by ANDREW BRADLEY, Indiana Capital Chronicle
With basic costs continuing to outpace Hoosiers’ take-home pay, now is the time for Indiana policymakers to protect consumers and put a stop to the ‘scamification’ of Hoosiers.
The worrying trend is clear: Homeownership is declining in Indiana, especially among Black Hoosiers and low-income families, making inter-generational wealth-building harder than ever. Indiana now has the lowest renter household income in the Midwest and one of the highest rates of severe cost burden for vulnerable renters. And more than 4 in 10 Hoosiers have reported difficulty paying for usual household expenses.
As everyday costs rise but paychecks remain stagnant, Hoosiers naturally look for ways to make their income stretch, like an old blanket that no longer covers a growing child. That’s where our policymakers have allowed the ‘scamification’ to step in, by reducing consumer protections and sanctioning products that strip wealth away from Hoosiers with few options to make ends meet.
Unfortunately, the current federal administration is supercharging ‘scamification’, in part by freezing the critical work of the Consumer Financial Protection Bureau (CFPB) just as frauds and complaints are on the rise. Since 2011, Hoosiers have submitted nearly 90,000 complaints to the CFPB, at a rate that has doubled in the last year alone. Hoosiers’ most common complaints regarding credit reporting, debt collection, mortgages, bank accounts, and credit cards won’t magically go away just because Congress recently slashed CFPB resources by nearly half in the ‘One Beautiful Bill Act’. But without a strong CFPB, Hoosiers will most certainly be left more vulnerable to more and worse scams in the future.
Other actions at the federal level will leave Hoosiers with less in their wallets as well. While a 2024 CFPB rule meant to crack down on ‘junk fees’ would have capped overdraft fees from an average of $32 to $8, under the new administration, the CFBP joined a banking industry consortium that successfully petitioned a judge to block the fee cap. The ruling will cost Americans $10 billion in savings annually. And while on January 7, the CFPB finalized a new rule to remove medical debt from credit reports, six months later a federal judge ruled those medical debts can remain in credit reports, a move that will negatively affect the estimated 1 in 6 Hoosiers with medical debt in collections.
Trailing in consumer protections
On top of the loss of federal consumer protections, Hoosiers must contend with a state landscape rife with debt traps that has earned an ‘F’ for consumer protections. The Private Equity State Risk Index lists Indiana at ‘High Risk’ for private equity takeover of our health care, housing, jobs, and pensions. Without guardrails, Hoosiers stand at risk of having many of the basics they count on ‘scamified’ into wealth-drainers.
Hoosiers also already face a consumer policy environment that allows payday loans with effective APRs up to 391%. Bipartisan legislation to cap payday loans at 36% APR (the same cap required in order to lend to active duty service members) has been filed each session for nearly a decade but has not made it across the finish line. This past session saw worrying new attempts to hike charges on supervised loans, such as unconscionably high new rates on auto loans. Time will tell if guardrails put on newly-sanctioned Earned Wage Access products will be enough to prevent them from becoming yet another debt trap.
So, what can be done to stop the ‘scamification’ of Hoosiers?
Employers can do their part by utilizing no-cost Community Loan Center alternatives to payday loans as an employee benefit. The State of Indiana should also consider Sen. Spencer Deery’s proposal to protect taxpayer resources by extending CLC protections to state employees. Above all, we need our policymakers to retake the reins of consumer protections and stop gutting watchdogs like the CFPB at the federal level. State lawmakers should re-think the trend of carve-outs to existing protections and instead set the bar higher with consumer needs at the forefront. These decisions can be hard, though, especially in the face of well-resourced special interests. To learn more Hoosiers can join Hoosiers for Responsible Lending and advocate for a stronger and more fair Indiana for all consumers.
