Letter from Ward Scull
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Some Virginians know, but many don’t know, that car title, payday, and open ended lenders charge interest rates of 300 percent, 400 percent APR or more on their loans. By any definition, this is usury. But usury is legal in Virginia under laws passed and reaffirmed every year by the General Assembly. To put it another way, payday, car title, and open ended lending are a reverse Ponzi scheme. Instead of enticing investors into pouring more and more money into bogus securities, predatory lenders entice the borrowers to take out additional loans until they are trapped into a cycle of debt or have their cars forfeited.
Every year, for the past several years, public interest groups, businesses, and faith based organizations have traveled to Richmond to petition the General Assembly to do one simple, decent thing in regard to predatory lending and usury in Virginia, i.e., to ban usury by imposing a reasonable interest rate cap of 12 to 36 percent APR. And every year payday loan, car title loan, and open ended lenders make the same journey but with a mission to maintain and make more complex the laws governing predatory lending in Virginia.
So far, evil has triumphed over good. Year after year the predatory lenders have bamboozled and hoodwinked our legislators and with generous monetary donations the lucre taken from the pockets of the working classes.
Hopefully, the General Assembly has learned from their yearly mistakes and will at last pass the simple legislation that will ban usury and predatory lending as numerous other states have done and the Congress has done for military personnel. But this will not happen automatically and it will not happen at all if concerned citizens fail to contact their delegates and senators to demand the end of usury now.
Ward R. Scull lll is the cofounder of Virginians Against Payday Loans.
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