Colorado statement
August 12, 2010 | Colorado, research | Comments (0)Consumer Lending Groups Issue Statement on New Loan Law
Denver, CO – August 11, 2010 – A new law governing short-term consumer credit goes into effect today in Colorado. The law eliminates payday loans and, in their place, creates a six-month consumer installment loan product. The industry associations representing lenders that formerly offered payday loans in Colorado — the Colorado Financial Service Centers Association (COFiSCA) and the Community Financial Services Association (CFSA) — issued the following statement regarding the new law:
The new law that goes into effect today is the result of definitive action taken by the state legislature to eliminate payday loans in Colorado. HB 1351, passed with the urging of groups opposed to the payday lending industry, leaves over 300,000 consumers in Colorado without a convenient, highly-regulated credit product that has been available to them for more than a decade. Moreover, the new law has already exacerbated economic hardship in the state with the closing of dozens of payday loan stores and the loss of at least 100 full-time jobs with benefits.
Unfortunately, HB 1351 is yet another example of hasty, ill-conceived antibusiness regulation that limits consumer’s short-term credit options. The law allows lenders to offer consumers an installment loan of no more than $500 for at least a six month period, but eliminates consumers’ ability to take out a loan simply to bridge a cash shortfall until payday. In its present form the law offers consumers little but confusion and complexity, and offers lenders uncertainty in terms of a rational framework for implementation.
Our members have been working intently since HB 1351 was signed into law by Governor Ritter on May 25th to evaluate whether the loan product crafted by the legislature can be translated into a viable business model. We do not know if this installment loan will meet the needs of our customers, and we are concerned that its complex nature will negatively affect the simplicity and
transparency they had come to expect with the payday loan product previously offered. As an industry that serves over 300,000 Coloradans a year, there is no question that the need for short-term personal credit remains strong, perhaps now more than ever given the deteriorating economy across our state and country.
Over the upcoming months we hope to have a clearer understanding of customer response to the new product offering. We will continue working with state policy makers to refine the details of this new law in an effort to better meet the needs of consumers.
In the meantime, we will work to assure that the lenders who make up CFSA and COFiSCA operate in a fully compliant manner.
About the Colorado Financial Service Centers Association: COFiSCA is the state trade association representing payday lenders in Colorado. COFiSCA’s primary mission is to bring a broad range of community based financial services businesses together with the goal of identifying industry best practices, improving customer satisfaction and establishing guidelines to assist members in complying with various state and federal regulations. COFiSCA members are dedicated to delivering valuable community based financial services to underserved consumers throughout the State of Colorado. For more information: www.cofisca.org
About the Community Financial Services Association of America: CFSA is the only national organization dedicated solely to
promoting responsible regulation of the payday advance industry and consumer protections through CFSA’s Best Practices. As
such, we are committed to working with policymakers, consumer advocates and CFSA member companies to ensure that the payday advance is a safe and viable credit option for consumers. For more information: www.cfsaa.com
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