Payday Loans in Georgia

Georgia Attorney General orders payday lenders to pay $40 million in civil monetary penalty and refund to the consumer.

The Office of the Georgia Attorney General on February 8 disclosed that it had reached a compromise with two payday creditors regarding allegations that the corporations had infringed the State's Payday Lending Act, which forbids unauthorized credit of $3,000 or less. Whilst the interest on loans granted under the Payday Lending Act is limited to 10 per cent, the non-licensed creditors in this case are alleged to have spent over 18,000 loans at interest levels between 140 per cent and 340 per cent and have raised over $32 million in related interest and charges since 2010.

Pursuant to the conditions of the Arrangement, the Enterprises are obligated to (i) make $23.5 million in reimbursements to consumers, (ii) suspend all recoveries and grant all loans due, (iii) make a $1 million fine to the State under common law, and (iv) make $500,000 to reimburse the State for its attorneys' expenses and legal charges.

CMFPB for checking the payday loan rule

CFPB on 16 January heralded a 'rethink' of its new arrangements for payday, vehicle titles and certain costly instalment credits (the payday rule). Technically, the payday provision came into force on the same date. Adherence to the main rules of the rules is however only necessary from 19 August 2019, so that the CFPB's determination to review the rules at this early stage should not affect current enforcement work.

Under the new rules, we anticipate a postponement of the cut-off date for payment. For this purpose, the CFPB, when it announced its intention to launch a regulatory initiative, stated that the current payday arrangement allows it to dispense with the period of the 16 April 2018 regulation within which an audit firm may request to become a RIS.

In addition, CFPB is likely to try to move the focus of the rules away from endorsement and towards more solid disclosure. This latter line was explicitly opposed by CFPB's former management teams - i.e., CFPB has consistently argued in its comments on the Federal Register that research and past experiences show that disclosure is not effective to prevent the damage that certain kinds of high-cost credit cause to individuals.

In a relatively short period of 16 short month, the current payment scheme has evolved from a proposal to a definitive scheme. Between a new regulatory proposal and the effective publishing of a reviewed proposal, a whole year or more could elapse. The new CFPB management may be forced to conduct its own research on consumers in order to warrant a shift in the emphasis of the payday regime from writing to disclosure.

Such research would further prolong the period until a reworked policy is achieved and the results would certainly be highly sceptical among consumers' associations. When the payday rules are reviewed to be less stringent, state lawmakers can try to close the perceived regulatory loophole by adopting stricter domestic legislation.

It is our expectation that this law would take the shape of stricter limit values for extortion. As an alternative, states could try to ban certain types of high-cost loans, e.g. the granting of payday loans in Georgia is illegal. One of the most contentious issues of the current payday regime is the need to obtain a new specialised loan reporting developed by CFPB, which is why we anticipate that CFPBB will revise the RIS notion.