The payday loan industry may be in for a major overhaul.
The Consumer Financial Protection Bureau has proposed new rules to rein in those companies that offer short-term loans with sky-high interest rates.
Those proposed rules would require payday loan companies to verify a borrower's ability to repay the loan and make it harder for them to refinance a borrower's loans.
Those companies in Nebraska say it would devastate their industry.
But local social services agencies say it would hold payday loan companies accountable.
Payday lenders in Nebraska say if the guidelines recommended by the consumer protection agency were effective.
Half of the 44 payday loan companies in Omaha would be out of business.
EZ Money Regional Director Brad Hill says the regulations would do more harm than good in Nebraska.
“If this legislation would go into effect, you're going to chase people to offshore lenders that's there's absolutely no regulation on as opposed to states that are regulated like us,” Hill said.
Hill says most of his customers pay back their loans in time and come from different financial backgrounds.
“We do have doctors, lawyers, policeman and teachers,” Hill said. “I would say more of the middle class, you pretty much have to have a job, so I think you'd be surprised. It's a little more slanted towards the middle class.”
But there are many struggling families in Omaha who rely on pay day loans, and then struggle to pay them back.
Craig Howell directs local social services programs and says regulating pay day loans is a good idea.
“You and I have a bank account, and that bank account is regulated,” Howell said. “The working poor who do not have a bank account, and go to one of these advance pay places, they do not have that type of regulation to protect them.”
That lack of regulation, Howell says, can cause loan after loan, to stack on top of the working poor.
A 15 percent interest rate can be devastating to those trying to make ends meet, Howell said.
“We see these people, we see them suffering, they need help,” Howell said. “The type of help they need is not ones where they have interest rates to pay off before pay day happens and then they have to do it twice or three times in one pay day.”
The Better Business Bureau in Omaha says they receive few complaints about payday lenders.
So few, their director can’t remember the last time they received a complaint in the Omaha area.
