Payday Lenders Skirt State Ban
Payday lending is currently banned in Georgia, but companies are still finding ways to offer these high-interest short-term loans.
The state attorney general’s office recently threatened legal action against two out-of-state payday lenders. The lending firms were offering loans online that had interest rates at about 300-400 percent annually.
The lending firms initially challenged the state and claimed tribal immunity because they were owned and operated by Native Americans. But eventually the companies yielded and have since removed options that allowed Georgians to use the services.
John Sours of Georgia’s Office of Consumer Protection says despite the state ban on the practice, payday loans are still relatively easy to find online.
“This is not a small industry and as internet-use has grown, so to has the prevalence of this kind of activity, so I think the impact of it in Georgia has decreased substantially but this activity certainly has not gone away,” said Sours.
Payday lending is still allowed in 37 states, with varying degrees of regulation in each of those states. Sours says that makes completely eliminating the practice difficult.
Georgia law limits lenders to no more than 16 percent interest annually on loans of $3,000 or less.
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