WHAT THE BILL WOULD DO

AB 539 would place a maximum interest rate of roughly 38% on consumer loans between $2,500 and $9,999. It also would restrict the duration of these loans to between one and five years. 

WHO SUPPORTS IT?

Consumer protection advocates and anti-poverty activists, faith groups, some of the state’s largest unions, a number of municipal governments including Los Angeles and the state Department of Justice. They argue that loans with interest rates higher than 100% are exploitative. 

WHO’S OPPOSED?

Consumer lenders who are active in the high-cost share of the market, a number of tribal governments and the state’s National Association for the Advancement of Colored People. They argue that outlawing high-cost loans will push desperate borrowers toward even less favorable alternatives.

WHY IT MATTERS

With payday lenders facing increased state and federal regulatory scrutiny, lenders have raced into the market for slightly larger loans that are not subject to rate caps. Between 2009 and 2017, loans between $2,500 and under $10,000 with rates of more than 100% have surged from 4% of the non-bank consumer lending market to nearly a third.

GOVERNOR’S CALL

Newsom signed AB 539 on Oct. 10, 2019, saying that “many Californians living paycheck to paycheck are exploited by predatory lending practices,” and that “this industry must be held to account.”