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Virginia law will protect consumers and expand access to affordable credit, a long-term racial justice priority


From left, Senator Mamie Locke (D-Hampton), Jay Speer, Director of Virginia Poverty Law Center, Delegate Lamont Bagby (D-Henrico). Seated, Governor Ralph Northam. Locke and Bagby co-sponsored the bill.

At a ceremonial bill signing Aug. 3 at Wesley Memorial United Methodist Church (Mechanicsville), Governor Ralph Northam celebrated passage of the Virginia Fairness in Lending Act. The new law will reform payday and title loans while expanding access to affordable credit. The legislation championed by Senator Mamie Locke (D-Hampton) and Delegate Lamont Bagby (D-Henrico) ensures that all loans have strong consumer protections, including affordable payments, reasonable time to repay, and fair prices. It closes loopholes in Virginia law that high-cost lenders used to charge consumers unlimited rates. The bill had 55 co-patrons and passed the House of Delegates (65-33) and Senate (23-16) with bipartisan support.

Governor Northam commented, “All Virginians should be able to access credit without fear of being trapped in a cycle of debt. For too long, predatory lenders took advantage of our broken laws and charged extreme prices, disproportionately hurting the Black community. Thanks to bipartisan reform, Virginia will now have the strongest laws for small loans in the nation and improved access to affordable credit.”

Leaders of the Virginia Legislative Black Caucus (VLBC) noted that comprehensive lending reform has been a long-term priority of theirs. Delegate Bagby, chair of the VLBC and the lead House patron explained, “We have been working for years to stop predatory payday and title lenders from stripping wealth from communities throughout the state, especially communities of color. Finally, we’ve righted this wrong. Now Virginia families will save more than $100 million each year going forward, money that was once being extracted from the commonwealth. This is a great example of economic and racial justice at work– everyone benefits when our policies are equitable.”

Virginia was previously known as the “East Coast capital of predatory lending.” Payday loan companies charged consumers in Virginia three times higher prices than in other states. One in eight title loan borrowers had a vehicle repossessed, one of the highest rates in the country.

The Virginia Fairness in Lending Act was developed using evidence from successful reform in other states where lenders operate profitably, but at prices far lower than they have charged in Virginia.

According to a poll conducted by The Wason Center for Public Policy, Virginia voters overwhelmingly supported (72 percent) reforms.

Senator Locke explained: “We are proud to usher in a new era of responsible lending. Payday and title lenders will no longer be able to take advantage of consumers. Lenders who offer transparent loans can offer reasonable products and we have strong new tools to enforce the law against bad actors. Most importantly, borrowers will benefit from lower prices, affordable payments and a clear pathway out of debt.”

Senator Jill Vogel (R- Fauquier), one of the Republican champions of the bill said, “This law definitively fixes Virginia’s long-standing problem with predatory lending. We now have strong safeguards for borrowers and a level playing field for responsible lenders- ensuring that Virginians still have access to credit on fair terms.”

The Rev. Rodney Hunter

Dana Wiggins, who leads the Virginia Partnership to Encourage Responsible Lending remarked, “We’re pleased that Virginia has stopped debt trap lending. While federal regulators are busy rolling back consumer protections, Virginia is showing the nation how to achieve meaningful regulation and expand access to affordable credit. We encourage the State Corporation Commission to move swiftly so that new licenses can be issued starting on October 1 and borrowers are fully protected starting on January 1.”

The Rev. Rodney Hunter, pastor of Wesley Memorial and a veteran leader in the push for reform praised the new law saying, “Thankfully, true reform won the day. This good news could not be coming soon enough amidst the economic pressures caused by the pandemic. Our elected officials, in response to the communities’ economic hurts and needs, took decisive, bipartisan action to rein in predatory lending. This is truly a momentous victory for families across Virginia.”