10-05-2025
Legalizing exploitation: Why Maryland must reject predatory lending apps
Critics say a House bill aimed at regulating "earned wage access," or payday loans, could actually open loopholes that make it easier for low-income borrowers to be trapped in debt. (Photo by Getty Images)
On Moore's desk sits House Bill 1294, which would give predatory, app-based payday lenders a legal green light to exploit Marylanders. If signed into law, it would exempt these lenders from Maryland's hard-won protections against usury, deceptive practices, and discrimination based on race or sex. The governor should veto this bill.
HB1294 opens a loophole that would allow new, app-based payday lenders to bypass Maryland's 33% annual interest rate cap. These digital lenders already operate in the state, often illegally, offering small-dollar loans with effective annual interest rates that regularly exceed 100% — way higher than even the most expensive credit cards. The Maryland General Assembly, instead of cracking down on these scofflaw payday lenders, chose to legalize and protect their harmful practices.
Entrenching these extractive companies in Maryland will financially devastate families. These lenders rely on repeat borrowing to make a profit. Borrowers are typically advanced just a small amount, usually less than $100, and charged high fees each time. These fees are sometimes disguised as 'tips' or voluntary payments. The goal is to keep borrowers returning again and again.
We've seen this playbook before. In 2003, I founded the Mississippi Center for Justice to fight the systemic forces keeping people in poverty. One of our first and longest battles was against storefront payday lenders. These companies blanketed low-income neighborhoods with high-interest loans, trapping people in debt and blocking pathways to economic security.
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We saw families struggle to repay one loan, only to be forced to take out another. We watched predatory lenders siphon away financial resources from communities, especially Black communities. These practices helped keep Mississippi at the bottom of nearly every measure of economic health.
Unlike Mississippi, Maryland has historically stood firm against payday lenders. But HB 1294 would unravel that legacy. It establishes a haven for predatory lenders to firmly establish themselves in our state and wreck the finances of our residents. By exempting app-based payday lenders from key consumer protections, the bill makes it more likely Marylanders will get trapped in debt, scammed, or targeted with an unaffordable loan because of the color of their skin.
Data from the Center for Responsible Lending paints a troubling picture. Over 25% of Marylanders using these apps take out 25 or more advances per year. Nearly half use two or more apps simultaneously. These are the same debt-trap patterns we saw with storefront payday lending.
The bill would also shield app-based lenders from Maryland's ban on misleading or deceptive statements about loan terms. That means they could continue to obscure the true costs of borrowing behind confusing terms and hidden fees, all with the state's blessing.
Perhaps most alarmingly, the bill exempts these lenders from Maryland's anti-discrimination laws. That means app-based lenders wouldn't be held accountable if they discriminated based on race or sex, an especially dangerous move given persistent disparities in access to fair credit.
At a time when federal consumer protections have weakened, especially under the Trump administration, which gutted enforcement at the Consumer Financial Protection Bureau (CFPB), state laws are more important than ever. The CFPB has abandoned actions against payday lending apps accused of deception and against mortgage lenders accused of racial discrimination. Without strong state protections, Marylanders will be left vulnerable.
HB1294 lets an industry built on exploiting financial hardship break the rules. Friendly branding and smartphone apps don't change the underlying business model: pushing borrowers into a cycle of debt.
I've seen what happens when predatory lenders are allowed to flourish — how they target vulnerable communities, make false promises, and leave people worse off than before. I've been fighting these practices for decades, and I can say with confidence that this legislation would give a free pass for abusive payday lending in Maryland.
Gov. Moore has the opportunity to stand with consumers, protect vulnerable families, and uphold Maryland's tradition of strong financial protections. He should veto HB1294.
