Nevada Financial Regulators Move Forward With Database for Short-Term Lenders

Members of Nevada’s Financial Institutions Division recently approved draft regulations clarifying details of a statewide database for short-term, high interest payday loans. The regulations still need to be approved by Nevada’s interim Legislative Commission before taking effect, but those who supported SB201—the legislation creating the database—applauded the draft rules. The regulations are overdue, though, as the system should have been implemented over the summer.

“Thank you for being so thorough in the undertaking of this,” said Bailey Bortolin, Nevada Legal Aid Policy Director, according to the Nevada Independent. “We are six months delayed in the implementation, so I would encourage the state to move forward with this as quickly as possible.”

Regulations implementing SB201 have become the most recent conflict between short-term lenders and the industry’s opponents. Lenders claim they provide necessary financial services to underbanked consumers, while opponents of the industry claim that the state’s current regulations do nothing to ensure consumers are protected..

Nevada has no cap on loan interest rates, but structural changes from the mid 2000s aimed to restrict how much interest could be charged after a borrower defaulted on a loan. SB201, passed in 2019, adds even more immediate oversight to short-term loans. 

Under SB201, the Financial Institutions Division is required to contract with an outside vendor to collect information on loans and any additional information on a borrower’s loan history. The Financial Institutions Division currently audits short-term lenders’ records, but a database of all loans would enable more regulatory oversight that would discover problems before considerably affecting borrowers. 

The bill has faced opposition about its “ability to repay” function. 

“These regulations make it a situation where there has not been a two-way dialogue, and we are ending up with an overly burdensome and unworkable regulation that is going to really not help consumers or the industry,” said Neil Tomlinson, Dollar Loan Center lobbyist. 

As of December 9, no Legislative Commission meeting, where the regulation will be officially approved, had been scheduled.