Alabama House passes payday loan database bill

The Alabama House voted 93-1 Thursday for a bill to create a statewide common database of payday loans. HB 145, sponsored by Rep. Patricia Todd, D-Birmingham, now goes to the Senate.

Todd’s bill would make it easier to enforce a current state law that prohibits borrowers from taking out more than $500 in payday loans at any one time. Without a common database, many borrowers can hop from storefront to storefront and take out multiple $500 payday loans, racking up thousands of dollars of debt.

HB 145 would not reduce the annual interest rate that payday lenders can charge in Alabama from the current 456 percent APR. But a common database would alert lenders when a borrower already had reached the $500 cap and prevent them from extending additional loans to that borrower.

The state Banking Department last year proposed regulations to create a common database, but lenders sued to block the plan, claiming the department lacked the authority to do so. Todd’s bill would require lenders to submit information annually to the department, which many advocates say would greatly improve available data about the industry.

Lawmakers will return Tuesday for the 25th of 30 allowable meeting days during the 2014 regular session, which is expected to last until early April.

By Chris Sanders, communications director. Policy analyst Stephen Stetson contributed to this report. Posted March 13, 2014.