ANNAPOLIS, Md. –  With the window closing fast for Maryland Governor Wes Moore to sign or veto legislation, NAACP Maryland State Conference and the Center for Responsible Lending (CRL) today released a letter from over 40 advocates for civil rights, consumers, and workers urging the Governor to veto HB 1294. This legislation would give app-based payday lenders a special exemption from parts of Maryland’s law governing small dollar loans that prohibit lenders from discriminating based on race or sex, deceiving borrowers, or charging extremely high interest rates. The letter comes as several leading payday loan apps have recently been sued for overcharging military servicemembers.

NAACP Maryland State Conference Political Action Chair Ricarra Jones said, “The NAACP is particularly concerned that certain companies have written themselves out of the anti-discrimination protections embedded in the small-dollar lending statute. At a time when the federal government is openly working to dismantle hard-won laws and policies that protect people of color, these industry-proposed rollbacks are especially harmful for the people of Maryland. We call on Governor Moore to stand firm in defense of civil rights and equal protection under the law.”

The bill would allow payday loan apps – also known as “Earned Wage Advance” – to evade the state’s usury law and charge triple-digit annual percentage rates (APRs). The bill also would exempt these lenders from regulations that limit how much they can charge in fees, including so-called “tips” that are hard for consumers to opt out of, as well as exempt them from prohibitions against lenders issuing false or misleading statements about the rates, terms, or conditions of a loan. HB 1294 would exempt these companies from complying with Maryland’s Equal Credit Opportunity Law within the Commercial Credit Code, which bans financial discrimination based on a person’s race, sex, religion, national origin, gender identity, or disability status.

Center for Responsible Lending (CRL) Deputy Director of State Policy Whitney Barkley-Denney said, “HB 1294 acknowledges that app-based wage advances are loans, but it exempts these lenders from not just Maryland’s effective and long-standing 33% rate cap, but also from prohibitions on discrimination, and deceptive advertising in the Maryland Commercial Code. As the Trump administration is gutting federal consumer protections and attempting to overturn historic laws protecting all people against discrimination, Maryland should stand as a bulwark against lenders’ anti-consumer actions, not an accomplice. We urge Governor Moore to act in the best interests of Marylanders and veto this bill.”

CRL research has shown that over 25% of Maryland borrowers using payday loan apps take out at least 25 loans per year, and that nearly half of borrowers take money from more than one app at a time. This type of repeat re-borrowing and stacking is typical of payday loans, whether digital or from a store. It is exactly what creates the debt trap for borrowers.

In recent weeks, class action lawsuits have been filed against payday loan app companies – Albert Cash, Brigit, Dave, Empower, FloatMe, and MoneyLion – for allegedly violating the Military Lending Act by charging military servicemembers triple- or quadruple-digit annual interest rates, well above the 36% APR limit set by the law; by failing to disclose terms of the loans; and by trying to block military servicemembers from taking the companies to court. As reported by Law.com: “According to the complaints, the companies specifically market their cash advance products to populations — like military service members — who are more likely to live paycheck-to-paycheck [and]... deceptively advertise their loans as ‘no-interest’ and only inform users of the various charges attached to their loans once they have connected their banking institutions to the apps and accepted the cash advances.”

Alongside other public enforcement actions against payday loan apps, the Consumer Financial Protection Bureau in 2022 filed a lawsuit against MoneyLion, claiming the company overcharged servicemembers and trapped consumers in costly memberships.

The letter from over 40 advocates from across the county, including 20 from Maryland, which calls for Governor Moore to veto of HB 1294, is linked again here.

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Press Contact: Matthew Kravitz matthew.kravitz@responsiblelending.org