Report: Shady Arkansas Payday Lender Made Thousands of Illegal Loans From 13 Locations
By Paul RizzoPayday Loan Writer
Earlier this week, we reported that an Arkansas payday loan company was slammed with a seven-figure fine. Since then, more information has been released about the firm and its alleged infractions.
Searcy Fast Cash, operating at 3205 E. Race in Searcy, Ark., was violating state lending law and issuing loans without a license. According to the Searcy Daily Citizen, 13 similar businesses owned by Dennis Bailey across Arkansas were doing the same, a state agency found.
As a result, the businesses’ parent company, BMB Finance Company of West Plains, Mo., was ordered to pay $1,317,450 in fines by the Arkansas State Board of Collection Agencies for repeated violations of the Arkansas Check Casher’s Act.
The company operates Beebe Fast Cash and similar fast payday loan agencies in Cabot, Little Rock, Bryant, Corning, Harrison, Mountain Home, Sheridan, Walnut Ridge, Fordyce, Camden, Hot Springs and Newport. It formerly operated in Pine Bluff and Magnolia as well.
“He’s not supposed to make any new loans, collect outstanding loans or cash any checks for a fee,” Peggy Matson, Executive Director of the board, said. “He’s supposed to refund any fees for cashing checks and making loans to customers. They owe him no money. They do not have to repay these loans.”
Customers need only to present their receipts at one of the locations or call the board at 371-1434 for a full refund of fees paid. Those with outstanding payday loans do not have to pay them back.
At the Searcy location on Thursday, a reporter for the Daily Citizen was told a $300 loan for him could be processed the next Wednesday. Told to bring a bank statement, pay stub, two forms of I.D. and a current utility bill, he was quoted a $60 fee for the two-week loan.
A poster at the store was labeled “BMB Payday Loan Rates,” and a rate of $20 on every $100 was reflected in its chart. The equivalant APR is 521 percent, with an additional $13 fee per month if the payment is not forthcoming.
A customer must leave a signed check for the loan amount, which would be deposited and charged to the customer’s account if payment is not made in two weeks. A $25 collection fee would also be assessed at that time.
Two female employees of the store — Kayla, apparently a clerk, and Donna, the manager — declined to give their last names. Asked if she knew the business was in violation of the law, the manager said she did not. The manager then refused to answer any more questions when she learned she was talking to a journalist.
The business and its employees may be liable for violations of the state's lending bylaws.
“Since none of these stores are licensed, an employee who participates in cashing checks for a fee or participates in processing a loan for a customer, whether it be taking payments or taking the application, can be charged with a Class A misdemeanor,” Matson said. “Is $8 an hour worth having a criminal record?”
A certificate from the Arkansas Secretary of State’s Office reflecting an application made for an LLC corporation in Arkansas was on display.
The applications for 13 quick payday advance outlets were made to the board in January 2005, but were rejected two months later when the board discovered Bailey had been found to be selling tobacco without a permit and had also violated regulations of the Arkansas Beverage Control.
The Arkansas board concluded that the cash loans were nothing more than deferred presentment transactions, and that BMB is not, and was never authorized to make them.
In October 2004, Bailey was found to be operating in Pine Bluff without a license and fined $20,200, which he paid with a check from the Harrison, Ark., payday loan store’s account. However, Bailey put a stop-payment order on the check and the fine was never paid.
On March 4, 2005, Bailey received certification from the State of Missouri for organization of BMB Finance Company, LLC, in West Plains, Mo., but he was notified in January 2006 by Missouri authorities that the license only authorized the company to do business in West Plains.
According to the investigation, the number of illegal personal loans made during the investigation and their amounts for the locations are as follows:
- Searcy — 11 ($4,428.03)
- Beebe — 56 ($18,050)
- Cabot — 286 ($91,560)
- Little Rock — 547 ($210,634)
- Newport — 80 ($23,313)
- Fordyce — 210 ($77,700)
- Sheridan — 251 ($90,860)
- Camden — 639 ($201,055)
- Corning — 47 ($14,925)
- Walnut Ridge — 228 (94,920)
- Harrison — 194 ($60,675)
- Mountain Home — 275 ($85,991)
- Hot Springs — 116 ($37,311)
The investigation periods varied for each location. Bailey has not complied with the board’s subpoenas for records, which were served on his attorney in May. The board concluded that all transactions by Bailey's businesses are hereby null and void. The operator was fined $1,000 for each illicit quick cash loan made in 2006, for a total of $562,000.
He was also hit with a $250 penalty for each deferred payment transaction in 2006, for a total of $725,250, and will still have to pay the $20,200 fine for the Pine Bluff store, along with $10,000 in attorney’s fees.
