After Industry Crises, Startups, and Pushbacks, the State’s Payday Loan Database Is Finally Up and Running

A statewide database to track short-term payday loans, which was supposed to be operational in July 2020, is finally operational a year and a half later.

It took until February 1 this year for the system to go live, a year after lawmakers approved regulations governing the database on December 28, 2020.

After failing to grant a hearing for legislation in 2019 that proposed to cap percentage rates for payday loans, which can go up to 600% in Nevada, lawmakers instead passed Senate Bill 201, who authorized a database to ensure that loan companies do not lend to borrowers. who cannot afford to repay.

In an email, Teri Williams, spokesperson for the Department of Trade and Industry, said on Monday that the long delay between the passage of the bill and its implementation is due to a mixture of problems, including the pandemic.

“The delay was primarily due to operational disruptions and technological challenges due to the pandemic, which impacted the process and timing of organizing regulatory workshops, the LCB (Legislative Counsel Bureau) review, the RFP process and the actual development and testing of the database prior to implementation. ,” she said.

Nevada’s Financial Institutions Division, which held virtual meetings regarding database development during the pandemic, encountered technical difficulties along the way that caused meetings to be postponed and rescheduled, it said. she adds.

“The initial workshop for the database was scheduled and the meeting was oversubscribed and people couldn’t get into the meeting so they had to cancel it and reschedule it for 30 days as required by law. “Williams said. “Part of the delay can also be attributed to the vacancy of the divisional commissioner position and the subsequent hiring of a permanent commissioner to guide settlements through the process.”

Consumer rights advocates and legal groups have long urged Nevada officials to take more action to curb predatory practices in the payday loan industry. Even though they argued that the state should do more, they supported the creation of the database.

The initial regulations governing the database were finalized in November 2020 and included provisions to prevent customers from taking out multiple loans exceeding 25% of their income.

Lawmakers approved the proposal 7-5 in a party-line vote at a December 2020 meeting of the Legislative Committee, which approves regulations for state agencies.

Mary Young, deputy commissioner of the Nevada Division of Financial Institutions, was asked during the hearing about the expected timeline for the establishment and operation of the database.

She was unable to provide lawmakers with a specific timeline.

Ahead of the Legislative Committee’s vote in favor of the regulations in 2020, former state senator Julia Ratti said there was an urgent need to get the database up and running as quickly as possible.

“This is a consumer protection bill passed in the legislature that we need to put in place as soon as possible,” she said. “I already hear about my constituents getting into trouble. The idea here is that there is some responsibility in not letting individuals jump from place to place and rack up more debt than they can ever repay and be buried in that debt.

Republicans who voted against the settlement feared the proposal would exceed the scope of the legislation.

The vote also drew negative reactions from representatives of the payday loan industry, who had lamented the process since Nevada’s Financial Institutions Division began discussing database regulation earlier in the year.

MP Maggie Carlton, who also voted in favor of the settlement, said the database was a good way to collect data that would give better insight into the practices of payday lenders.

“I think it’s a good step forward just knowing what issues might exist with this industry and being able to have a factual conversation about the behavior of the industry and who is accessing it for these short-term loans. term,” she said. “There’s nothing here about trying to get rid of the industry. We know it’s going to be there for a while. We just want to know what’s really going on. If you can’t you can’t measure it, you can’t monitor it and you can’t regulate it.