WHY IT'S SO HARD TO REGULATE PAYDAY LENDERS. by Astra Taylor

Georgia's founder, James Oglethorpe, an eighteenth-century social reformer, envisioned the colony as an economic utopia-a haven for those locked in Britain's debtors' prisons. Oglethorpe petitioned King George II to allow the country's worthy poor a second chance in an overseas settlement, and then instituted laws that sought to erase class distinctions while prohibiting alcohol and slavery. The experiment lasted less than two decades, cut short by Spanish hostilities and resistance from residents who wanted to own slaves and drink rum.

Despite the fact that Georgia didn't become the debtors' haven that Oglethorpe envisioned, the colony didn't entirely abandon its early principles. In 1759, it established strict limits on usury. But before long lenders began challenging and evading such laws. In the late nineteenth century, the practice of "wage buying" emerged, with creditors granting loans in exchange for a promise of part of the borrower's future earnings. Through the years, the practice evolved into the modern payday-loan industry, sometimes called the small-dollar-loan industry; it spread across the country, particularly to urban centers, and now online. Throughout, Georgia has remained at the forefront of efforts to curtail creditors' most abusive practices, only to have the industry devise new ways to get around them.

And so when, in June, the Consumer Financial Protection Bureau announced new draft rules to protect American debtors from exploitative lenders-the first federal regulation of the payday-loan industry by the C.F.P.B.-advocates in Georgia began assessing the ways that the industry might be able to evade the rules. (A disclosure: I work on economic-justice issues through the Debt Collective, an organization that I co-founded. It does not address payday lending, specifically, nor operate in Georgia.) The rules, which are now open to public comment, aim to crack down on lending practices that have been shown to target low-income individuals and ensnare them in a cycle of borrowing at inflated rates. Read more at the NEW YORKER

Consumers want action on illegal debt collection and CFPB agrees

If you are one of the 77 million Americans who are hounded each year by debt collectors, the Consumer Financial Protection Bureau (CFPB) is taking on this $13 billion industry. At a July 28 field hearing in Sacramento, Richard Cordray, CFPB Director, announced the Bureau's intent to rein in illegal practices that harass and rob consumers.

"Today we are considering proposals that would drastically overhaul the debt collection market. Our rules would apply to third-party debt collectors and to others covered by the Fair Debt Collection Practices Act, including many debt buyers. . . . The basic principles of the proposals we are considering are grounded in common sense. Companies should not collect debt that is not owed. They should have more reliable information about the debt before they try to collect," said Director Cordray.

"In the debt collection market, notably," he continued, "consumers do not have the crucial power of choice over those who do business with them when creditors turn their debts over to third-party collectors. They cannot vote with their feet. They have no say over who collects their debts, and they likely know next to nothing about the collector until they receive a call or a letter. This can quickly lead to a barrage of communications, which in some cases are designed to be harassing or intimidating."

Reactions to CFPB's proposals were as swift as they were direct. Consumer advocates, like People's Action Institute, a national organization working in 30 states for economic, environmental, racial and gender justice weighed in. Read the entire story at LOS ANGELES SENTINEL