Proposals Would Create New Debt Trap for Low-Income Consumers

HB 469 (Fernandez-Barquin) and SB 874 (Rouson) would create a new statewide consumer-loan program that could charge interest rates as high as 36 percent on small-dollar loans. Florida statutes consider interest rates beyond 18 percent to be usurious. However, consumer finance loans (installment loans largely accessed by individuals with limited access to capital and traditional financial services) are allowed to charge up to 30 percent under current Florida law.

While the FCCB generally supports alternatives to payday lending, these bills would further raise interest rates for an unnecessary pilot program. A robust consumer loan industry already exists in Florida by lenders who, though not required by law, report to credit bureaus to help individuals build or repair credit - a provision included in the bills.

SB 874 was passed by the Senate ( 33-4). HB 469 has passed all committees of reference and is on the House Calendar, on 2nd reading. It is likely that the House will not take up this measure.