A nationwide short-term payday loan tracking database that should be operational in July 2020 is finally operational a year and a half later.
It took until February 1 of this year for that system to go live, a year after lawmakers approved regulations for the database on December 28, 2020.
In 2019, after the legislature failed to allow a hearing for legislation proposing a limit on payday loan percentages, which can exceed 600% in Nevada, the legislature instead passed Senate Bill 201, which authorized a database to ensure lending companies were not making loans given to borrowers who lack the funds to repay.
In an email on Monday, Teri Williams, a spokeswoman for the Department of Business and Industry, said the long time between the bill’s passage and implementation was due to a mix of issues, including the pandemic.
“The delay was primarily due to business disruptions and technological challenges due to the pandemic, affecting the process and timing of conducting regulatory workshops, the LCB (Legislative Counsel Bureau) review, the RFP process, and the actual development and testing of the database before implementation,” she said.
The Nevada Financial Institutions Division, which hosted virtual meetings to develop the database during the pandemic, encountered some technical difficulties that caused meetings to be postponed and rescheduled, she added.
“The first workshop for the database was scheduled and the meeting was overbooked and people couldn’t access the meeting so they had to cancel and reschedule it 30 days as required by law,” Williams said. “Part of the delay is also due to the vacancy of the commissioner in the department and the subsequent hiring of a permanent commissioner to guide regulations through the process.”
Consumer advocates and rights groups have long urged Nevada officials to take more action to curb the predatory practices of the payday loan industry. Although they argued that the state needed to do more, they supported the database’s establishment.
The first regulations for the database were finalized in November 2020 and included provisions to prevent clients from taking out multiple loans that exceed 25% of their income.
Lawmakers approved the proposal 7-5 in a party-line vote during a December 2020 session of the Legislative Commission, which approves regulations for state agencies.
Mary Young, Deputy Commissioner for the Nevada Financial Institutions Division, was asked during the hearing about the likely timeline for the database to go live.
She was unable to give the legislature a set timeframe.
Ahead of the Legislative Commission’s vote to support the ordinance in 2020, former state senator Julia Ratti said there was an urgency to get the database up and running as soon as possible.
“This is a consumer protection law passed by the legislature that we need to enact sooner rather than later,” she said. “I’m already hearing from my constituents who are getting themselves into trouble. The idea here is that there is a certain responsibility not to have individuals jump from one place to another accumulating more debt than they can ever pay back and get buried by that debt.”
Republicans who voted against the regulations feared the proposal went beyond the scope of the legislation.
The vote was also rejected by payday loan industry officials who had done so complained about the process since the Nevada Financial Institutions Division began discussing regulations for the database earlier this year.
MP Maggie Carlton, who also voted in favor of the regulation, said the database is a good way to collect data that would provide better insight into payday lenders‘ practices.
“I think this is a good step forward to just knowing what problems there might be in this industry and being able to have a fact based conversation about the behavior in the industry and those responsible for it.” short-term loans access it.” She said. “There is nothing here about getting rid of the industry. We know it’s going to be out there for a while. We just want to know what’s really going on. What cannot be measured cannot be monitored and cannot be regulated.”