A Hawaii House committee that deals with consumer protection issues is scheduled to vote Wednesday on a bill aimed at reining in Hawaii’s payday lending industry which currently can charge up to 459 percent in interest each year.

Jon Shindo, a former case manager at a Waipahu emergency homeless shelter, testified that he supports the bill in part because the exorbitant fees prevented two of his homeless clients from affording rent.

“I had to read the fine print multiple times to understand that the fees and APR my clients were being charged was not a typo,” Shindo wrote in his testimony.

House Bill 744 would cap the annual interest rate at 36 percent, following 17 other states as well as the federal government’s rules for lending to active military service members.


PayDay Hawaii is a local money lending company that fears it could go out of business due to a bill to cap interest rates for payday loans.

Screenshot of PayDay Hawaii website

The current law caps the interest rate at 15 percent per $600 loan, which a 2005 state audit found can add up to 459 percent each year for a 14-day loan.

The audit recommended that the Legislature reduce the maximum fee charged to borrowers.

But many payday lending companies argue that the proposal would drive them out of business.

Richard Dan of Maui Loan said lawmakers should instead regulate credit card companies or Internet payday lenders that are abusing customers.

Lorna Sordillia, a branch manager at PayDayHawaii on Hilo, emphasized that customers choose to take out payday loans.

“Ladies and Gentleman, Are we as check cashers, being held responsible for the choices and actions of consumers? Because we shouldn’t!” she wrote. “Our industry does not force consumers to take out pay day loans, but in fact, just provide a service like any other business such as grocery stores, clothing retailers and entertainment venues.”

Still, several social service organizations that support the measure contend that the industry preys on the poor who are already struggling to afford Hawaii’s high cost of living.

The House committee on consumer protection plans to decide on the bill on Wednesday at 2 p.m., along with two other bills that would similarly regulate the industry but to a lesser extent.

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