Washington limits collection efforts
State of Washington governor Chris Gregoire on Wednesday signed new restrictions on payday lenders into law. The new laws address what type of payday loan collection efforts can be used and how often and in what manner borrowers can be contacted.
The rules
Washington law now says payday lenders may only contact customers regarding collection three times per week. Payday loan lenders are forbidden to visit a borrower’s home or place of work unless invited. Lenders must also keep a communication log in which all collection efforts are recorded.
Thou shalt not lie
The law also says payday lenders cannot threaten to take legal action which they can’t actually take. They also cannot imply any sort of affiliation with government agencies. For a full list of new laws, check out this story.
The new restrictions, of course, followed a lawsuit.
Meanwhile, in Idaho
In Washington’s neighboring state, Idaho, the Senate passed a bill regarding payday loans today. The law, if passed, will require online payday loan companies to be licensed in order to lend to Idaho residents.
The Idaho bill now goes to the Idaho House of Representatives.
Kentucky joins in the fun
Governor Steve Beshear of Kentucky signed new regulations on payday lenders into law Wednesday. The law now mandates the creation of a statewide database that tracks all payday loan amounts, dates and borrowers.
The database will ensure that requirements regarding the amount and number of loans a single borrower can have at one time. Borrowers now may not have more than two outstanding payday loans and can’t take out more than $500 in payday loans at once.
Another cap
The bill also says that no new payday loan companies can open in Kentucky for the next 10 years. This provision intends to limit the number of payday lenders in the state. However, despite the governor’s signature, Beshear doubts the legality of this law.
“I question the constitutionality of this provision and believe it may be subject to a legal challenge,” Beshear said.
Some of these rules are good but others are foolish.