This column originally appeared in The Alpena News on February 19, 2020
Last October, I wrote a column in The Alpena News on payday lending, the threat it poses to local residents, and the legislative efforts underway in Lansing to protect borrowers.
I noted that rural areas, in particular, are vulnerable to payday lending, and that Alpena County has one of the higher rates of payday lenders in the state, with 14 stores per 100,000 people, making the high-interest, high-risk loans even more accessible here than in most counties. I also pointed out that a report by the Center for Responsible Lending found that, from 2012 to 2016, payday lenders took more than $513 million in fees from consumers in Michigan, with fees and interest that can reach over 340% annual percentage rate (APR).
But I also shared some good news with readers, as House Bill 4251 had been introduced in the Michigan Legislature to require lenders to determine that a borrower has the ability to repay and that the borrower’s debt-to-income ratio is not greater than 41%. Banks and credit unions are required to determine that borrowers have the ability to repay their loan, but payday lenders have no such requirement. That bill also included a stipulation that borrowers can have no more than one active loan at once and must have a 30-day “cooling off” period between loans … but it failed to include the 36% interest rate cap that the original bill language included.
Fast-forward four months, and House Bill 4251 has seen no further action than the committee hearing I wrote about in October. And in fact, later that month, some legislators instead introduced a bad payday lending bill, House Bill 5097, that benefits the lenders and further harms consumers. That bill moved quickly, passing out of the House Regulatory Reform Committee the same day it was brought up for discussion. The legislation now has to be reviewed by the House Ways and Means Committee, which will happen today.
House Bill 5097 would allow payday lenders to make loans of up to $2,500, with fees of 11% monthly on the principal of the loan. At that rate, a one-year loan would carry an estimated APR of around 132% to 135%. On a $2,500, two-year loan, that means a borrower would pay back a whopping total of $7,187.08.
The bill would not only create another high-cost credit product, but it would allow payday lenders to directly access customers’ bank accounts through electronic means. In other states where electronic access to an account is allowed, there are many stories of payday lenders attempting to take funds multiple times in any given day (thus causing overdraft fees), and of banks closing those accounts because of repeated attempts to take money electronically.
In addition, there are already laws governing small loans in Michigan — the Michigan Regulatory Loan Act and the Credit Reform Act. Proposing House Bill 5097 under the Deferred Presentment Act is an attempt to allow the payday lending industry to gain an unfair advantage by getting around the consumer protections that other small loan providers are required to abide by in Michigan.
Simply put, this legislation is designed to boost an already predatory industry, essentially sharpening its teeth and claws to enable it to sink deeper into residents’ pocket books.
This bill has widespread opposition, including my organization, the Michigan League for Public Policy, the Community Economic Development Association of Michigan, the Michigan Catholic Conference and other faith leaders, Habitat for Humanity Michigan, and several financial institutions including Lake Trust Credit Union.
As an organization dedicated to helping workers and their families make ends meet, we know times are still hard for many Michiganders.
But payday lending is a money-hungry wolf in the sheep’s clothing of economic assistance, taking advantage of people’s financial needs to create a bigger pile of debt in the long run.
The League and our partners who are truly dedicated to the economic well-being and security will continue to support sound public policies to help people who are struggling. And we will continue to oppose legislation that does more harm than good, including House Bill 5097. We will oppose House Bill 5097 when it is taken up by the House Ways and Means Committee, and every step of the way beyond that. And we urge readers to contact your legislators and urge them to oppose this bad policy as well.
Emily Jorgensen joined the Michigan League for Public Policy in July 2019. She deeply cares about the well-being of individuals and families and has a great love for Michigan. She is grateful that her position at the League enables her to combine these passions and work to help promote policies that will lead to better opportunities and security for all Michiganders.
Jacob Kaplan 
Mikell Frey is a communications professional with a passion for using the art of storytelling to positively impact lives. She strongly believes that positive social change can be inspired by the sharing of data-driven information coupled with the unique perspectives of people from all walks of life across Michigan, especially those who have faced extraordinary barriers. 
Rachel Richards rejoined the League in December 2020 as the Fiscal Policy Director working on state budget and tax policies. Prior to returning to the League, she served as the Director of Legislative Affairs for the Michigan Department of Treasury, the tax policy analyst and Legislative Director for the Michigan League for Public Policy, and a policy analyst and the Appropriations Coordinator for the Democratic Caucus of the Michigan House of Representatives. She brings with her over a decade of experience in policies focused on economic opportunity, including workforce issues, tax, and state budget.
Donald Stuckey 
Patrick Schaefer
Alexandra Stamm 
Amari Fuller
Renell Weathers, Michigan League for Public Policy (MLPP) Community Engagement Consultant. As community engagement consultant, Renell works with organizations throughout the state in connecting the impact of budget and tax policies to their communities. She is motivated by the belief that all children and adults deserve the opportunity to achieve their dreams regardless of race, ethnicity, religion or economic class.
Megan Farnsworth joined the League’s staff in December 2022 as Executive Assistant. Megan is driven by work that is personally fulfilling, and feels honored to help support the work of an organization that pushes for more robust programming and opportunities for the residents of our state. She’s excited and motivated to gain overarching knowledge of the policies and agendas that the League supports.
Yona Isaacs (she/hers) is an Early Childhood Data Analyst for the Kids Count project. After earning her Bachelor of Science in Biopsychology, Cognition, and Neuroscience at the University of Michigan, she began her career as a research coordinator in pediatric psychiatry using data to understand the impacts of brain activity and genetics on children’s behavior and mental health symptoms. This work prompted an interest in exploring social determinants of health and the role of policy in promoting equitable opportunities for all children, families, and communities. She returned to the University of Michigan to complete her Masters in Social Work focused on Social Policy and Evaluation, during which she interned with the ACLU of Michigan’s policy and legislative team and assisted local nonprofit organizations in creating data and evaluation metrics. She currently serves as a coordinator for the Michigan Center for Youth Justice on a project aiming to increase placement options and enhance cultural competency within the juvenile justice system for LGBTQIA+ youth. Yona is eager to put her data skills to work at the League in support of data-driven policies that advocate for equitable access to healthcare, education, economic security, and opportunity for 0-5 year old children. In her free time, she enjoys tackling DIY house projects and trying new outdoor activities with her dog.
Amber Bellazaire joined the Michigan League for Public Policy as a policy analyst in June of 2019. Her work primarily focuses on state policy and budgets affecting Michigan’s Medicaid programs. Previously, Amber worked at the National Conference of State Legislatures tracking legislation and research related to injury and violence prevention, adolescent health, and maternal and child health. She also brings with her two years of Americorps service. As a full time volunteer, Amber had the opportunity to tutor high school students in Chelsea, Massachusetts and address issues of healthcare access and food insecurity through in-person outreach in Seattle, Washington.
Simon Marshall-Shah joined the Michigan League for Public Policy as a State Policy Fellow in August 2019. His work focuses on state policy as it relates to the budget, immigration, health care and other League policy priorities. Before joining the League, he worked in Washington, D.C. at the Association for Community Affiliated Plans (ACAP), providing federal policy and advocacy support to nonprofit, Medicaid health plans (Safety Net Health Plans) related to the ACA Marketplaces as well as Quality & Operations.
