Assemblywoman Addie
J. Russell (D-Theresa) announced she is sponsoring new legislation to provide
much-needed oversight of companies that offer loan advances on pensions for
veterans, seniors and other individuals (A.7332-A). The legislation is aimed at
businesses that often engage in deceptive or predatory lending practices that target
veterans and seniors who have pensions.
“Predatory lending is a repulsive and
unethical business practice that unfortunately has been on the rise,” said
Assemblywoman Russell. “This legislation provides the oversight necessary to
ensure our veterans and seniors are not taken advantage of by unscrupulous lenders
looking to make a quick buck.”
Pension-advance companies target
individuals who are in need of cash but have been turned away by banks. These
companies, which are not subject to state or federal banking regulations, often
advertise directly to veterans, seniors or other vulnerable populations, who
are encouraged to sign over their pension checks in exchange for lump sums of
cash. In reality, these advances come with outrageously high interest rates,
ranging from 27 percent to 106 percent, which trap the recipient in a cycle of
long-term debt.
“Being from a community with large numbers of veterans and
seniors, doing right by them is a responsibility I take very seriously,” said
Assemblywoman Russell. “We cannot sit back and do nothing while these companies
capitalize on their economic hardships.”
The bill sponsored by Assemblywoman
Russell would authorize the New York State Department of Financial Services to
publicly evaluate pension-advance companies and make any needed recommendations
regarding their licensure and the fees and interest rates they charge. It would
also direct the department to examine these companies’ disclosure practices.
Pension-advance companies became
increasingly common following the 2008 financial crisis, when many retirees
lost significant portions of their investments and turned to pension advances
to pay their bills. At the same time, the combined debt held by Americans
between the ages of 65 and 74 years old is rising faster than the debt held by
any other age group. Among households led by individuals above the age of 65,
debt levels have increased more than 50 percent from 2000 through 2011.[1]
-30-