Groups Urge End to Predatory Lending and Debt Collection

Consumer advocacy groups are alleging that minorities and low-income consumers are being unfairly targeted by predatory lenders and debt collection agencies.  In response, they’d like lawmakers to “crack down” on these financial practices and ensure equal access to legitimate services.

With tax season coming upon us, one of the more questionable services targeted to lower income consumers is refund anticipation loans, advertised as quick sources of tax-refund money.

Under state law, lenders cannot charge more than 25 percent interest on small loans. But companies offering "rapid refunds," as well as payday and holiday loans, often charge 40 percent or more. The companies circumvent state statutes by partnering with national banks or independent tax-preparation companies.

And, from the debt collection front, AARP volunteer Gina Calabrese told New York’s <i>Journal News</i> that “Among the worst abuses is creditors’ freezing of bank accounts that contain Social Security and other ‘exempt’ benefits, which are off limits to creditors by law.”

Conway called on the Legislature to enact "new laws that rein in unruly debt collectors" and enforce federal laws that exempt Social Security from account freezes.