After industry ups and downs and pushback, the state’s payday loan database is finally operational

A state database for tracking short-term payday loans, which was supposed to be operational in July 2020, is finally up and running a year and a half later.

That system took until February 1 of this year to work, a year after lawmakers approved the regulations governing the database on December 28, 2020.

After failing to grant a hearing for legislation in 2019 that proposed capping percentage rates for payday loans, which can be higher than 600% in Nevada, lawmakers passed Senate Bill 201, which authorized a database to ensure that loan companies do not lend to borrowers. who lack the means to pay.

In an email, Teri Williams, a spokeswoman for the Department of Business and Industry, said Monday that the long time between the bill’s passage and implementation is due to a combination of issues, including the pandemic.

The delay was primarily due to operational disruptions and technology challenges due to the pandemic, which affected the process and timing of hosting regulatory workshops, the LCB (Legislative Advisory Bureau) review, the RFP process, and the development and actual database testing before implementation. ,” she said.

The Nevada Division of Financial Institutions, which hosted virtual meetings on database development during the pandemic, encountered some technical difficulties along the way that resulted in the meetings being postponed and rescheduled, it added.

“The initial workshop for the database was scheduled and the meeting was oversubscribed and people were unable to access the meeting so they had to cancel and reschedule for 30 days as required by law,” Williams said. “A portion of the delay can also be attributed to the division’s commissioner vacancy and the subsequent hiring of a permanent commissioner to guide regulations through the process.”

Consumer rights advocates and legal groups have long pushed Nevada officials to do more to curb predatory practices in the payday loan industry. Although they argued that the state needed to do more, they supported the creation of the database.

The initial regulations governing the database were finalized in November 2020 and included provisions to prevent clients from taking out multiple loans that exceed 25% of their income.

Lawmakers approved the proposal 7-5 on a party-line vote during a December 2020 meeting of the Legislative Commission, which approves regulations for state agencies.

Mary Young, deputy commissioner of the Nevada Division of Financial Institutions, was asked during the hearing what the anticipated timeline was for getting the database up and running.

He was unable to provide lawmakers with a set time frame.

Before the Legislative Commission vote in favor of the regulation in 2020, former state senator Julia Ratti said it was urgent to establish the database as soon as possible.

“This is a consumer protection bill that was approved in the Legislature and that we must implement sooner rather than later,” he said. “I already have news from my constituents who are getting into trouble. The idea here is that there is some responsibility to not allow people to jump from one place to another and accumulate more debt than they can pay and get buried by that debt.

Republicans who voted against the regulations worried that the proposal would go beyond the scope of the legislation.

The vote was also pushed back by representatives of the payday loan industry, who had regretted the process since the Nevada Division of Financial Institutions began discussing regulations for the database earlier this year.

Assemblywoman Maggie Carlton, who also voted in favor of the regulation, said the database was a good way to collect data that would provide better insight into payday lenders’ practices.

“I think this is a good step forward in knowing what issues might exist with this industry and being able to have a fact-based conversation about behavior in the industry and those who access it for those short-term loans.” she said. “There’s nothing here about trying to get rid of the industry. We know it’s going to be out there for a while. We just want to know what’s really going on. If you can’t measure it, you can’t monitor it and you can’t regulate it.”