BUFFALO, N.Y. (WIVB) – Getting a loan in New York could get a lot easier, especially for those shunned by banks, if a new bill pending in Albany is passed. All you would have to do is head to your closest business that cashes checks.
But opposition is mounting by consumer watchdog groups who claim questions about protecting borrowers from abusive lending practices have not been answered sufficiently.
CHECK CASHING TRADE GROUP RESPONSE | Click here to read an FAQ issued by New York’s check cashing trade group.
The measure would allow check-cashing services to offer loans to individuals and small businesses, but those businesses would not be held to the same standards as banks and loan companies
At present, check cashing firms are regulated by the state and can offer a variety of other retail services–for a price–such as wiring money, paying bills, buying pre-paid debit cards and money orders.
The aim of the bill pending in Albany is to allow the check-cashing stores to loan money to people in underserved communities where it is a lot harder to borrow money from conventional financial institutions such as banks and credit unions.
But Thomas Keily, an attorney for the Western New York Law Center, a consumer watchdog group, contends the measure does not contain enough safeguards to protect consumers from abuse.
“In the legislation, there is no standard of what will happen–there is no standard. Could the check casher come after their tools, if they are a carpenter, could they seize their tools?”
Keily said check cashing firms are ill-equipped to properly assess what a borrower can afford to pay back, and how far they can go to collect on delinquent loans, “We don’t know because it is not established in the legislation, so it is very difficult to tell where that stops.”
With just days to go until the end of the legislative session, the odds seem to be stacked against the measure becoming law. The bill is in committee, and it still has to pass both the full Assembly and Senate.