In Maine, Rep. Anne-Marie Mastraccio (D-Sanford) is co-sponsoring a bill to address predatory lending and enhance financial protection for low-income families. The proposal is an effort to crack down on unlicensed payday loans from online lenders, which draw customers in with offers of quick, short-term loans only to trap them in a cycle of debt.
“As technology advances and the way we interact changes, it is imperative that we stay ahead of the curve to protect Mainers from harmful scams, such as predatory lending,” said Mastraccio. “Simply put, crime like this has no place in a stable Maine economy.”
Unlicensed lenders have been proliferating online. Borrowers commonly are charged interest rates at 500 percent or even 700 percent annually and sometimes are forced to pay fees that match the size of the loan itself. If these terms are even disclosed to the borrower, they are usually obscured by fine print and technical jargon. Because borrowers struggle to pay back the loan in full, they often end up borrowing more just to keep up. Online lenders often can access borrowers’ bank accounts through businesses that process electronic money transfers. The proposed legislation would make it illegal to process any transactions that come from these unlicensed lenders.