Consumer Protection News

EUGENE—Payday lenders commonly charge consumers a staggering 521 percent annual interest rate in Lane County, according to a new OSPIRG report. The study also revealed that one in four lenders surveyed may not be complying with the Oregon rule to post the annual percentage rates (APR) where customers can easily read it.

"No matter how desperate the consumer, no lender should be able to gouge him with these outrageous interest rates and loan terms that trap borrowers in debt," said Laura Etherton, Consumer Advocate with Oregon State Public Interest Research Group.

In a typical payday loan in Lane County, a consumer must write a post-dated personal check for $360 to borrow $300 for two weeks. If the consumer is unable to repay the entire loan on the due date, he may “roll over” the loan to extend it for another two weeks, for another fee of $60. If he rolls over the loan the three times allowed in Oregon, the borrower initially desperate for $300 pays $240 in fees and owes $300 in loan principal. To keep up with the mounting fees and inescapable debt, a consumer may even take out additional payday loans to pay off the first.

“We see the impact of payday loans everyday,” said Laurie Trieger of Food for Lane County, the area’s food bank, “People get a payday loan to help pay rent or groceries, but end up in an even worse position – and at our doorstep.”

The report, "Predatory Lending In Lane County," authored by Oregon Student Public Interest Research Group, details the findings of in-person surveys of 80 percent of the licensed payday lending outfits in the county. In addition to exceedingly high interest rates, the study found consumers face obstacles to repaying the loans such as penalties for repaying the loan early or in installments and clauses that allow the lender to deposit the consumers’ check before the due date.

Tom Dodd of United Lutheran Church in Eugene became involved in the issue when one of his parishioners sought his help after she was caught in a payday loan debt trap, "Charging triple-digit interest is unconscionable,” said Dodd, “it’s time to rein in the predatory practices of payday lenders.”

The report comes as public pressure mounts to enact meaningful reforms, prompting city ordinances, a proposed ballot initiative, and possible consideration in the Legislature’s upcoming special session.

“Oregon should enact the strongest possible consumer protections,” said Etherton, “the proposed ballot measure’s provisions provide the minimum necessary to protect consumers and the legislature should not accept any less.”

Additional Contacts
Laurie Trieger, Food for Lane County
(541) 343-2822
Pastor Tom Dodd, United Lutheran Church
(541) 342-5808