August 22, 2013
For more information: Ginna Green at (510) 379-5513 or

CRL Statement: States Lead in Curbing Payday Lending

Last Friday, a Tennessee-based online payday lender stopped making loans nationwide after a crackdown by New York regulators. The state attorney general earlier asked major banks to cut ties with payday lenders making illegal online loans to New York residents.

“This is a tremendous victory for families in every state,” said Uriah King, CRL’s vice president of state policy. “Contrary to payday lender spin, illegal lending can be stopped—and states are leading the way.”

Several states have targeted illegal payday loans in recent months, including Arkansas, Maryland, Pennsylvania and West Virginia; New York’s enforcement is only one of the most recent. These enforcement actions signal that state laws are working. Further, the Pew Charitable Trusts estimates that state payday laws have a 95% effectiveness rate.

Due to the success of state enforcement, payday lenders are scrambling to preserve their predatory business model. Yesterday, lenders loosely affiliated with Native-American tribes sued New York in an attempt to keep making abusive loans.

But policymakers have seen through the payday lawyer and lobbyist spin, and momentum is building for continued state and federal action. Since 2005, no state has authorized payday lending, despite repeated attempts. At the same time, multiple states have capped payday loan interest rates or enacted other reforms that curb the well-documented debt trap of predatory payday lending.

“State laws are working, but all Americans deserve protection from abusive payday loans,” said Gary Kalman, CRL’s executive vice president for federal policy. “The CFPB should look to states for tested models of effective laws as they develop rules that will protect families nationwide.”

Related Resources

Consumer Financial Protection Bureau Payday Lending White Paper

Insight Center for Community Economic Development: The Net Economic Impact of Payday Lending in the U.S.

For more information: Ginna Green at (510) 379-5513 or


About the Center for Responsible Lending

The Center for Responsible Lending is a nonprofit, nonpartisan research and policy organization dedicated to protecting homeownership and family wealth by working to eliminate abusive financial practices. CRL is affiliated with Self-Help, one of the nation's largest community development financial institutions.