Congress takes action to prevent lenders from charging exorbitant interest rates

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EasyPay Finance, a consumer lender that charges very high interest rates, may soon find it more difficult to operate in Massachusetts, following two recent votes in Congress.

On Thursday, the House voted, 218 to 208, to remove a regulation promulgated under the Trump administration that made it easier for EasyPay and other non-bank lenders to extend loans with interest rates of up to 189%.

The House vote came six weeks after the Senate voted 52 to 47 to overturn the Trump administration’s rule. In the House and Senate, the measure was supported by all Democrats and a few Republicans.

President Biden is expected to sign it.

“Tackling predatory lending programs is a priority as we repair the damage done by Trump,” Representative Jake Auchincloss said in a statement after the vote.

“Congress is taking the necessary steps to make sure our economy works for everyone,” said Auchincloss, vice chairman of the House Financial Services Committee.

EasyPay is one of a dozen non-bank lenders targeted by a broad coalition of community groups, including Boston’s National Consumer Law Center, Americans for Financial Reform and Public Citizens.

“Congress has taken a critical step in ending this type of predatory lending that can trap people in debt and destroy their lives,” said Lauren Saunders, associate director of the National Consumer Law Center. “We urge President Biden to quickly sign the resolution.”

Of the dozen lenders targeted by community groups, EasyPay is the only one now operating in Massachusetts.

EasyPay is available in approximately 100 auto repair shops and a few pet stores in Massachusetts. Auto store owners surveyed last month said they let EasyPay customers know if they have no other options for paying for repairs.

A loan can be arranged in a matter of hours, completely online and via SMS. When the loan is approved, EasyPay makes a deposit covering the cost of the repairs directly into the store owner’s bank account (less a 2.99 percent fee).

EasyPay says on its website that loans are available “whether you have good credit or no credit” and without putting any money.

EasyPay requires applicants to have a cell phone, email address, and bank account for direct debits. Applicants must have at least $ 750 in income per month, according to the EasyPay website. Loan amounts range from $ 350 to $ 5,000.

In Massachusetts, on a two-year $ 2,000 loan, the interest limit is 24%, according to the National Consumer Law Center. Under these terms, the monthly payment would be around $ 106 and the total interest would be $ 538.

But at 189% interest, monthly payments on the same loan would be around $ 325, and total interest close to $ 5,800 – more than 10 times the state’s allowable interest limit. .

EasyPay circumvents Massachusetts Usury Act by being affiliated with a bank headquartered out of state, depriving the state of the power to regulate it. But the National Consumer Law Center and other critics say the affiliation is a sham that allows EasyPay to circumvent the law.

EasyPay is affiliated with Utah-based TAB Bank, according to recent testimony to the Senate Banking Committee. A representative from the Center for Responsible Lending told this committee that TAB Bank “helps EasyPay Finance make predatory lending for. . . pets, auto repairs and other products.

EasyPay did not respond to an email seeking comment.

The bill passed by Congress would allow state attorneys general to investigate whether lenders’ affiliations with banks are intended to evade state usury laws. Such investigations are now blocked by the Trump administration rule.

Attorney General Maura Healey’s office enforces state interest rate caps.

“This will help strengthen my office’s continued efforts to take action against unfair lending and other abusive high interest debt traps,” Healey said in a statement after the vote.


I have a problem? Send your consumer concern to sean.murphy@globe.com. Follow him on Twitter @spmurphyboston.



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