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Small Dollar Loans, Big Problems: How States Protect Consumers From Abuses And How The Federal Government Can Help, Leah A. Plunkett, Ana Lucia Hurtado

Law Faculty Scholarship

Across America, drivers pass twice as many payday loan storefronts as Starbucks coffee shops.2 In twenty-nine states, there are more payday lender stores than McDonald’s restaurants.3 Numerous research studies warn of the dangers associated with payday loans, including significantly higher rates of bankruptcies, evictions, utility shut-offs, and involuntary bank account closures.4 Many states have recognized the dangers posed by payday and other types of small-dollar loans with predatory features, prompting them to adopt laws to combat the abusive nature of these loans. These laws, however, offer consumers varying degrees of protection.

Historically, states have used their police powers to protect …