ASSEMBLY BILL 425 HARMS CONSUMERS AND BUSINESSES
Lacking concern for Californians' needs, critics drafted the proposed legislation in an attempt to remove the option of obtaining a payday advance. The legislation has been written, moreover, based on the stories of those who abuse the service, not on facts.
One clear fact is that the proposed legislation by Assembly Member Ellen Corbett (Assembly Bill 425) is extremely restrictive. In fact, the bill makes payday advance services economically unfeasible in California. The following chart outlines the changes between current law and AB 425.
| Current Law | Corbett's Proposed Legislation (AB 425) |
| Allows a fee of 15 percent on a check's face value (up to $300 including the fee). | Allows a fee of 2 percent per month (or 24 percent per year) on a check's face value - a change that essentially prohibits payday advance services. |
| Places no limit on the number of yearly transactions | Requires that no more than six transactions take place per year. |
| Provides no current study of payday advance services | Directs the Department of Justice to conduct a feasibility study relating to computer tracking of payday advance transactions. |
If California loses the payday advance industry, thousands of jobs will be lost and tens of thousands of consumers will be left with no alternative service. Consumers may be forced to write checks that bounce, thereby paying outrageous bank charges for returned checks (up to approximately $50 per check).