Bay Area Cities Crack Down on Payday Loans

Bay Area lawmakers are working to regulate payday lending in their counties following the failure of reform legislation in the state senate.

Berkeley city Councilman Jesse Arreguin has drafted a plan to control the opening of new payday lending centers in his city. Legislators in several Bay Area cities, including Oakland, San Jose and San Francisco, have also worked to pass payday lending reform bills that are stricter than state laws.

"We want to change the laws to restrict the number and locations or prohibit them outright," Arreguin said in an interview with the Oakland Tribune. "Payday lending lobbyists have been successful on the state level at stopping laws restricting them, so we want to act on the local level."

In April, California senators, led by Sen. Hannah-Beth Jackson, tried to pass a bill that would limit the number of payday loans borrowers could take out per year and extend repayment periods. The California Senate Banking and Financial Institutions committee voted against moving the bill forward in a vote last month. 

In an email statement to, the councilman said his goal is to regulate Check Cashing stores through the city’s zoning code. Currently, the code categorizes storefront payday lenders under a general finance and retail category. Under the proposal there would be a new category for Check Cashing, and these stores would face stricter opening regulations.

“For example, the proposal seeks to prohibit any new Check Cashing stores from all commercial districts. Also, should staff want to take a different route, we are also looking at distance standards between Check Cashing stores to prevent over-concentration, and/or distances between Check Cashing stores and residential areas, school, etc.,” the email statement read.

Arreguin’s proposal does not address the number of loans a borrower can take out in a year, or the interest rates lenders can charge. Currently, California state law allows lenders to charge 15 percent interest on loans no larger than $300.

The proposal would also potentially limit the opening of new Check Cashing stores near liquor stores and churches. All current Check Cashing stores would be unaffected.

“Any new zoning that is adopted would not affect the existing three check cashing stores, and it would only be prospective,” the statement read. “Our proposal seeks to limit any new check cashing stores.”