Lawmakers to Decide on Reach of Payday Lenders

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New legislation is being argued on the Hill regarding the fate of sites like

online payday loans

Online payday loan providers are anxiously awaiting the decisions made this week on the Hill

National requirements would open up opportunity for more consumers seeking loan alternatives.

New legislation being pushed this week by a bipartisan team of House lawmakers will have a direct effect on the way people are able to access payday lenders and receive payday loans. Online payday loan providers like would increase their reach, as the proposed legislation would create a federal charter to correct problems connected to the variations and inconsistencies of unique state laws.

Because a number of payday loan providers and other smaller lenders are not offering consumers a brick and mortar business, they use the internet to appeal to a wider audience. Current restrictions and limitations in some states make it hard for them to get through with messaging, and not raise the ire of consumer protection groups and watchdog agencies.

The bill, which was introduced last week by Reps. Blaine Luetkemeyer (R., Mo.) and Joe Baca (D., Calif.) is a revision of an earlier bill. The current draft "includes changes aimed at quelling criticism that the legislation is an end-run around the fledgling CFPB (Consumer Financial Protection Bureau)," according to a recent report in the Wall Street Journal.

While there are definitely strong voices in favor of this argument, there is definitely some resistance to be expected on capitol hill this week as it is argued out and eventually comes to a vote. A subcommittee meeting by the House Financial Services is scheduled later this week to determine the success or failure of the bill. There are more than a dozen states that currently have laws in places that are there to restrict or prohibit the use of payday loans, and agencies like the CFPB are targeting the payday lenders specifically, as being of a predatory nature.

Champions of this proposed legislature suggest that current rules and laws prohibit the development of new working capital options for those who are struggling with what is now available. They argue there is a need for innovative alternatives to traditional lending, but that individual state rules often stunt this otherwise natural growth. They are arguing that the new bill will open-up more communication between providers and consumers, which will help to benefit the creation of new working capital products like payday loans, designed to help those with challenged credit histories. They argue the need for national requirements, which would give consumers a wider range of options than those that can be reasonably provided by the localized efforts of traditional financing.


Vince Bigelow-Edwards is a freelance business analyst who reports on a variety of small business financing issues and writes news articles and detailed consumer information for

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