FOLIO
I was recently challenged by a Florida legislator during a committee testimony regarding my definition of the term “exploitation.” As an ordained minister, defining this term is important for matters of faith and ministry. For me, exploitation is harming those who are vulnerable for the purpose of financial gain. Although exploitation happens in varied forms within the Sunshine State, one of the most egregious forms occurring on our soil is predatory lending.
People of faith define predatory lending as usury, or the charging of excessive interest rates. The three Abrahamic faith traditions of Islam, Judaism and Christianity all decry the sin of usury as evidenced in the writings of their sacred texts.
People across the state do have emergencies, and when the unforeseen occurs in a low-income household, traditional loan options are often off the table. But the fact that people need small dollar loans does not make it right to charge excessive triple-digit interest rates.
Supporters of payday lending within the state consistently refute the validity of evaluating short-term loans by looking at their annual percentage rate, but it is federally mandated that loans be disclosed per annum. In doing so, it is possible to compare lending products apple to apple. Payday lending is defined as a predatory product due to interest rates in Florida that average close to 300 percent, as well as repeat borrowing seven or more times after the initial loan.
Consumer advocates describe predatory loans as those that greatly benefit the lender while ignoring the borrower’s ability to repay the debt. Even when borrowers are able to repay under the initial loan terms, the resulting hole in their budget creates the need for another loan, snaring them in a debt trap.
A new bill supported by the payday lending industry is on a fast track through committees in both the Florida House and Senate. SB 920 and HB 857 has been passed in two committees in both the Senate and House, and is scheduled to be heard in two more committees this week.
If passed, the amount that can be borrowed through the new loan product will go up and the loan term will be lengthened, but the results for family financial stability will be the same: payday lenders will generate millions off poor Floridians and low income borrowers will find themselves stuck in a cycle of debt.
Meanwhile, at least $2.5 billion in fees have been collected from Floridians by payday lenders since 2005, and over $311 million collected in 2015. This is usury. This is immoral. This is what exploitation looks like.
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Shapard is associate coordinator at Cooperative Baptist Fellowship of Florida.
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