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Employment credit checks are putting jobs out of reach for Oklahomans

This post is by OK Policy intern Lydia Lapidus. Lydia is a recent graduate from George Washington University’s Elliott School of International Affairs with a concentration in International Politics.

When applying for a job, you might scan your social media profiles and hide or delete any off-putting posts that an employer could see. But what if they look at your credit report? You can’t hide the credit card payment you missed several years ago. Though credit reports were originally designed to help banks determine interest rates on loans, nearly half of all American companies now use credit checks as an employment vetting tool. Job applicants with good credit reports are viewed as responsible; those with poor credit reports may be discarded as unreliable or likely to steal from their employer.

That’s unfortunate, because using credit reports during the hiring process ends up unfairly screening out low-income people and minorities, and it keeps qualified candidates out of work and talent out of Oklahoma’s workforce. A person’s credit history, or lack thereof, says nothing about their work ethic, trustworthiness, or potential job performance. It can, however, reflect the financial misfortunes of long-term unemployment, lack of health insurance, and medical debt. So far, eleven states have passed laws either restricting or prohibiting the use of credit reports in employment decisions; Oklahoma should join them.

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Bill Watch: Ways to help Oklahoma families build wealth this legislative session

This post is the first in a series highlighting key bills in several issues areas that we’re following. 

Last session, working families saw little in the way of help from the Legislature.  As the budget crisis continued, core services suffered further cuts and teachers and state employees did not see the raises that many legislators promised would be a priority. Too many Oklahomans are still struggling with financial instability, but there are opportunities for the legislature to make some strides this session.

We identified several goals related to economic opportunity and security in OK Policy’s 2018 legislative policy priorities. Here are some key bills related to those goals:

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New protections for payday loan borrowers are under attack

Last fall, we told you about new rules issued by the Consumer Financial Protection Bureau (CFPB) that would protect payday loan customers from some of the most abusive practices in that industry. These new rules, scheduled to be enforced in mid-2019, offer basic and common sense protections for consumers, like requiring that lenders verify customers can afford to repay the loans before making them and that they gain authorization before drawing payment from a borrower’s bank account after two unsuccessful attempts. The rules were a promising and important first step in preventing consumers from being lured into debt traps of frequent, high-interest loans.

These protections were especially welcome news for Oklahomans since our state has the highest rate of payday loan usage in the country. Even worse, the majority of payday loans in Oklahoma are going to frequent borrowers who take out seven or more of these loans in a year. But now these protections have come under attack from two sources: Congress and the new leaders of the CFPB.

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Roadside cameras won’t solve Oklahoma’s uninsured driver problem

In 2016 Oklahoma enacted SB 359 creating the Uninsured Vehicle Enforcement Program. The new law allows district attorneys to contract with private companies for automated license plate readers to catch and send tickets to uninsured drivers. The company that won the contract, Gatso USA, will provide the equipment and in return will get a portion of the fine (initially about 43 percent).  District attorneys will also get a cut of any fines collected – 20 percent.

Supporters of this program argue that it will reduce the number of uninsured drivers in Oklahoma.  That number does need to be reduced – we lead the nation in the percentage of drivers that are uninsured at 26 percent. But using cameras to catch uninsured cars and automatically send tickets isn’t likely to actually solve the problem.  That’s because most uninsured drivers are not opting out because they just don’t want insurance – they don’t have insurance because they can’t afford it. And that’s not because they’re bad drivers and are being charged more because they pose a bigger risk.  It’s because your car insurance rate depends on some things that have nothing to do with your driving history… like your credit score.

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New protections for payday loan borrowers are coming (if Congress will stay out of the way)

After years of research and public consultation, the Consumer Financial Protection Bureau this month issued a final rule to create new protections for payday loan borrowers. These new protections are a necessary and positive first step in eliminating the debt trap that so often results from high-interest, predatory loans — and nowhere more than Oklahoma, where we have the highest payday loan usage rate in the nation.

The new protections won’t close off all access to expensive loans, but they will curb the practices most likely to catch borrowers in debt traps, with mounting fees and interest charges on loans they simply cannot afford to pay back.

But we’re not out of the woods quite yet.  This new rule could face strong opposition from the predatory loan industry and from Congress, and we must continue speaking out to ensure that these protections go into effect.

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Congress is trying to strip away Americans’ protections from predatory lending

Last month, Governor Fallin made the right choice when she vetoed HB 1913 – a bill that would have expanded predatory lending in Oklahoma. In her veto message, Fallin pointed out that Oklahomans frequently take out high-interest loans at a high cost to them and their families. Gov. Fallin wisely chose not to add another predatory product to the market that could trap Oklahoma families in even more debt.

Predatory lending is not just an Oklahoma problem. Only 15 states and the District of Columbia prohibit payday lending with interest rate caps.  Interest rates in the remaining states range from an average of 154 percent in Oregon to an astronomical 677 percent in Ohio. The average rate in Oklahoma on a payday loan is nearly 400 percent. Payday borrowers often end up paying more in interest than what they get through the loan, and repeat borrowing is common.  Payday loans, auto title loans, and small installment loans are a debt trap for working families in America, and most states have not taken action to protect them.

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Common sense reforms needed to protect Oklahoma tenants

by | May 9th, 2017 | Posted in Consumer Protection | Comments (2)

Preston Brasch was an OK Policy Spring intern. He is studying law at the University of Tulsa School of Law.

Oklahoma faces a significant affordable housing shortage (see e.g. the 2016 Oklahoma Housing Needs Assessment and A Housing Strategy for Tulsa). Wait lists for programs that provide affordable housing can last anywhere from several months to several years. So what do these low-income families do? They often end up in unsafe and poorly maintained housing — an astounding 75 percent of low-income tenants in Oklahoma live in properties with at least one “housing problem” as defined by the U.S. Department of Housing and Urban Development.

This matters because evidence shows poor housing conditions have tremendous impact on health.  Children are especially vulnerable: one study found that 39 percent of asthma cases in children under six were linked to their homes. In the most extreme cases, tenants experience sewage backing into the home, leaking roofs, and infestations that can cause infectious disease.

It is important to note that most cases are not so extreme, and most landlords try to provide safe homes to their tenants. However, some landlords abuse the flaws in Oklahoma laws to profit off of our state’s most vulnerable citizens. Due to some unintended consequences of Oklahoma laws, local communities face an uphill battle in trying to improve housing that endangers the health of tenants. Fortunately, a few simple fixes could shore up these problems.

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