Pew Comments on Proposed Virginia Consumer Finance Regulations
Letter applauds certain safeguards, urges strengthening of others
On Oct. 22, The Pew Charitable Trusts filed a letter with the Virginia State Corporation Commission about proposed regulatory changes to implement parts of the Virginia Fairness in Lending Act of 2020. The act reforms a set of related state statutes regarding open‐end credit plans, consumer finance companies, short‐term (formerly payday) loans, motor vehicle title loans, and credit services businesses.
Pew’s letter praises proposed safeguards to protect consumers when lenders conduct “other business” in their stores but cautioned against planned exceptions to these requirements. For example, the proposal would generally prohibit lenders from requiring borrowers to buy unrelated services, such as auto club memberships, as a precondition to receiving credit but could exempt credit life and similar insurance products from these rules. Pew cited research demonstrating the potential for harm in this approach and urged the commission to ensure that the general safeguards would also apply to the sale of credit insurance.
The letter also provides suggestions for amending or clarifying the proposal with the goal of improving consumer protection, ensuring access to safe and affordable credit, and maintaining a level playing field among lenders.