A $200 million rebound from the previous year

DURHAM, NC – Today, the Center for Responsible Lending (CRL) released a new report, Down the Drain: Payday Lenders Take $2.4 Billion in Fees from Borrowers in One Year. Based on 2022 data, the report features a range of original findings. In addition to calculating that borrowers paid payday lenders $2.4 billion in fees nationally that year, the report provides a dollar amount of fees paid in each of the 30 states where this predatory lending is not outlawed. Notably, residents of the state of Texas paid $1.3 billion in fees, over half the nation’s total. Today’s report accompanies an additional research brief released today on high-cost lending, Under the Radar: Evidence of Prohibited Vehicle Title Loans Made in 22 States and DC.

“Although payday loan fee volume declined early in the pandemic, the Down the Drain report shows a $200 million rebound from 2021 to 2022, reflecting increased strain on consumers’ finances,” said report co-author Lucia Constantine, senior researcher at CRL. “Especially considering changes in the market toward online and longer-term loans, storefront payday lenders in 2022 continued to drain a massive amount of wealth from people and communities with very little wealth.”

“Payday loans are designed to trap people in debt and this report shows the scale of the harm,” said report co-author Yasmin Farahi, deputy director of state policy and senior policy counsel. “Predatory lending is a public policy choice. Twenty states and DC protect their residents from the payday loan debt trap with strong interest rate caps at no higher than 36% APR. Congress and policymakers in states without commonsense interest rate limits should enact these usury laws and the executive branch has a duty to enforce them – that is how to keep payday loan sharks at bay.”

Among the report’s notable findings:

  • Between 2021 and 2022, payday loan fee volume increased in California by 20%, Texas by 22%, and Florida by 17%. All are bigger percent increases than the national fee volume experienced.
  • States where payday lenders took in the highest fee volumes are: Texas at over $1.3 billion, Florida at over $252 million, California at over $224 million, Mississippi at over $149 million, and Michigan at over $78 million. Mississippi’s payday fee total, the fourth highest, is far out of proportion to its population size, which is the 35th largest.
  • In the only two states that collect and report statistics on online lending, the share of online payday lending increased from 2019 to 2022: in Alaska from 55% to 57% and in California from 25% to 49%.

Read the full report Down the Drain: Payday Lenders Take $2.4 Billion in Fees from Borrowers in One Year here.

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Press Contact: Vincenza Previte vincenza.previte@responsiblelending.org