Imagine the scenario: One of your relatives dies, and you’re in grief. Then you get a notice in the mail offering to give you an advance sum of cash based on the inheritance. The envelope looks like it comes from a court, and it's unclear how much this company is going to charge.
“You may be struggling to figure out how to pay for the funeral, how to pay final bills at a hospital," says Delegate Carrie Coyner, a Republican from Chesterfield County. "This can be a very tempting way that you think you’re going to have access to funds. But it really takes advantage of folks in one of the hardest moments of their life."
That's why she introduced a bill that's now been signed by the governor and will become a law this summer that will regulate these loans and make the companies get a license to offer them. Jay Speer at the Virginia Poverty Law Center says these companies try to claim that the money is not a loan.
"Whenever somebody gives you money, and you are expected to pay it back, that's a loan," explains Speer. "If somebody gives you money and they don't expect you to pay it back, that's a gift. But this business of trying to claim it's something other than a loan is becoming somewhat epidemic."
Businesses that offer earned-wage access, for example – a kind of online, workplace payday loan – they’re also trying to argue that the money they offer is not a loan and, as a result, not subject to Virginia usury law.
This report, provided by Virginia Public Radio, was made possible with support from the Virginia Education Association.
