The Missouri legislature overrode 10 bills vetoed earlier this year by Gov. Jay Nixon -- including House Bill 329, which alters some regulations for financial institutions. Nixon worried that the measure would allow payday lenders to up their fees, which House Democrats warned would squeeze the poorest Missourians. The United Payday Lenders of Missouri, however, argues that the industry is regulated under a different statute and that none of the provisions in HB 329 apply to them.
The provision in HB 329 that supposedly would allow rates to rise is nearly identical to the smaller Senate Bill 254, which Nixon signed into law. Both bills placed a $75 cap on “origination fees” for loans with terms of more than 30 days; but HB 329 would have allowed a fee of up to 10 percent or $75 of the principal loan amount, which doubles the original 5 percent. In Missouri, payday lenders may not issue loans for a period exceeding 31 days. Technically, the 30-day-or-longer language applies to them and allows them to begin collecting higher fees, or change their fees under the new statutes. Scott Holste, press secretary for Nixon, said these fees typically come with consumer installment loans -- not payday loans -- but pointed out that many businesses licensed as payday lenders were also licensed to issue consumer installment loans, regulated under a separate state statute.
Diane Standaert, senior legislative council for the Center for Responsible Lending, noted that many payday lenders are transitioning to consumer installment lending, effectively allowing them to increase fees on loans that do not fall under the payday lending law. “Laws like [HB 328] allow lenders to add fees onto more fees,” she stated. “All it does is allow people to be caught in unsafe, unsustainable debt. It lends itself to the culture of repeat borrowing, and repeat borrowing is debt and repeat borrowing is the majority of the business for these companies.”