Lieu Bill To Protect Military Members From Predatory Lenders Passes Key Senate Committee

(Sacramento, CA) – Assemblymember Ted W. Lieu (D-Torrance) today won passage of AB 1965 in the California Senate Banking, Finance and Insurance Committee by a unanimous vote. AB 1965, the strongest bill of its type in the nation, will provide special protections for military members who take out payday loans.

AB 1965 provides substantial protections that will help mitigate the impact of payday lending practices in California on our military readiness. Specifically, AB 1965 will:

• Require payday lenders that make loans to military borrowers, and their spouses, to defer payments on the payday loan for the duration of deployment, plus 30 additional days after they return.
• Prevent the accrual of interest or any other charges during the deferral period.
• Allow all military borrowers access to an automatic repayment plan.
• Eliminate military targeting by the payday loan industry by banning lenders from marketing loans to military borrowers in any manner suggesting a military affiliation.
• Require that any binding arbitration agreement in a payday loan to a military borrower is voluntary.

Payday lenders exist in substantially greater concentrations around military bases. The Department of Defense is extremely concerned about the impact financial problems are having on military readiness, which in part, is due to payday loans. AB 1965 contains substantial protections that will address this problem.

“If this bill becomes law,” said Lieu, “California will have the strongest law in the nation in terms of protections to military service members for states in which the payday loan product is legal.”

AB 1965 will be heard in the Senate Veterans Affairs next Wednesday.