A Maine bill to thwart predatory online lenders is moving to the full state legislature with the unanimous support of the state's Insurance and Financial Services Committee.
The bill, L.D. 1691, addresses the problem of unlicensed payday loans. Under current law, these online lenders can freely access borrowers bank accounts through firms that process electronic money transfers. The measure, introduced by Rep. Christine Powers, D-Naples, makes it illegal to process the electronic transactions that these unlicensed lenders use to access borrowers bank accounts.
According to testimony by Will Lund, superintendent of the Maine Bureau of Consumer Credit Protection, hundreds of state residents fall victim to Internet-based payday lenders each year. Last year, 65 consumers sent written complaints about these lenders to the bureau and reported that they were asked to pay between 300 and 600 percent interest. One hundred more consumers told the bureau they were subject to harassing collection tactics when they were unable to pay. They complained that their loan balances were doubling and tripling within months of being issued the loan.
Rep. Anne-Marie Mastraccio, D-Sanford, co-sponsored the bill.
"This bill will protect Maine families across the state," she said. "The nature of theft is changing. A thief no longer needs physical access to the victims to take advantage of them. This bill addresses this reality."
Online predatory lenders tend not to have a physical presence in the U.S., instead using the Internet to make loans that are already illegal under several state's laws - including in Maine. ??[LD 1691] would create a valuable tool to pursue and shut down lenders who prey on Maine citizens with exorbitant interest rates and fees but which operate outside of Maine and avoid Maines licensing requirements, said Maine Attorney General Janet Mills in written testimony provided to the committee.
During the bills public hearing, nobody testified in opposition.