National Restrictions on Military Payday Loans Misguided, Letter States
By J.J. CameronPayday Loan Writer
As president of Community Financial Services Association of America, Darrin Andersen feels strongly about instant payday loans. He takes exception the reports that cash advance companies are preying on our troops.
He expressed as much in the paraphrased letter to The Citizen-Times below …
Instead of working towards real solutions, the Pentagon turned to activist groups that have a stated agenda of putting the payday advance industry out of business. Activists worked so closely with the Pentagon that one group publicized the report the day before it was even delivered to Congress.
The allegation that payday lenders target members of the military is simply false. In fact, their own report shows that less than 1.3 percent of total industry revenues comes from military customers. Among the recommendations is a rate cap of 36 percent APR on loans to military customers.
At a 36 percent APR, the total fee charged on a $100, two-week faxless payday loan would be $1.38. Payday advance lenders couldn't cover the cost of originating a loan, let alone meet employee payroll and other fixed business expenses. Meanwhile, storefront payday lenders would be prohibited from offering payday advances to members of the military.
But eliminating payday loans as an option will not eliminate the need for short-term credit. Borrowers will be driven to unregulated offshore Internet lenders who specialize in online payday loans - or forced to choose between more expensive alternatives such as bounced check or overdraft protection fees, or late bill payment fees.
Congress should support legislation that has already passed the House and incorporates protections such as those in CFSA’s Military Best Practices. Doing so would protect service members from ALL predatory lenders, including loan companies that target only the military, as well as any bad actors in our own industry.
Military customers would be protected … and reputable fast payday loan lenders allowed to stay in business and service growing demand for this credit option.
