Payday Loan Times

Albuquerque, New Mexico — Attorney General Patricia Madrid, following a legislative failure, wants to cap payday loan rates in New Mexico using her rule-making authority.

After a series of hearings, Madrid said she wanted to set a 54 percent limit on payday loans and borrowers would have at least four months to pay back to the loan. Current payday loans generally charge rates in the hundreds of percent and have a payback term of 14 to 30 days.

Madrid conceded her latest effort to regulate the online payday loan industry faces a likely legal challenge. But she also said legislative allies already are at work on cap proposals for the next state legislative session, starting in January.

Jacksonville, FL — The Jacksonville payday loan ordinance crafted by Council President Kevin Hyde is on track for an October 11 vote by the full Council. In addition it still needs approval from the Land Use and Zoning Committee.

The ordinance limits interest rates the cash loan businesses can charge and where they can operate, keeping them away from military bases and each other, and closes loopholes that allowed some of the shadiest lending practices. These include disguising the loans as rebates for other purchases and threatening borrowers with arrest.

The bill contains several provisions specific to military members. Lenders would be prohibited from complaining to commanding officers and using coercive collection methods (in an attempt to receive payment of an outstanding no fax cash loan) while a military member is serving combat duty.

Raleigh, NC — Advance America Cash Advance Centers suspended lending in North Carolina today after its out-of state bank partner said it would no longer finance the loans.

The move came after a months-long hearing in which Roy Cooper, the state attorney general, alleged that Advance America's payday loans violated state lending laws that banned them. The result of the case could determine the fate of Advance America in North Carolina and take a big bite out of the state's short-term lending market.

Payday lending has technically been banned in North Carolina since 2001, when a law that had legalized and governed it expired. But several lenders, including Advance America, Kwik Kash, Ace Cash Express and other cash loan providers sidestepped the ban by partnering with out-of-state banks not subject to North Carolina laws.

First Fidelity Bank of Burke, S.D., the lender behind Spartanburg, S.C.-based Advance America's 117 loan centers in North Carolina, did not provide details of its decision.

Lansing, MI — The Senate voted Tuesday to approve a bill that would regulate the payday loan industry by limiting amounts of the cash loans and capping finance charges. But the House wanted to take a closer look at some provisions included by the Senate and sent the bill to a conference committee where the two chambers will hammer out their differences.

Michigan is one of just 14 states without a payday lending law, according to the National Conference of State Legislatures.

The legislation would limit borrowers to a maximum $600 loan in a 31-day period and let lenders charge service fees between 11 percent and 15 percent. For example, someone borrowing $100 would owe $15; a $600 loan would cost $76.

The Senate voted 31-6 to send the bill to the House, which shipped it to a House-Senate conference committee on a 59-48 vote. Democratic Gov. Jennifer Granholm had been expected to sign the compromise legislation. She vetoed a payday lending bill in early 2004, citing concerns that its interest rate cap was not stringent enough.

Winnipeg, Canada — After months of lobbying, the Canadian federal government has agreed to give the provinces the power to crackdown on the payday loan industry.

Amendments will be made to the criminal code this fall that gives provinces the right to enforce maximum interest raes and fees.

The Criminal Code currently limits interest rates to a maximum of 60 per cent per year. But Greg Selinger, Manitoba Finance Minister, and other provincial ministers have complained that the law is rarely enforced. Thus, the no faxing payday loan agencies are becoming more and more popular in the province.
Mr. Selinger is also planning new provincial legislation this fall that will forbid loan companies from offering so-called "rollover" loans, where a customer takes out a second loan to pay off the first and the interest is compounded.

Las Vegas, NV — The Henderson City Council is concerned that the payday loan industry is growing too fast in Henderson. Although they recently allowed two more payday loan stores to open, they scolded the industry for its perdatory practices and warned that a new ordinance is being prepared for Henderson.

Unlike North Las Vegas, Henderson has no plans to enact a moratorium on payday loan companies seeking a permit. In July, North Las Vegas put a six-month halt on new permits while the city considers a range of ideas from limiting the number of licenses allowed per year or by population or even an outright ban on new businesses.

Henderson, however, is focusing on other regulations under consideration in North Las Vegas, including limiting the number of payday loan companies close to each other, to schools and to homes. Once a staff review is completed in upcoming months, the council will consider an ordinance.

Denver, CO — In 2004, the house passed a state law, HB 1394, allowing small installment loans in Colorado. The law was intended to allow select "supervised lenders" to make high interest loans that would compete with payday lenders.

The 2004 state law seems to have little impact on the fast growing cash advance and online payday loan industry.

Newly released 2004 data shows that payday loan locations, loans and dollars continued soaring in Colorado in 2004, all rising faster than they did in 2003, according to the Colorado Attorney General's Office.

The number of Colorado payday lending locations as of Dec. 31 rose 28 percent from one year ago, with 114 lenders operating 496 locations by the end of the year. The number of Colorado payday loans rose 22 percent to about 1.2 million, and the dollars loaned rose 26 percent to $367.5 million.