Business

New State Law Restricts Payday, Other “Debt Trap” Loans

Published

7 years ago

October 24, 2019

Gov. Gavin Newsom recently signed Assembly Bill 539, putting restrictions on predatory lending practices in California that he says “create debt traps for families already struggling financially.”

Critics say lenders who offer these high-interest loans target disadvantaged people, large numbers of them Black and Brown consumers living in some of the most underserved census tracts in the state. These are Californians who are typically denied traditional bank loans because of poor credit or lack of collateral. However, the high interest rates on these loans can be crippling.

According to documents provided to California Black Media, a LoanMe Inc. loan for around $5,000 would require a payback of $42,000 over seven years at a 115 percent annual percentage rate

Tacking interest rates on loans as high as 200 percent sometimes — in addition to hidden fees, critics say that predatory lenders typically structure their loans in ways that force people who sign up for them to constantly re-borrow money to pay off the mounting debts they already owe.

“Many Californians living paycheck to paycheck are exploited by predatory lending practices each year,” said Newsom. “Defaulting on high-cost, high-interest rate installment loans push families further into poverty instead of pulling them out. These families deserve better, and this industry must be held to account.” The new legislation restricts the amount of interest that can be levied on loans ranging from $2,500-$10,000 to 36 percent, plus the federal funds rate.

“Gov. Newsom’s signature on AB 539 sends a strong message that California will not allow lenders to thrive on high-cost loans that often leave consumers worse off than when they started,” said Assemblymember Monique Limόn (D-Santa Barbara,) co-author of the bill.

“I am grateful to the broad coalition of community groups, faith leaders, local governments, and responsible lenders who supported this historic achievement and helped us achieve strong bipartisan support of this legislation.”

Limon has been campaigning for the passage of AB 539 for more than two years now. She is also a champion for financial education that informs consumers about the dangers of high-interest loans.

Assemblymember Timothy Grayson (D-Concord), a co-author of the bill, says the governor signing the bill signals the end of the worst kinds of abusive loans in the state.

“Californians deserve real access to capital, not exploitative loans that trap them in perpetual payments and compounding debt,” said Grayson. “We must do more to protect financially vulnerable, hardworking families from predatory lenders who profit off their devastation.”

Figures from the California Department of Business Oversight (CBO) reveal that in 2016 the total dollar amount for payday loans in the state was $3.14 billion. The CBO also stated that seniors now represent the largest group taking out payday loans and more than 400,000 consumers in the state took out 10 payday loans in 2016. A third of those high-cost loans ended up in default.

Not everyone is cheering the passage of AB 539. Those opponents say the bill is restrictive and undermines the values of free-market capitalism.

The California-Hawaii chapter of the NAACP opposed the bill, arguing that it limits options for poor African Americans who need to borrow money in emergencies.

“We are deeply concerned about the impact AB 539 will have on small businesses and consumers. As proposed, AB 539 will limit lenders’ ability to provide a variety of short-term credit options to borrowers in need.” said the California Hispanic Chamber of Commerce in an interview with California Globe.

Manny Otiko, California Black Media

Posts by Manny Otiko, California Black Media

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Activism

Oakland Post: Week of May 6 – 12, 2026

The printed Weekly Edition of the Oakland Post: Week of may 6 – 12, 2026

Published

4 days ago

May 10, 2026

Oakland Post

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Activism

Up to the Job: How San Francisco’s PRC Is Providing Work Opportunities That Turn Into Lasting Stability

Each year, PRC serves more than 5,000 clients through a wide range of programs. These include housing navigation, legal advocacy to ensure access to health and public benefits, supportive housing, job and life-skills training, and residential treatment programs.

Published

3 weeks ago

April 26, 2026

Oakland Post

Black Leadership Council (BLC) Advocacy Day in Sacramento. BLC works to advance meaningful change through policy engagement to unlock the full potential of Black and low-income communities. Photo courtesy of PRC.

By Joe Kocurek, California Black Media

Seville Christian arrived in San Francisco in the 1990s from Kansas City, Mo., a transgender woman coming from a time and place still hostile to who she was.

San Francisco offered a deeper LGBTQ+ history and a more visible community of people like her, but even in a city known for acceptance, building a stable life from scratch was no small task.

After arriving in the city, she turned to Positive Resource Center (PRC) looking for work — and for a foothold — in a new place.

“PRC gave me my first job,” Christian said. “A simple gig — passing out magazines at the San Francisco Pride Parade.”

That first opportunity marked the beginning of a decades-long relationship with PRC, one that has seen Christian grow from client to valued employee, and eventually to policy fellow.

“Today, I’ve been with PRC for 27 years, going on 28,” she said.

Seville Christian’s decades-long relationship with PRC includes as a client, fellow and beloved employee. Photo courtesy of PRC.

Helping people access employment and build sustainable careers has been a cornerstone of PRC’s mission since its inception nearly four decades ago. In its most recent annual impact report, PRC served 443 clients through workforce development services, including career counseling, educational programs, hands-on training, and job search assistance. The average wage earned by PRC clients is $26.48 per hour — approximately 38% above San Francisco’s minimum wage.

To advance this work, organizations like PRC have benefited from funding through California’s Stop the Hate Program, which provides direct support to community-based organizations leading anti-hate initiatives.

Christian’s path was not without challenges. During some rocky years, she experienced periods of housing instability and struggled with addiction. Through PRC, she enrolled in a life-skills program that emphasized using her own lived experience as a means of helping others. The program helped set her on a path toward completing an associate’s degree and ultimately launching a career in case management.

“Today, whether someone is new to the city or has lived here their whole life, I know how to help them navigate to where they need to be,” Christian said.

Members of PRC’s Black Leadership Council meet with a lawmaker in Sacramento. Photo courtesy of PRC.

While PRC was founded to serve people living with HIV, its mission has expanded over the decades to meet the needs of people with disabilities, individuals experiencing homelessness, and those facing mental health and substance use challenges.

According to PRC’s Chief of Public Policy and Public Affairs, Tasha Henneman, some of the organization’s earliest programs remain as vital today as they were at the start.

“Our emergency financial assistance program helped more than 1,200 people this year pay rent, cover medical bills, and keep the lights on,” Henneman said. “And over 1,400 people reached out for legal advocacy, resulting in more than $2.5 million in retroactive benefits unlocked.”

Beyond direct services, PRC is deeply committed to community empowerment and policy change. Programs such as the Black Leadership Council support community leaders in advocating for systemic reform, while the Black Trans Initiative focuses on addressing the unique challenges faced by Black transgender individuals.

A recent study from the Williams Institute highlighted findings that 71% of transgender homicide victims in the U.S. between 2010 and 2021 were Black and that nearly a third of the transgender homicides during that period were confirmed or suspected hate crimes.

PRC’s direct and indirect services can be a lifeline for people experiencing hate and are an example of the resources people can get connected with through the state’s CA vs Hate hotline.

PRC is now also producing a film project that centers the lived experiences of Black trans clients, including individuals like Christian.

PRC welcomed guests to their annual Open House in April, an evening dedicated to connection, reflection, and learning more about the programs and people working every day to support San Franciscans experiencing housing instability, unemployment, and behavioral health challenges. Photo courtesy of PRC.

“Our film highlights the health journeys and lived experiences of some of PRC’s Black trans clients,” Henneman said. “Our goal is to give voice, visibility, and agency to the participants — and to bring their stories, both harrowing and inspirational, to policymakers and the broader public.”

The film, expected to be released later this year, is directed by Yule Caise, with assistant director Zarina Codes, a Black transgender San Francisco resident.

Today, Christian continues her relationship with PRC as an ambassador, reflecting on a journey that began with a single job opportunity and grew into a lifelong commitment to service.

“Sometimes I’ll be riding the bus or standing in a grocery store, and someone will come up to me from a women’s shelter,” she said. “They’ll say, ‘Oh, Miss Seville, I just want to thank you. You really helped me with what I was dealing with.’”

She paused, smiling.

“And in those moments,” Christian said, “I think to myself, “Well!.”

A single word that sums up pride in a journey to find the best in herself.

Get Support After Hate:

California vs Hate is a non-emergency, multilingual hotline and online portal offering confidential support for hate crimes and incidents. Victims and witnesses can get help anonymously by calling 833-8-NO-HATE (833-866-4283), Monday to Friday, 9 a.m.–6 p.m. PT, or online at any time. Anonymous. Confidential. No Police. No ICE.

This story was produced in partnership with CA vs Hate. Join them for the first-ever CA Civil Rights Summit on May 11, 2026. More information at www.cavshate.org/summit.