Oregon lawmakers are considering a bill that would crack down on what proponents call predatory lending schemes that impact thousands of Oregonians each year.
A new report by the Center for Responsible Lending examines lender OppFi, which charges Oregonians up to 195% interest on loans of $500 to $5,000. According to Ellen Harnick, the center’s executive vice president and director of state policy, such lenders target desperate borrowers and trap them in cycles of debt, where interest paid can equal the original loan amount within a year or two.
“When you have borrowers paying such extraordinary amounts of interest, then the lender doesn’t need a lot of their borrowers to succeed,” Harnick said. “In fact, a lot of their borrowers can fail.”
The new legislation would require all lenders operating in Oregon to comply with the state’s interest rate caps of 36%, regardless of where they are based. Similar legislation was passed by the Oregon House last year, but it stalled in the Senate.
Rep. Nathan Sosa, D-Hillsboro, one of the bill’s sponsors, said online lenders exploit a federal law requiring states to honor out-of-state banks’ lending terms. He explained that lenders partner with Utah banks, which have no interest caps, in order to bypass Oregon’s own limits.
“This bill is about stating to all the lenders in our state that if you’re going to do business in Oregon,” he said, “you all have to comply with the laws of our state.”
He added that over the past five years, 22,000 of these high-interest loans have been given out to Oregonians, totaling more than $11 million.
