Predatory lenders promise “fast cash” and “short-term” fixes but at a high cost. These lenders, which cluster in low-income neighborhoods and communities of color, often charge annual interest rates as high as 300% or more for short-term loans. As a result, borrowers find themselves trapped in a vicious debt cycle as they end up having to borrow more and more to pay for their initial loans. In 2004, Georgia took steps to effectively ban payday lenders by imposing strict usury caps on the interest rates the lenders can charge. However, predatory lenders are now benefiting in Georgia by forming partnerships with Fintech companies that offer automated services to speed up their processes.

These “rent-a-bank” schemes enable predatory lenders, including some Fintech companies, to evade Georgia’s interest rate cap and other hard-fought protections. With the economic instability tied to the pandemic, this would be the worst time to increase risk of financial exploitation for already cash-strapped Georgians. We oppose any effort to create a loophole that could allow predatory lenders to exploit rent-a-bank schemes to evade Georgia’s strong consumer protection laws and put our usury caps at risk.