The following testimony was delivered to the Interim Financial Institutions and Insurance Study Committee on August 15 by Indiana Assets & Opportunity Network Manager Logan Charlesworth. To view the recording of the hearing,click here.

Members of the Committee,

Thank you for the time to discuss this important issue with all of you. My name is Logan Charlesworth and I manage the Indiana Assets & Opportunity Network, a network of organizations dedicated to increasing asset acquisition for low-income families across the state.

As you may remember from the past legislative session, many different groups, including human service agencies, veterans’ groups, churches and faith-based groups of all denominations and creeds, community development organizations, and more came together to oppose the expansion of short-term loan products in our state. Since the spring, our group has swelled to more than 100 members.

For the sake of time and brevity, I’ll refrain from listing all of our group’s members. However, I will highlight a few from the list I’ve provided all of you with, including: AARP Indiana, the Indiana United Ways, Indiana Military & Veterans Coalition, the Friends Committee on Legislation, the Indiana Catholic Conference, Prosperity Indiana, the Indiana Community Action Association, the Indiana NAACP, the Indianapolis Urban League, and the Indiana Coalition for Human Services, to name a few.

You may also remember the Community Loan Center model offered by Brightpoint in Northeast Indiana and Homestead Consulting Services in West Central Indiana. The Community Loan Center (CLC) is a safe, affordable employer-based loan program that offers loans at 18 percent interest (plus a $20 origination fee). Depending on their income, employees can borrow up to $1,000 and pay it back over the course of one year through payroll deductions. All the while, they are building up their credit in a safe, responsible manner and have access to free financial counseling.

Since the last legislative session, we have added a Community Loan Center in Northwest Indiana and are in talks with several organizations to become CLCs in Southeast Indiana, Southwest Indiana, and Central Indiana. It’s also important to note that more states are beginning to take note of the Community Loan Center, with CLCs now operating in Alabama, Arizona, Maryland, Missouri, North Carolina, South Carolina, Tennessee, and Texas.

In addition to nonprofits becoming Community Loan Centers, churches across the state are putting their faith into action by lifting up families whose finances have been decimated by predatory lending practices. According to LendJustly, 35 percent of clergy and service providers who know individuals with payday or car title loans have provided money to pay these loans off or refinance these loans.

Because of growing concerns about the impact of financial distress on the workforce, we’ve also seen employers increasingly step into this space with incentives and vehicles to build savings and promote short-term financial stability. For example, Walmart offers the Even app which does both budgeting and free paycheck advances. The options I’ve highlighted are just a few of the credit counseling and safe loan products available to Hoosiers today. I encourage you to review the document with the heading “Alternatives to Payday and Other High-Cost Loans” for more information.

The products and aide offered by employers, nonprofits, human service organizations, and churches may not lend as much money as payday lenders do. By some, that has been viewed as a weakness of the system. However, I will remind you that, unlike payday lenders, the goal of these organizations is not to have repeat business – their goal is to help vulnerable families weather a storm and fill the void where credit unions and other lenders would traditionally offer safe, credit-building loan products.

In closing, I implore you to take a moment to read through the list of organizations banded together in unity against predatory lending. It is comprised of your friends, neighbors, and constituents. It’s comprised of the people bettering their communities by defending the most vulnerable among us with no promise of money, recognition, or accolades. These are the people who deal with and oftentimes pick up the pieces once families’ lives have been thrown into disarray after falling victim to predatory lending practices.

Once again, thank you for your time and for the opportunity to discuss this matter with all of you.

The Consumer Federation of America (CFA) released a report detailing the most common consumer complaints. The report is aggregated from data collected from thirty-five agencies from twenty-one states. In total, the agencies surveyed received 1,148,848 complaints last year.

These are the complaints most frequently cited as the top problems reported to state and local consumer agencies:

• Auto

• Home Improvement/Construction

• Retail Sales

• Services

• (Tie) Landlord/Tenant

• Health Products/Services

• (Tie) Credit/Debt

• Internet Sales

• Home Solicitations

• (Tie) Household Goods

To read the press release,click here. To read the full report,click here.

In an effort to create a tool that enables and empowers youth workforce development organizations to provide even more effective financial education and access to safe savings opportunities, Prosperity Now and the Citi Foundation partnered to launch the Youth Financial Capability Fund (YFCF).

As part of the YFCF, the organizations gathered insights across five categories with the hopes of helping youth development organizations develop effective financial capability programs, including:

• Preparing for organizational change

• Putting young people at the center

• Exploring the role of partnerships

• Measuring progress to tell your program story

• Managing organizational change and sustaining financial capability work

To read the full report,click here.

In 2019, Next Gen Personal Finance (NGPF) researchers discovered that a mere 16.9% of U.S. high school students attending public schools (1 in 6) took at least a semester-long personal finance course that was required for graduation. For one year, the NGPF researchers studied 11,000+ US high school course catalogs to determine which states had the highest percentage of students graduating with a personal finance course under their belts in 2018-2019; how socioeconomic status impacted who had access to financial education; and what are the roles - and limitations - of state legislation and grassroots advocacy in pushing for universal access.

To read the report and search the interactive map of schools across the nation,click here.

The Prosperity Now Scorecard, an interactive tool that provides data on the financial health of households in the United States, has been updated with localized data. This updated report provides new data at the local level, with outcomes measurements across five issue areas for cities, counties, metro areas, tribal areas and Congressional Districts.

To read full data findings from Prosperity Now,click here. To access the Scorecard,click here.

The National Endowment for Financial Education partnered with Montana State University to study the impact mandatory K-12 financial literacy education can have on a young adult’s post-secondary outcomes. The study highlighted the causal effect of state-mandated financial education as a graduation requirement. Positive outcomes included:  increased likelihood that students will apply for financial aid; decreased private loan amounts for borrowers; and more.

To read the full report,click here.

According to Prosperity Now’s Affordable Homeownership team, matched savings programs (such as individual development accounts [IDAs]) can help families with down payment assistance, making the goal of ownership within reach.

Click here to read Prosperity Now’s findings.

Although Indianapolis has experienced dramatic growth in the past few years, many low-income families are being left behind or forgotten by traditional financial institutions, worsening an already difficult situation.

“It is so expensive to be poor,” said Kathleen Lara, Prosperity Indiana Policy Director. “The barriers are multitudes. If we’re trying to address equity and building wealth for low-income individuals, we’ve got to reduce some of the barriers that drain wealth.”

Read this fantastic piece from the Indianapolis Business Journal outlining the financial burdens facing the lowest income families in our community, featuring comments from A&O Steering Committee members Erin Macey and Kathleen Lara, and A&O Network Manager Logan Charlesworth.

On May 21, the Legislative Council for the Indiana General Assembly released a resolution outlining the study topics assigned interim study committees. Although a proposed study committee focused on financial security in retirement for all Hoosiers did not get assigned to a committee, a second resolution we have been monitoring did. The resolution would open the door for revisions to the Uniform Consumer Credit Code (UCCC), a set of regulations that governs multiple forms of lending (including payday lending).

We will keep the Network updated as to when meetings regarding this resolution are scheduled and how you can get engaged in advocacy related to this topic.

The Consumer Financial Protection Bureau (CFPB)'s Fair Debt Collection Practices Act is critical to protecting consumers across the nation from abusive collection practices. However, the Network believes the newly proposed rule would protect debt collectors more than everyday American consumers. 

According to the National Consumer Law Center, the median debt owed by Hoosiers is $1,509; the majority of debt is related to medical expenses or student loans. In Indiana, 34 percent of all Hoosiers have a debt in collections. This figure balloons to 56 percent of Hoosiers with a debt in collections when viewed through the lens of those living in communities of color.

In 2016 alone, the CFPB fielded 8,348 complaints by Hoosiers regarding abusive debt collection practices, including (but not limited to) calling after receiving a “stop calling” notice; repeated calls; making false representation about debts; failing to identify self as a debt collector; falsely threatening illegal or unintended act; and more.

Given the fact that Indiana's current laws do not provide sufficient protections against predatory debt collection practices, we must unite and implore the CFPB to protect consumers by shielding them from abusive practices.

Join us in urging the CFPB to protect consumers by promoting fair debt collection practices. Click here to sign your name to our letter to the CFPB.