Ahead of key committee hearing, Dolores Huerta voices her support for Assembly Bill 2558, to protect Californians from payday loan debt cycle that drains Californians of hundreds of millions of dollars every year

Bill supporters released a new video today. Click here to watch.

Sacramento, Calif. — At a time when many Californians are struggling with the rising prices of rent and groceries, labor leader and civil rights activist Dolores Huerta is calling on the California State Legislature to pass Assembly Bill 2558, to end the payday loan debt cycle and protect all Californians from a predatory business model that harms cash-strapped Californians.  

Authored by Assemblymember Marc Berman (D-Menlo Park) and Assembly Majority Leader Cecilia Aguiar-Curry (D-Winters), AB 2558 would cap interest rates on payday loans at 36% annual percentage rate (APR) – the same limit for lending to military servicemembers and rate caps in several other states.  

“This legislation would protect Californians’ hard-earned wages as they experience an affordability crisis,” said Andrea Luquetta, senior policy counsel based at the Oakland office of the Center for Responsible Lending. “No lender should be allowed to profit from worsening financial hardship. With federal cuts to the social safety net and the increasing cost of living, our families need more affordable options – we deserve better.”

“Too many Californians are struggling with a serious affordability crisis. The predatory payday loan industry is making this crisis worse by trapping Californians in a cycle of reborrowing, raking in huge profits off of their hard-earned wages that they need for rent, groceries, medical care, and other basic needs,” said Assemblymember Berman. “I am honored to have the support of Dolores Huerta for AB 2558, which will protect Californians by capping the interest they can be charged for loans.”

“The payday lending industry is built on a predatory model, which is repeat borrowing. Consumers who get from 5 to 9 and from 10 or more loans per year with payday lending, make up an overwhelming amount of the revenue of that industry,” said Robert Herrell, Executive Director to the Consumer Federation of California. “21 other states, including red states, and the military, have acted to ban or cap the cost of payday loans to protect borrowers from predatory debt cycles. AB 2558 is a common-sense measure that ensures all our neighbors have the same financial protections already afforded to residents of other states and our service members.”

“Payday lenders are extracting hundreds of millions a year from Californians who are already struggling to pay rent and put food on the table. That’s exploitation,” said Mónica Lazo, California Campaigns Director at Economic Security California Action. “AB 2558 stops lenders from profiting off of desperation and starts treating California's working families with the dignity they deserve. Economic Security California Action is proud to support Assemblymember Berman and Majority Leader Aguiar-Curry in this fight to protect Californians from this predatory practice.”  

Payday lenders take over $246 million from fees alone, and the majority of this revenue comes from Californians that have to take out subsequent loans. Current law requires that borrowers pay the loan back all at once from their very next paycheck, leaving far too many short on income and unable to meet other household needs. As a result, 47% of borrowers take out a new loan on the same day or within seven days of repaying the last one. Payday lenders generate most of their revenue from borrowers who have taken out ten or more loans in a year.

The Dolores Huerta Foundation has joined Californians for Economic Justice, a growing coalition of over 40 advocates working with Assemblymember Marc Berman and Assembly Majority Leader Cecilia-Aguiar-Curry to ensure California’s credit market treats people fairly and promotes long-term financial stability for all families.

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Press Contacts

The Dolores Huerta Foundation is a 501(c)(3) social justice organization that inspires and organizes communities — particularly rural, low-income, and Central Valley residents — through grassroots organizing in civic engagement, education equity, health and safety, and LGBTQIA+ equality, lifting the voices of those most directly impacted by economic exploitation, including predatory lending.

The Center for Responsible Lending is a non-partisan, nonprofit research and policy advocacy organization dedicated to promoting financial fairness and economic opportunity, ending predatory lending, and closing the racial wealth gap. CRL’s research on small-dollar lending and state rate caps underpins the evidence that a 36% limit both protects borrowers and supports a healthy credit market.

The Consumer Federation of California is a nonprofit advocacy organization that has been a powerful voice for consumer rights since 1960, campaigning for state and federal laws that put consumer protection ahead of corporate profit. CFC works on a wide variety of consumer protection issues, from combating junk and hidden fees to advocating for financial services reforms and against monopolistic anti-consumer industry practices.

 

Economic Security California Action, an affiliate of Economic Security Project, builds economic power and promise for all Californians by fighting consolidated corporate power and championing cash-based policies — such as guaranteed income and targeted tax credits — that put money directly into the pockets of people who need it, helping families achieve stability and the freedom to thrive.