All it takes is one.

Now that a British Columbia judge has ruled that payday loans from A OK, Inc. are charging "criminal" interest rates, the ruling could easily have an effect on other cash advance lenders in the country.

There are dozens of similar class-action lawsuits pending in Canada - and lawyers who are bringing them against supposedly cheap payday loan companies look at this initial judgment as setting a precedent.

"It's the first class-action, of which there are several out there, in which a decision has been rendered involving the legality of the fees that were charged by a payday-loan company," said Paul Bennett, a Vancouver-based lawyer with Hordo & Bennett."I think it has significant implications to the other cases that are outstanding. We believe the reasoning in this case will apply to any of the fees that are charged by any of the other payday loan operators."

While a decision in the British Columbia Supreme Court is not binding in Ontario, it will be given significant weight by the court, lawyers there said.

B.C. Supreme Court Justice Brenda Brown ruled that late fees and processing fees charged by the aforementioned payday loan company are, indeed, interest. She found that the company was charging a rate above 60 percent - the maximum amount of interest that can be charged under Canada's Criminal Code. Justice Brown asked lawyers to submit further evidence before she determines what relief should be paid to the plaintiffs.

Bruce Hallsor, the lawyer representing A OK Payday Loans, said this decision will be looked at by other courts, but "it's fully expected that this issue will be raised in higher courts." His client has not yet decided whether to appeal, but other quick payday advance firms are undoubtedly hoping it does.

As a new military payday loan amendement makes its way to Congress, the Pentagon is throwing its considerable weight behind ensuring its passing. 

It has cites some of the worst cases and abuses of such pay day loans - among 3,000 case studies involving active duty military personnel - the armed forces has recently seen the Pentagon said:

• A U.S. Navy E-5 (Petty Officer, Second Class) began with three payday loans in March 2004 to take his family to visit his cancer-stricken grandfather. By October 2005, he had four payday loans, totaling $2,300 costing. him $600 every month just in rollover fees.

• An Air Force E-4 (Senior Airman) had faxless payday loans with two lenders, totaling $900 owed in principal. She paid $200 in fees each month to rollover the loans for seven months. When she entered financial counseling, she had other military installment loans, one for $7,000 with a 61 percent APR.

• A U.S. Air Force E-4 obtained a $500 no faxing payday loan that ballooned into a $10,000 loan with an annual percentage rate (APR) of 50 percent. The woman ended up paying $15,000 for the money and much more in a personal loss after the financial problems contributed to her divorce.

Just through this tro of examples, it's easy to see why army representatives would like to see changes made in current military payday loan laws.

Due to student loans and a lack of credit, you'd think young consumer were most at risk for falling into debt. These individuals are not familiar with online payday loans, either; they're more likely to not understand such interest rates.

And, don't get us wrong, this age group does fall into debt. However, recent information from abroad makes it apparent that UK consumers in their 50s are increasingly struggling with credit card debt. A government report published today warned that the number of insolvencies in England is likely to rise as this trend continues.

The Consumer Credit Counselling Service (CCCS) said that while credit card spending has slowed over the past 12 months, people aged 53 and above are the only age group still increasing their spending on plastic. No information was made public about the tendeny of these individuals to apply for cash loans of any kind.

The proportion of people between the ages of 53 and 59 seeking help from the above group has risen to 23% of the total, up from 19% in 2003. These over 53s now have the biggest outstanding credit card debt in the nation, while those in their 60s have increased their credit card borrowing by one third between 2004 and 2005.

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Need cash groceries, but can't pay right now?

According to the Charlotte Observer, the Bi-Lo supermarket chain is rolling out a new store credit card that lets customers with a checking account and photo identification buy now and pay later. Advocates for lower-income consumers worry, however, that the program is too similar to predatory payday loans.

Officials with the company say BonusPay, introduced in all South Carolina Bi-Lo stores last week, is a way to help cash-strapped shoppers avoid fees associated with revolving credit or bounced checks. Bi-Lo operates more than 300 supermarkets in the Carolinas, Georgia, Tennessee, Alabama and Florida.

With BonusPay, shoppers are given a credit line of $50-200 and are charged $3-5 each time they use the card at the checkout, plus $4.99 for each month they use the card. The balance and fees are deducted from their checking account when they get their paychecks.

Like faxless payday loans, no credit check is required, nor is proof of income. In comparison, fees for bounced checks range from $30-70, depending on financial institution.

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In his fight against military payday loans, Senator Jim Talent has the support of The St. Louis Dispatch.

A recent editorial in that newspaper discusses Talent's proposed addition tacked on to defense bill SB 2766. This proposal would limit the annual percentage rate to 36 percent for military members and dependents. It's a figure no fax payday loan lenders argue is less than it costs to service such loans, and that the industry couldn't stay in business at rates that low.

There's truth to that argument, and payday loans - if they're NOT allowed to snowball out of control - do serve a legitimate purpose. All kinds of bad credit payday loans can be a handy short-term stopgap … or the gateway to ruin. Unless they are paid off immediately (the loans can be rolled over again and again), clients will be racking up debts many times the amount of the original cash loan.

"There's a tremendous abuse of servicemen and women going on," Talent said, and it's creating "a huge military readiness problem," he said.

Talent's Democratic opponent for the Senate race in November, Missouri Auditor Claire McCaskill, says that his proposal would help quash the competition of predatory finance companies, including a Kansas City-based lender, Pioneer Services, that played a role in drafting the language of the amendment.

Such a lack of competition, critics say, could leave military families with fewer options, making them even more susceptible to exploitation by predatory lenders.

While the Talent/Nelson amendment has the support of the Center for Responsible Lending, a nonpartisan research center in Washington, and the Consumer Federation of America, there are other approaches to the national military payday loan problem.

Talent might take a look at the new reforms in Illinois. State law now limits fees on a two-week loan to $15.50 per $100. Borrowers must wait a week before rolling over a payday advance, and lenders must offer interest-free payment plans to borrowers who get in over their heads. Illinois applies those limits to civilians as well as the military, which makes a lot of sense.

Federal legislation limiting fees and rollovers would end payday loan abuses. Then Congress should take on the finance companies - and the issue of lousy military pay.

First, Cash Now, a well-known payday loan company, announced that is would utilize new technology to double check on potential bad cash advances or clients.

Now, the same firm is taking advantage of another breakthrough to make it even easier for individuals to receive faxless payday loans.

In Virtual Terminal, Cash Now has found what it considers to be - by far - the most advanced Web-based platform for processing electronic payments available today. With its easy-to-use, yet powerful user interface, Virtual Terminal enables Cash Now licensees and system users to schedule a single transaction or a series of recurring transactions with a few simple keystrokes.

The progream supports the processing of credit card, debit card and electronic check (ACH/ATM) transactions. These transactions can be processed in real-time or can be scheduled to occur at a future date designated by the user. The idea is to make the acquisition of instant payday loans as simple as possible.

The goal, of course, is for Cash Now to continually integrate its technologies with other fast payday loan sub prime credit reporting agencies, while identifying potential bad loans and reducing loss exposures for the Cash Now licensees utilizing the company technology.

NOTE: Below is a letter we received, via e-mail, from an Oregon resident and small business proprietor with strong opinions about the payday loan industry in his state. If you would like to have your opinions heard, please use the Contact Us form and let us know what's on your mind. The democratic nature of the Payday Loan Times makes us inclined to share all views, so nothing is off the table.

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I've been reading your site and a ton of local papers lately about all the commotion going on regarding payday loans here in Oregon. I ask that you keep my name and my businesses [sic] name out of this because I know I will have activists breathing down by neck if this gets out. But as an owner of a payday loan store I have to voice my opinion.

I am frankly sick of being labeled a loan shark by all of these groups that are seeking to end payday lending in numberous [sic] Oregon communities, mine included. I run an honest business that, believe it or not, helps people. Why do you think the industry grows each year. Because it fills a niche and consumers want it. It's the way the world works, and the last time I checked, we were living in a free society! Imagine that!

People who call payday loan company's [sic] rates predatory do not know the facts. Yes they are high. Yes you can get end up with more debt if you don't pay off no fax payday loans on time. But most people do pay on time, and the fact that some people don't make the rates necessary from a business standpoint!

I make a decent living for myself but I am hardly raking in the riches. I will not waste time by breaking down the numbers for you but let's just say my overhead is massive due to the risk of every unsecured personal loan my store gives out. Think about it — yes I make money off interest, but what do I get if someone doesn't pay it back? Nothing!

This is unsecured debt, and while most customers of mine handle their loans responsibly, it's the people who don't that drive the risk (and rates) up for all.

I have no doubt that the intentions of the activists and politicians who want to regualte [sic] the payday advance business are good. But frankly if you ask me I believe in our constitution and I believe this is not their place. In a free society people make their own decisions, and the free market dictates what businesses succeed and which fail.

With ordinances against cash loans you not only strip people of a viable option but violate basic economic principles of the United States of America. Thank you for letting me voice my opinion.

Sincerely,

James

Missouri Senator Jim Talent hates military payday loans. He sees them as preying on our armed forces, negatively affecting their readiness for battle.

As his bill heads to Congress, Talent headed out to VFW Post 5896 in Farmington this week, giving a speech on the issue to citizens regarding the use of such harmful pay day loans.

Payday lenders are jeopardizing national security by trapping military families into outrageous interest rates that send families into debt, U.S. Senator Jim Talent said Thursday during a visit to VFW Post 5896 in Farmington.

The U.S. senator, who has cosponsored an amendment to the Defense Authorization Bill that would limit the Annual Percentage Rate (APR) that payday lenders can charge soldiers and their spouses for a loan, said:

“Thousands of service men and women can't get security clearance because of the payday loans,” Talent said. “Fifty-four hundred sailors and Marines have lost their security clearance, mostly because of financial reasons."

Talent said he would like to pass a “predatory lending” measure that would address payday loans for nonmilitary persons as well. For now, however, his proposed amendment is part of a military defense bill; therfore, he could only focus only on the impact on the military.

That impact, he said, is jeopardizing national security.

“The Department of Defense has even said that service member debt resulting from predatory practices directly impacts troop readiness,” the senator continued. “We have to step in and stop these predatory lenders from making a quick buck at the expense of the livelihood and future of those defending our freedom.”

Talent said that a coalition of more than 70 veterans, civil rights and consumer organizations support his bipartisan amendment regarding faxless payday loans and similar resources. The bill would not affect “credible” lending institutions that assign reasonable interest rates, he added.

Missouri has a relatively large number and high density of payday advance lenders around Fort Leonard Wood in Pulaski County, Talent pointed out. He said that St. Robert, a small town near the base has only 5,200 residents, but there are eight payday lenders in town.

“This predatory lending is a curse everywhere,” he said. “The problem is growing.”

Just as payday loans seemed to gaining traction in Canada as a respected fiscal solution, a Supreme Court judge has ruled that companies specializing in cash advances are charging "criminal" rates."

In the first class-action civil ruling of its kind in Canada, the multimillion-dollar decision should create a ripple effect for no fax payday loan companies across the country. Justice Brenda Brown has ruled the processing fees and late fees charged by the A OK Payday Loans Inc. were, in fact, interest.

The court heard during the trial in April that A OK charges a 21 percent interest rate and a processing fee of $9.50 for every $50 borrowed. There is also a $75 fee if a check is returned and if the borrower wants put off a cash advance loan payment, A OK charges $25 for every $100 deferred.

"I accept the plaintiff's submission that if processing fees and late fees are interest, and their payment results in payments at a criminal rate, then A OK has necessarily received interest at a criminal rate," Brown said in a written ruling released Monday.

An expert testified that with fees added in, the interest rate was well above the 60 percent annual rate allowed under the Criminal Code. Paul Bennett, the lawyer for the representative plaintiff Doris Kilroy, said they're very pleased with the ruling.

"This is the first decision in Canada that has been rendered in a class proceeding with respect to the fees charged to payday loan companies," he said.

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As reports come in that individuals in Great Britain are suffering from mounting debt, the prospects at home aren't much higher at the moment. More and more Americans are considering the use of payday loans because they have little confidence in their financial future otherwise.

In fact, surveys shows that consumer confidence slid to a three-month low in August, as people worried about the direction of the economy and their own balance sheets in the months ahead. It's, therefore, little wonder the popularity of faxless payday loans increased.

The RBC CASH Index, based on results from the international polling firm Ipsos, showed confidence ebbed to 74.8 in early August. That marked a sharp drop from July's showing of 80.1. It was the second month in a row that confidence dropped, andthe lowest reading since May.

Economists blamed the deterioration in confidence mostly on rising energy prices and a cooling in the once-hot housing market.

With housing prices not going up as much as they had been, people aren't feeling as wealthy. They can't simply rely on home equity to get them through difficult times - and the result is curiosity about quick cash resources, such as an instant payday loan.

"Right now consumers are feeling insecure. They are worried about their inability to finance their standard of living in the face of higher gas prices, a softening economy, a slowing job market and a cooling housing market," said Peter Morici, an economist and professor at the University of Maryland's Robert H. Smith School of Business.

The economy - and the job market - have shifted into a lower gear. Economic growth slowed to a 2.5 percent rate in the April-to-June quarter as consumers and businesses turned cautious.

The nation's unemployment rate in July rose to 4.8 percent, a five-month high. As a result of all these factors, consumers are growing more anxious about future economic conditions. An index measuring their expectations about the next six months - including the overall economy's prospects as well as their own financial situations - declined in early August to 21.8, down from 34.2 in July.

What does it all mean? There's no reason to panic, but an increased number of people will probably look into the possibility of a cash advance or faxless payday loan in order to dig themselves out of debt holes.