Jay Speer has been lobbying the Virginia legislature for as long as he’s been a parent: 22 years.

And for almost all, while he and his wife raised two children, both now out of college, Speer fought back against the high-cost instant loan industry, arguing that payday lenders and securities cars mainly exploit the poor. with debts they find it difficult to repay – if at all.

For Speer, executive director of the Virginia Poverty Law Center, the industry is now a much smaller target, having been held back by rules imposed by Democrats in 2020, when their party commanded every corner of state government. Even Republicans long friends of the lenders supported the reforms.

Speer’s fight with loanees may have died down, but it’s by no means over. A little-noticed mid-May settlement of a federal lawsuit filed more than three years ago by Speer’s organization and two law firms, Kelly Guzzo of Fairfax and Consumer Litigation Associates of Newport News, says as much. .

Under the settlement, 550,000 borrowers here and in other states won’t have to pay $489 million in illegal internet-based payday loans for which they were charged 600% interest. Most borrowers will split $450 million in cash repayments. An additional $39 million is for those who paid illegal amounts to lenders.

Despite their checkered track record, Virginia was open to payday lenders — they’re so called because they provide a cash advance against a borrower’s salary — during a pro Democrat’s 2002-2006 gubernatorial term. -company, Mark Warner, now a US senator who has since cooled off in the industry.

Warner signed the legislation sent to him by a Republican-controlled General Assembly even as his top aides pressed him to reject it. One of them threatened to resign in protest. Warner’s successor, fellow Democrat Tim Kaine, not a fan of lenders, tried in vain to negotiate reforms acceptable to the industry and its opponents.

A 2009 attempt to limit the frequency of lending — it was spearheaded by several senior House Republicans and a white-shoe law firm with close ties to the GOP — drove out some lenders. To stay open in Virginia, many revamped their business model, operating under a provision of state law that allowed them to charge higher interest rates.

Over the next few years there would be other – unsuccessful – efforts to bring the lenders to heel. The industry’s footprint in Virginia expanded in 2011, when the state sanctioned car title lending under which a borrower risks losing their motor vehicle if a loan is not paid. . At the time, Republicans held the Legislative Assembly and the office of governor.

Finally, in 2020, with Democrats in full control of the state house for the first time in nearly 30 years, Virginia passed sweeping protections under the Fairness in Lending Act. The measure has generated bipartisan support that lobbyists on both sides attribute to legislative fatigue over years of fighting.

At times the debate was theatrical, overshadowing larger and lingering issues: that traditional financial institutions – banks and credit unions – then showed little interest in small loans, viewing them as risky and unprofitable. Additionally, competition among payday lenders for a seemingly captive audience was limited because their high-cost products were similar.

Lenders were blocking public hearings with credit union workers who had been bussed to Richmond, many of them from Hampton Roads, where there were many stores. Rebuking lenders as loan sharks, an enemy of the industry—a moving company executive who tried to pay off an employee’s five-figure debt—sometimes showed up in, you guessed it, a suit of shark.

Although it took effect in 2021, the law capped interest and fees on payday and car title loans and locked in the interest rate on consumer purchases paid over time at 36%. time. The law also created safeguards against online payday lenders based in other states or, like those in the May settlement, operated by sovereign Native American tribes shielded from many laws.

The Pew Charitable Trusts reports that Virginia — where lenders have worked their will through well-placed lobbyists and, since Speer’s arrival two decades ago, with millions of dollars in donations to lawmakers — is the one of four states since 2010 to enact broad protections for payday borrowers while guaranteeing access to credit. The others are Colorado, Ohio and Hawaii.

“In these states, lenders are cost-effectively offering small loans that are repaid in affordable installments and cost four times less than typical one-time payment payday loans that borrowers must repay in full on their next payday,” Pew said. in an April survey of all 32 states. who authorize payday loans.

Among Virginia’s neighbors, Washington, DC, Maryland, North Carolina and West Virginia ban payday loans, according to the Consumer Federation of America, a consumer advocacy and research group. Loans are legal in Kentucky.

The impact of Virginia’s new law on lenders is still unclear, though Pew says it would likely mean fewer payday stores. The State Corporation Commission’s Office of Financial Institutions is expected to produce a first overview of the legislature this month.

A consequence of the reform: possible competition between banks for small borrowers. Personal finance website NerdWallet says low-interest, low-dollar loans are expected to be offered by national companies such as Bank of America, Wells Fargo and Truist. Could this be a magnet for cash-strapped, inflation-worried customers?

It’s all part of a larger overhaul of a facet of consumer finance that in Virginia has long been described as big business exploiting the little man. Heck, they aren’t even called payday loans anymore. By law, these are short-term loans.