and predatory business practices. And that is what our legislators should be working on. Instead, we have seen two very concerning bills filed this session (S.B. 580 and H.B. 1267) which would increase caps on interest rates for short-term loans in Florida. The bills are being supported by short-term lenders who are represented by The Florida Financial Services Association. The bills are pushing to eliminate Florida’s tiered interest rate structure and replace it with a flat rate cap of 36%. This drastic change in interest rates would be detrimental to vulnerable borrowers who already struggle to make ends meet.
Currently, short-term lenders charge interest based on a tier:
Interest Rate Caps
(Current Florida Law)
Interest Rate Caps
(Proposed in SB 540)
|Up to $3,000||30%||36%|
|$3,001 - $4,000||24%||36%|
|$4,001 - $25,000||18%||36%|
Now, the short-term lending industry wants a flat 36% interest rate cap on loans up to $25,000
Our concerns are not unfounded. In fact, investigative reporting from 2020 highlighted the practices of one of these short-term lenders, Oportun, a California-based loan company that allegedly targets low-income Latinos with high-interest loans. The investigation by the Guardian, ProPublica and the Texas Tribune showed that Oportun is one of the most litigious debt collectors in California, responsible for at least 15% of all small claims filings from July 2017 through June 2018. In 2019 alone, Oportun filed over 30,000 collections lawsuits, and at least 14,000 in the first half of 2020. The reporting showed that Oportun routinely used lawsuits to intimidate a vulnerable population into keeping up with high-interest loan payments — even amid COVID-19.
Lenders who engage in such predatory and litigious behaviors are causing harm to the very communities they are supposed to serve. During the pandemic, when unemployment rates were soaring, vulnerable borrowers were being sued and harassed to keep up with predatory high-interest loan payments. Sadly, companies like Oportun can operate through loopholes created by Florida legislators. Although Florida has usury laws that limit interest rates to 18%, a carve-out was created to charge higher interest on loans under $25,000 based on a tiered structure. Now, these short-term lenders are asking to remove the tiered rates and allow them to collect a flat 36% interest rate. Thirty-six percent interest is double the usury law limit. The Florida Financial Services Association, which represents these lenders, donated $190,000 to politicians from both political parties to gain support for their proposal. It is high time for Florida lawmakers to listen to the needs of consumers, not campaign contributors.
Floridians overwhelmingly support a cap on interest rates, as they understand the devastating impact high-interest loans can have on families and communities. Allowing lenders to charge interest rates above 18% only serves to enrich the lenders at the expense of borrowers who are often in dire financial straits.
The recent news about Oportun underscores the need for stricter regulation of the lending industry. We must work together to ensure that vulnerable borrowers are not taken advantage of by predatory lenders. I urge all Florida lawmakers to vote against the proposed predatory 36% interest rate. Let us instead work towards creating an economy that is fair and just for borrowers.