A Recent Timeline of Financial Empowerment and Consumer Protection Wins in Colorado
A Recent Timeline of Financial Empowerment and Consumer Protection Wins in Colorado
Colorado has a long history of enacting forward-looking, proactive policies that support financial well-being. Collectively, these efforts have earned Colorado national recognition as a leader in financial empowerment and consumer protection. Importantly, this history positively positions our state if national consumer protections – like funding for the federal Consumer Financial Protection Bureau – are rolled back.
It’s important to recognize though, that Colorado’s robust financial empowerment ecosystem is not accidental, nor is it the result of one-time action. Instead, it has evolved over the years, strengthening as programs grow and efforts build upon one another. We explore the most recent portion of this decades long history, and its continued development, in more depth below.
2018: Capping Interest Rates and Fees on Payday Loans
Proposition 111: Limits on Payday Loan Charges Initiative
In 2018, Colorado voters passed Proposition 111, which capped total APR (which stands for annual percentage rate, and is inclusive of a loan’s interest rate, fees, and charges) on payday loans at 36 percent. Proposition 111 was one of the most popular ballot measures in Colorado history, passing with 77 percent of votes. Moreover, the measure won a plurality of votes in all but two counties.
Proposition 111 was supported by many organizations that collectively represent and showcase our state’s diversity. Among the measure’s many supporters were labor, religious, agriculture, older adult, veteran, youth, and disability organizations. Proposition 111 and its wide support is an ongoing testament to Coloradans’ preferences for reasonable caps on high-cost loans.
2021: Proactively Growing Coloradans’ Financial Health
SB21-148: Creation of the Office of Financial Empowerment
Recognizing the value of not only protecting, but also growing, Coloradans’ financial well-being, lawmakers passed SB21-148, which created the Office of Financial Empowerment (OFE). The first of its kind, Colorado’s OFE is tasked with increasing access to safe and affordable financial products, fostering local wealth building strategies, and connecting individuals to financial coaching and counseling.
Since its inception in 2021, the OFE has grown Coloradans’ access to safe and affordable bank accounts through Bank On Colorado and is now offering grants to support free and individualized financial coaching and counseling services. Beyond these tangible efforts however, the OFE plays a critical role in strengthening and connecting the network of community organizations active in the financial empowerment ecosystem. This includes nonprofit agencies offering counseling services and small dollar loans like Work Life Partnership and The Savings Collaborative, local OFEs such as those in Denver and Pueblo, and private financial institutions.
2022: Leveraging Public Resources to Bolster Affordable Lending Options
HB22-1359: Colorado Household Financial Recovery Program
In 2022, lawmakers added another financial empowerment tool for individuals. HB22-1359 provided seed funding for a new, small-dollar loan fund. When operational, this new program will offer small dollar loans at a maximum of 5 percent APR – far lower than what’s permissible for many other alternative financial products. These loans will be targeted to those who often turn to payday and other high cost lending options because they are unbanked, underbanked, or have low credit.
While this new lending option is still being set up in Colorado, similar efforts showcase its potential. For example, a comparable loan product has been available in Mississippi for over 10 years. In pro sponsoring bank has documented an increase in credit scores and overall financial health. Importantly, its success has brought in additional funding and facilitated growth and private investment within the program.
2023: Closing Predatory Lending Loopholes
HB23-1229: Amending Terms Consumer Lending Law
The most recent effort to bolster Coloradans’ financial security occurred in the spring of 2023 with the passage of HB 23-1229. With the adoption of this bill, a loophole was closed that had allowed banks chartered outside of Colorado to skirt our state’s lending rules and regulations – leading to substantially higher lending costs for many residents.
Prior to HB23-1229, banks chartered in a state outside of Colorado were able to offer loans to Coloradans at the rate allowed in their home state. For example, a state bank chartered in Utah could offer loans to Coloradans at the rates allowed in Utah. Concerningly, as seen in the map below, Colorado APR caps are significantly lower than those in many other states throughout the nation. By closing this loophole, lawmakers put Coloradans first and reaffirmed the supremacy of our state laws.
Source: National Consumer Law Center
Moving Forward
In taking a brief tour of Colorado’s financial empowerment history, it becomes clear that our state has long prioritized this issue. Consumer protection and financial empowerment efforts have often been bipartisan and widely supported by diverse interests and stakeholders.
However, more than this, we also see that our financial empowerment ecosystem is not only robust. It is also growing, becoming stronger with time. For example, we strengthened our lending laws through Proposition 111, and then took steps to further enshrine and uphold them by passing HB23-1229. The ongoing work of the state’s OFE is paying dividends as it increasingly facilitates collaboration and the sharing of resources. New products – such as financial coaching and affordable lending products – are making their way to communities throughout our state.
As we look toward the future, it is essential that we continue to prioritize and build on the important work that has already begun. It’s only by doing this that we’ll be able to create the prosperous, economically secure Colorado that we all deserve.
