Payday Loan Times

Payday advance institutions have sprung up in large numbers near many California military bases, according to the Antelope Valley Press. Lawmakers believe they are targeting the state's military families, which become financially vulnerable when a member is sent overseas.

"We discovered a lot of younger enlisted folks were being taken advantage of by payday lenders," said Ted Lieu, a Torrance Democrat who serves in the Air Force Reserve and spent four years on active duty. "Many payday lenders are professional and do everything above board, but many do not."

Lieu has introduced Assembly Bill 1965 — which would require cash advance loan companies to abide by strict regulations when following up with members of the armed forces who have outstanding balances, including deferring collection activity against members who have been deployed (and spouses) — to protect the state's military personnel.

Payday cash loan providers generally offer a loan to a borrower in advance of the borrower's next payday. California law limits the amount to $300 per store, and limits the fee to $15 for every $100 borrowed. But when borrowers don't repay the fast cash advance when it's due, added fees and interest can escalate out of control.

A study by university professors Christopher L. Peterson of the University of Florida and Stephen Graves of CSU-Northridge found that the five California counties most densely packed with payday advance companies all have active, or recently closed, military bases. A surprising 14 of the 20 ZIP codes with the most payday lenders are within five miles of an active or recently closed base.

Oceanside, near Camp Pendleton in Southern California, has 22 payday lenders — far more than would be expected in such an affluent area. For the record, an Edwards Air Force Base spokesman said he wasn't aware of a problem with base personnel and any payday companies.

Assembly Bill 1965 would prohibit payday advance lenders from garnishing a military member's salary and prohibits contacting the borrower's superior officers in order to receive payment. The bill also requires the lending company to honor all terms and agreements of any replacement arrangement worked out between a member of the armed services or military / third-party credit counseling agency.
At least in the early going, the legislation is garnering bipartisan support.

"In concept, yes, I (support) whatever we can do to help our military families get by for that time that they're away from their families," said Sharon Runner, a Lancaster Republican.

The California bill is expected to be heard in committee in late March or early April. All three West Coast states have been in the news with proposed payday regulations lately. An Oregon payday loan bill is also being pushed by that state's consumer advocates, and a little farther north, a controversial piece of Washington payday loan legislation has also been hotly contested.