In a match-up of payday loans versus Big Macs, the financial resources dominate the fat-laden entrees across South Carolina.

There are six cheap payday loan lenders for every McDonald's restaurant in the state. In 2004, these cash advance providers made over 4.3 million loans - more than the entire population of South Carolina.

The local AARP says that's too many. Therefore, the orgamization is sponsoring five Payday Lending Town Hall meetings around the state to hear from consumers, advocates, the faith community, credit counselors, lenders and others to discuss the need for reforms no fax payday loan industry.

The local meeting will be held at 5:30 p.m. Sept. 14 at the Grand Strand Senior Center at 1268 21st Ave. N. in Myrtle Beach.

We have more on Mississippi payday loans and a certain consumer group's plan to monitor their use.

Let's start with facts from this state regarding regular and faxless payday loan popularity: 

• Per capita, Mississippi ranks third in the nation in the number of check cashing/cash advance outlets.

• Around 7.6 million borrowers a year take out up to 83 million instant cash loans, which generates an estimated $2 billion in annual revenue for lenders in the state.

As you can see, the abundance of cash advances across the state is quite high. The Mississippi Center for Justice wants to do something about these facts, at least hoping to require stores to post certain information for clients to see.

Here's a glance at what the group plans to bring up to the state legislature in January:

• What percentage of borrowers take more than five no fax payday loans per year and what percentage of the total payday loan volume they account for?

• Is there a subset of borrowers who take up a disproportionate percentage of payday loans?

• What percentage of all payday loans are refinancing of previous pay day loan debt?

• On any date, what percentage of payday borrowers were indebted every single day of the preceding six months?

• Which lenders had above average rates of repeat borrowers indebtedness?

The idea, at the very least, is to give the public a clear idea about online payday advance use in the state. From there, they can form their own views.

Will payday loan firms expand in Mississippi? We asked that question in the sprong. If it's up to a series of state legislatures, the answer will be an emphatic "NO!"

In January, the Mississippi Center for Justice will ask lawmakers to require storefront, supposedly low cost payday loan lenders to provide information about the amounts of money they lend, along with demographic information about their customers.

The nonprofit group also will push legislation that would allow Mississippi communities to regulate the number of cash advance companies in their cities.

Purpose of payday loan legislation: Representatives of the center said the proposed legislation would provide a better picture of who the lenders are targeting and whether those customers are able to pay high-interest rates that accompany the payday loans no faxing.

"You shouldn't allow predatory practices targeting people who don't have any money to begin with," center staff attorney David Miller told the Hattiesburg American editorial board Wednesday.

Based on the fees of $17 per $100 loaned over a two-week period, Miller said yearly interest would be between 400 and 500 percent.

"This is supposed to be an emergency loan, not one that you take out every two weeks and get caught in the debt cycle," he said. "With a reporting system, we could tell if that was happening."

Moreover, the location of the storefronts shows that there's a target market that includes people unable to get loans from traditional banks. Providers of quick cash loans try to take advantage.

"These businesses are targeting lower-income communities, African-American communities, military bases, people near casinos - these businesses are predatory," he said.

However, Dan Robinson, president of the Mississippi Financial Service Centers Association, said that Miller's figures were misleading and that there is already legislation in place that monitors payday loans.

"What we charge is a fee for cashing checks, plain and simple … and whether they honor that check in a week, two weeks, six weeks, eight weeks, the flat fee is what we charge for," he said.

He added that for most, the fees charged by check-cashing businesses are smaller than similar fees from a bank. Overall, bad credit payday loans get a bad rap.

"The bank charge is around $30 for a bounced check, and a merchant can charge up to $40, so one insufficient check can cost someone $70," he said.

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.

While the Pentagon is joined by consumer groups in its battle to limit military payday loans, providers of such cash advances are banding together.

Those that give out payday loans online for a living are mounting their own campaign against the interest rate cap, attached to the Senate’s defense authorization measure by Jim Talent (R-Mo.) and Bill Nelson (D-Fla.).

If Congress limits military payday loans to a 36 percent annual rate, the industry says it would not be able to cover expenses, adding that a market that can prove helpful to cash-strapped service members would dry up.

Focus on payday loans: The Center for Responsible Lending, the lobbying arm of community development lender Self-Help, has shifted its focus for this fall away from a legislative crackdown on predatory mortgage lending, which is not expected to move until next year, and onto the Talent-Nelson no faxing payday loan amendment.

Center president Michael Calhoun touted a Department of Defense (DoD) report last month that found payday lenders clustering around military bases to target service members and endorsed a 36 percent rate cap. He said the DoD has taken the lead in lobbying lawmakers for payday advance caps, setting up frequent Hill visits and allowing the Center to provide backup.

“It’s the right policy and right politics for folks to be supporting troops and supporting DoD,” he said. “This is not us pushing [the DoD]. We quite frankly have been surprised at how strong they have been.”

(more…)

Rentcash is the only payday advance loan broker in Canada publicly traded on the Toronto Stock Exchange. It operates more than 430 stores across Canada under three banners: The Cash Store, Instaloans and Insta-rent.

No matter how you look at them, the company enjoyed a net income of $3.6 million in the fourth quarter, compared to just $144,000 for the same quarter last year. It was an impressive haul for this payday loan company.

Other highlights from the final quarter report included:

- Revenues increased 17 percent to $37.6 million.

- Retention payments to lenders (formerly administrative allowance provision) totalled $3.6 million, compared to $8.9 million for the same quarter last year.

- Cash and cash equivalents of $12.9 million on June 30, 2006, compared to $10.7 million on March 31, 2006.

- Six new quick payday loan brokerage stores opened in the quarter.

The Utah Department of Financial Institutions, in cooperation with the Utah Consumer Lending Association, has produced a new brochure, "Consumer Guide to Payday Lending."      

The goal is to provide information about instant payday loans, along with consumers' rights and legal obligations.

The most pressing aspects of the brochure are probably in the section entitled When Considering a Payday Loan, Please Remember the Following. They are:

• The finance charge on your faxless payday loan is due each time you obtain an extension.

• Compare the interest rates, charges, quality of
  service and convenience various payday advance lenders offer for loans.

• If you need an extension of your online payday loan, you are encouraged at the time of renewal to pay an amount greater than the required finance charges, thereby reducing your principal.

• If you cannot repay the loan, the payday lender may seek judgment against you for the amount of the cash loan, interest, attorney’s fees and court costs.  

It seems as though payday loan violations are in the air this week.

We reported on trouble in Nebraska earlier today - and now five Illinois cash advance facilities in Illinois have been fined by the state for issuing loans prior to obtaining licenses, state officials said Tuesday.

According to The Journal-Standard, Affinity Credit Services in Freeport was fined $71,000 by the Illinois Department of Financial and Professional Regulation (DFR). Its offense? Issuing 71 loans before its license took effect Aug. 2.

Illinois law requires that each payday advance facility be separately licensed after meeting the state's financial standards under the Consumer Installment Loan Act.

“We have laws in Illinois. We require people be licensed before they issue loans,” IDFPR spokeswoman Susan Hofer said.

The owner of the Freeport facility, Chicago resident Mike Dambrose, 45, said it's all a misunderstanding.

“I'm raised by a Fortune 200 company to do things right. You just do the right things,” Dambrose said.

Makes sense to us.

When he applied for his regular and faxless payday loan license in June, Dambrose said it was approved. But he thinks the person who approved his license left his job and the paperwork was not processed completely. Dambrose owns all five facilities under scrutiny.

“DFR came in two weeks ago and they audited every store that I own in one day. The major problem they found was that my license said August 2, but I've been operating since July. But I was approved license-wise in June,” he said.

A payday loan examination: The DFR examined Affinity's operations following an unrelated consumer complaint about the company, and subsequently learned about the 273 low fee payday loans that had been issued, Hofer said. She said the complaint that triggered the investigation was about an alleged high interest rate on a loan.

(more…)

As the Pentagon focuses on national military payday loan laws, crafting a report that says 13 percent to 19 percent of service members took out cash advances last year, columnist Eddie Laird is concentrating more on issues at home.

He doesn't disagree with legislation to curb payday loans to soldiers across the nation, but he does take issue with how the industry has been handled in Alabama.

Laird writes about an Alabama judge that fired a shot across the dorsal fins of cash loan sharks in the state. St. Clair County Circuit Judge Charles Robinson ruled Alabama's Pawn Shop Act is unconstitutional because it allows pawn shops to charge interest rates on auto title loans far in excess of what's allowable under state law.

However, he remains pessmistic because "we've seen this 'Jaws' rerun before." Over the years, the problems posed by predatory lending practices have repeatedly been brought to the public's attention - by the media, by advocacy groups, by lawsuits. Nevertheless, lawmakers, state and federal, have done little to protect citizens.

In 2003, the Alabama Legislature did pass a pay day loan lending bill that provides a few protections for borrowers. But its primary purpose was to make legal an unfair practice. Moreover, the way it did so proves whose interests legislative leaders are apt to protect.

The real payday advance concern: After years of contentious debate, negotiations and failed bills, payday advance providers and advocates for the poor and elderly reached a compromise.

The legislation, among its measures, would cap fees and end rollovers. But after the House of Representatives passed the compromise bill, Senate President Pro Tem Lowell Barron - who operated a string of fast payday loan lending businesses - quietly replaced it with a bill more friendly to payday lenders, and the Legislature approved the substitute.

(more…)

In Nebraska, it's illegal to rollover payday loans. The law allows for no extension of any kind.

Perhaps Jim Kyles, owner of Fast Money, never read this provision. The Journal Star explains why the cash advance provider has had his license revoked by the Nebraska Department of Banking and Finance.

According to the article, Fast Money is no longer able to offer new transactions, but it may conclude pending business by collecting on bad credit payday loans that started before its license expired last week, the department said.

The attorney for the payday loan company questioned the department’s authority in the matter, stating the business is entitled to do business under an annual license issued in April. Nevertheless, last week - before the department announced the expiration of what it called a provisional license - it served the company with an order to show cause why its license shouldn’t be revoked, setting a hearing for Oct. 5.

Kyles' lawyer, Terry Barber, believes his client received a notice saying a provisional license had expired, but he still finds no authority for a provisional license in state law.

“I think we’re plowing some new dirt here,” he said.

Mike Cameron, counsel to the Department of Banking and Finance, said the department has a long history of authorizing provisional licenses in the cash of no fax cash loan businesses. The latest action continues months of complex dealings between the state and Fast Money.

Under the current order, Kyles would have no participation in any delayed deposit/no fax payday loan business for five years, the department said. Kyles could not be reached for comment.