Lawmakers introduce legislation to close ‘pawnbroker loophole’

Jazmine Thompson of Chicago talks about how she feels that she fell victim to pawnshop lending at a press conference at the State Capitol Building Wednesday Nov. 30, 2022.

Moving to Chicago last year, content creator Jazmine Thompson needed some extra cash to cover rent and expenses. She pawned her laptop computer and three professional cameras, receiving with it two $800 loans.

The interest rate on the loans was about 150% requiring her to pay $8,000 in loan fees over the course of 12 months. Not able to cover those expenses, Thompson decided to stop paying back the interest on her loans and has not regained her property.

“The pawn shops want you to think their loans are safe, but with my experience, it says otherwise,” she said during a Wednesday press conference at the state Capitol. “I was definitely a victim.”

Thompson was joined by state lawmakers to discuss legislation that would prevent stories like hers from happening.

Passage of either Senate Bill 4241 or House Bill 5850 would hold pawnbrokers to the same consumer loan interest rate standard set by the Predatory Loan Prevention Act. The PLPA passed in March 2021 and capped interest rates on short-term loans for auto title, installment payday and payday providers at 36% after years of interest rates reaching nearly 300%.

Because of a Sangamon County Court injunction in 2021 ruling favoring pawn brokers, the PLPA’s 36% standard does not currently apply to them. Interest rates have reached as much as 240%, according to an investigation from the Woodstock Institute — a nonprofit financial systems reform organization based in Chicago. As of the latest data, pawnbrokers in Illinois make $50 million a year, said Woodstock Institute President and CEO Horacio Mendez.

However, the Illinois Pawnbrokers Association IPA contends that stories like Thompson’s are sensationalized and his group would like to meet with lawmakers backing the legislation. The reality, IPA President Kelly Swisher said, is that pawnbrokers differ from other short-term loan providers in that customers can walk away from a pawn free of charge.

President of the Illinois Pawnbrokers Association Kelly Swisher talks with reporters after a press conference at the State Capitol Building criticizing the profession's lending practices  was misleading in his opinion.

“I’d like to point out that during COVID, the shutdowns, we were considered an essential business by this government,” Swisher said, who owns a pawn shop in Arlington Heights. “Now, all of a sudden, we are the enemy.”

IPA represents more than 200 pawnbrokers with a variety of specialties throughout the state, including three in Springfield, which makes setting a statewide standard a challenge. Above all, Swisher claims the measure will cause many shops to go out of business.

Related:The high price of desperation: How a $3,000 repair ballooned into a $14,000 debt

Mendez and state Sen. Jacqueline Collins, D-Chicago, said the PLPA has helped customers while preventing short-term loan providers to close doors. Since the act’s inception, Collins said the state Department of Financial and Professional Regulation has awarded 168 new licenses to lenders.

“Companies are making the choice to do business and make loans under our 36% cap,” Collins said, who introduced SB 4241 on Nov. 14.

Springfield Mayor Jim Langfelder speaks during a press conference at the State Capitol Building about about pawnshop lending abuses Wednesday Nov. 30. 2022.

Springfield Mayor Jim Langfelder, who attended the press conference, hopes the legislation will allow customers and pawnbrokers to benefit.

“Really what we want as my own personal self, as a mayor, is to make sure that we do have the individuals that have access to capital so they can survive and thrive,” he said. “‘How much is enough to earn?’ And I think that’s really the essence of this.”

SB 4241 and HB 5840 had first readings in the respective chambers earlier in the veto session. State Sen. Doris Turner, D-Springfield, is a co-sponsor of the senate bill.

Contact Patrick Keck: 312-549-9340,,

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December 1, 2022 at 11:10AM

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