Payday loan companies in Pennsylvania have take a hit, as a bill that would have increased the proliferation of the cash advances in the state, according to the Philadelphia Inquirer.

State Senator Gibson E. Armstrong, a Lancaster Republican, has indicated that his banking and finance committee will not debate on a House bill legalizing payday loans — a stunning reversal to lenders specializing in the short-term cash advance loans.

Industry lobbyists have warned legislators that the loans would be made anyway by lenders acting as agents for out-of-state banks. But instead, at least for the moment, federal banking regulators cracking down on those partner banks, and payday lenders are leaving the Keystone State.

Having drawn criticism from consumer advocate groups, the industry of payday loans has been under attack in Arkansas. A panel of legislators met this morning to discuss the topic.

Critics such as Arkansans Against Abusive Payday Lending claim that these short-term loans come equipped with unreasonable interest rates. We’ll keep you apprised as this story develops and the state’s payday advance fate is decided.

The practice of payday lending has drawn scrutiny lately from critics like Arkansans Against Abusive Payday Lending, who say the short-term, high interest loans trap poor people in a cycle of debt.

Advance America was the first to go.

Now it’s time for Check ‘n Go office (located in Statesville) to call it quits. In ordr to avoid further legal action from Attorney General Roy Cooper, who alleged the payday advance industry was inherently unfair, lenders in the state have been shutting down state.

“From a customer standpoint, they are going online or to another state,” said John Rabenold, a spokesman for Check ‘n Go. “It’s a net loss for the state of North Carolina. Roy Cooper has never come to our store, but the customers do every day, and they have always expressed appreciation for our services.”

The company had 65 offices in North Carolina - and there’s a good chance these customers are not just crossing the border for South Carolina payday loans.

Elsehwere, employees are still working at the First American Cash Advance office on Venture Lane. Spokesman Bob Manning said:

“It is the company’s intent to continue to operate its store locations in North Carolina during this transition period and will now offer limited products to its customer base under existing North Carolina laws.”

The company is trying to get relicensed to operate as a consumer finance lender. (more…)

They fight for our country. They defend our freedom. And they’re rewarded by being victimized via the debt trap of various cash advances. That’s the basic conclusion reached by the Center of Responsible Lending in its critique of military payday loans.

In many ways, soldiers are ideal targets for these resources. They have a steady income from the government of just $1,200 per month for new recruits. At deployment time, when military families are faced with extra expenses at home and abroad, they’re more vulnerable to the promise of quick cash loans from online companies.

A recent report by the Consumers Union Southwest Regional Office confirmed that military personnel are an attractive target for payday lenders because they are young and financially inexperienced. Also, their government paycheck ensures that payday lenders have a steady source of income for repayment.

(more…)

NDP MP Pat Martin (Winnipeg Centre) isn’t a huge fan of the payday advance industry. Of lenders that provide these loans, he said:

“These people should be dragged into the street and shot.”

This sounds a bit extreme. Fortunately, Finance Minister Greg Selinger’s proposed legislation strikes a balance to ensure payday loan companies aren’t run out of business, while protecting the consumer from being gouged from excessive interest.

Here’s what the bill proposes: The typically exorbitant fees charged by payday loan companies will be capped and extra charges for renewing a loan will be prohibited under new legislation introduced by the province yesterday to control this industry.

Once the province’s bill is passed into law, the Public Utilities Board (PUB) will have the authority to set the maximum cost of credit that lenders can charge for payday loans, said Selinger.

“We’ve decided to do it through an arm’s-length body, to de-politicize it,” said Selinger, noting the fees will be set after the public and interested parties have had a chance to speak at a public forum.

The payday loan companies will also have to be licensed and bonded and borrowers will have to receive a documented warning about the high cost of the loan - a move aimed to edcuate Canadians that seem to be unaware of the costs of payday loans.

Borrowers will also not be able to borrow money on wages they haven’t earned yet and will have a 48-hour cooling off period to cancel the contract without penalty.

“We do not see this as putting the mainstream payday lender out of business,” said Selinger, noting there is a need for the service in many communities.

Under the legislation, the Manitoba Consumers’ Bureau will have the right to inspect records and suspend an operator’s licence if they aren’t following the regulations. Plus, if there is evidence that payday loans are offered through an unlicensed agency, the bureau can shut it down.

Payday loan companies are often referred to as financial predators, taking advantage of the vulnerable. While lenders range in quality, as with any industry, there are clear signs of abusive lending in the payday advance business. Keep your eyes open for these signs and make sure you don’t get victimized. From the Center For Responsible Lending comes a list of Nine Signs of Predatory Lending:

– Out-of-state banks violating local state laws. Federal banking laws were not enacted to enable payday lenders to circumvent state laws, but a lot of corporations use them to avoid possible legal entanglements.

– Triple digit interest rates. Credit cards are known for their high APRs, but payday loan companies typically charge fees equal to 400 percent per year and higher. Lenders, by contrast, contend that their interest rates are necessary to counter the potential loss.

(more…)

The Dollar Financial Group has acquired 11 payday loan stores in western Canada and will soon complete deals for two more in the region, the Philadelphia Business Journal said Monday.

National Money Mart (Dollar’s Canadian subsidiary), which had minority ownership in seven stores.

The acquisition is valued at an estimated $16.8 million in addition to a portion of the loan portfolio, liquid assets, and other items.

Dollar Financial, headquartered in Berwyn, Pa., now operates 1,340 stores in 36 states, the District of Columbia, Canada and the United Kingdom. The locations offer check-cashing, short-term payday loans, money orders and other services.

The Federal Deposit Insurance Corp. (FDIC) expressed concern last month over Dollar’s “CustomCash” payday loans and installment loans. The FDIC has been subjecting lenders and partnering banks to closer scrutiny recently, with some companies in some states (such as North Carolina) deciding to stop making payday loans.

If the FDIC takes action that will decrease the company’s CustomCash revenue, Dollar has said it will pursue alternatives to mitigate the potential future loss of revenue. This may include company-funded payday loans that are regulated under prevailing state laws and can be just as easily distributed to the prospective customers.

The Pennsylvania payday loan giant does not appear to be deterred by the recent backlash against its Canadian subsidiary and other industry operations. It will be interesting to see if this acquisition helps boost the revenue of an already thriving enterprise.

The provincial government is investing in a project to assist low-income people in managing their money in an attempt to tackle the problem of payday lending companies that provide short-term cash advances at high interest rates.

The Community Financial Service Centre, an initiative by the North End Community Renewal Corporation, will provide money-management training as well as small, low-interest, short-term loans to help its clients improve their bad credit history.

“It’ll give people alternatives,” said Manitoba Finance Minister Greg Selinger. “Instead of going to payday lenders, they will get ID, they will get access to mainstream institutions, they will get support on how to do better financial planning. All of those things will reduce their dependence on payday lenders.”

Michael Thompson, vice-president of the Canadian Payday Loan Association, doubts the program will deter the people who use payday loan companies. He says the program appears to target another segment of the population.

“Payday loan customers, as a matter of course, have to have a bank account already, so although the government may wish to counter payday lenders with the lending institution, it’s not going to have any impact on our business at all because it’s targeted at a consumer segment that doesn’t use our product,” he said.

However, Selinger says studies have suggested payday loan companies take advantage of people who are not able to obtain short-term loans at “mainstream” banks.

Selinger also plans to introduce legislation this spring to regulate the payday lending industry. In the past, he has said such legislation would outlaw the practice of customers giving payday loan providers the right to seize part of their paychecks, while banning rollover loans that see customers take out a second loan to pay off the first, at compound interest.

The federal government, which governs interest rates, made it a criminal offence to charge an annual rate of more than 60 per cent. Consumer advocacy groups have complained, however, that when one tallies in service fees and loan extensions, the interest rate can top 1,000 per cent.

The Community Financial Service Centre, which is also receiving support from the federal and municipal governments, is expected to open in the North End by September. Participants will be referred to the program by other community organizations.

After two years of rigorous software development, the implementation of a new payday loan approval system means customers are finding it quicker and easier than ever before to apply for these cash advances. The new system provides much of the assistance normally required from loan advisors and allows the My Payday Loan (UK) team to approve loans quickly and reliably time after time.

“One of the important things as a business is to give consistency of service and product to all our customers. Before the implementation of our new system, approving payday loans was a largely manual basis and could vary from person to person,” said Kirsty Auchincloss, COO of MEM Consumer Finance, Ltd., My Payday Loan’s parent company. “Although all our advisors are comprehensively trained, different people sometimes see things in different ways. With our new system, customers will get a homogenous service across the board and we can manage our business more easily.”

The company emphasizes that having such an efficient system does not mean it will lose its strong consumer relationships. If anything, it means that their customer services team can spend more time helping customers and less time focusing on red tape, according to a press release. The new payday loan approval structure allows short term cash advances to be turned around quicker and that My Payday Loan can concentrate on the needs of its valued customers.

With this development, applying for a payday loan could not be easier, if you decide that it’s right for your needs. American companies are always striving to improve their faxless payday loan applications and approval technology as well, so don’t feel as if you will be left behind here in the States.

Celeste Collins, executive director of Consumer Credit Counseling Service of WNC, penned an editorial to The Citzen-Times this week. In it, she showed gratitude and happiness for the elimination of payday loans in North Carolina. To wit:

At Consumer Credit Counseling Services, we’ve seen them: families on the verge of losing their homes because of fees spent renewing payday loans; parents afraid of arrest because they’re unable to pay off their balances; calls from low-wage employees whose jobs were in jeopardy because of unrelenting collection calls.

What was the enticement of payday loans?

The way they were advertised, payday loans seemed to be the perfect solution to those times when there was too much month left at the end of the money - small loan amounts for short loan terms (generally two weeks).

Simply write a check to the payday company for up to $300, they cash it and keep a mere $45 fee.

Yeah, $45 for a two-week loan.

What?

Surely the happy payday loan customers featured in the TV commercials were having an easy time repaying the loans.

Not really.

Calculate the annual percentage rate on payday loans and you’ll find it’s 400 percent or more.

Thanks to the N.C. Attorney General’s Office and the N.C. Commissioner of Banks, payday lending in North Carolina came to an end this month.

North Carolina consumers won’t fall prey to the deceptive advertising and predatory interest rates of payday lenders, which tried to hide behind out-of-state financial institutions to bypass North Carolina law.

And the good news is that consumers who owe these payday lenders will only have to repay the principal amounts. While that may still be difficult for some, it’s nothing compared to the financial hole they were digging with the payday loan.

N.C. Attorney General Roy Cooper is counting on the Consumer Credit Counseling Service agencies in North Carolina to work with consumers who are trying to create a plan to pay off payday loans and stabilize their finances.