Sunday, October 15, 2006

At a Charleston town hall-style meeting on the merits of payday loans, a powerful lobbying group's message was loud and clear:

• Payday lending is a predatory practice and the laws should be changed to protect consumers, according to the AARP.

However, the nation's largest payday lender, given far less time than its opponents to speak, said its cash advances provide a valuable service for people who need help between paychecks.

The Post and Courier had the report.

Both sides agree that the short-term loans help provide cash for those in immedtae need - but while getting a fast cash advance is easy, paying it back two weeks later is more difficult, consumer advocates say.

"For folks on a limited income, there isn't going to be a pot of gold at the end of the rainbow to pay these loans," said Teresa Arnold, legislative director for AARP in South Carolina.

Statewide payday loan debates: The group has been sponsoring payday forums around the state, including a recent boisterous debate in Columbia. One speaker at the Midlands event, who owns 11 payday cash loan lending and check-cashing stores, spoke beyond his allotted time and provoked threats to call the police.

Although this week's gathering was less eventful, around 50 local residents heard consumer advocates call for legislators to impose tighter regulations on the industry.

AARP, a powerful national lobbying group for the increasingly influential 50-and-older crowd, says borrowers should be limited to one no faxing payday loan at a time and be subject to a 24-hour cooling-off period before returning to the till. The group also supports a monitoring system similar to Florida's, in which payday transactions are entered into a statewide database to ensure borrowers aren't carrying multiple loans.

Payday loans are too widely available, the AARP also believes. In 2000, licensed payday lenders issued 2.6 million loans in South Carolina and charged $91 million in fees, according to the Appleseed Legal Justice Center, a Columbia-based advocacy group for the poor.

During fiscal year 2004, the most recent data available, the figure jumped to 4.3 million cash loans and fees of $153 million. Making local matters worse, The nation's largest cash advance business is headquartered in the state.

Spartanburg-based Advance America is banned from offering payday loans in some neighboring states. But in South Carolina, it's a high-profile, publicly traded business with national advertising campaigns and offices in busy retail areas.

Advance America was the only payday cash advance lender that came to speak at the AARP forum, which was held at The Citadel.

Jamie Fulmer, director of investor relations, said in an interview that the cash loan company's target demographic is the hard-working middle class.

As for fees, Fulmer said, the charges are comparable to what banks charge for bounced checks. If a $150 check is returned, the bank's fee is likely to be around $32, he said, plus another $25 return fee from the merchant. He noted that AARP charges a $29 fee for late payments on its credit cards.

Those compare to the $22.50 flat fee Advance America charges on a $150 bad credit payday loan.

"Plus, it doesn't have any negative credit consequences, because it doesn't show up on your credit report," Fulmer said.

He also dismissed allegations that the company preys on lower-income families. The typical Advance America customer is 39 years old and has a median household income of $41,000, he said. About 45 percent own their homes.

Also, the company is not a hole-in-the-wall loan shark, Fulmer said. Rather, it positions its stores in high-traffic areas such as strip malls, or close to retailers such as Target and Wal-Mart. Posters on the walls of all locations clearly state how much cash advance loans cost.

"There are no hidden fees with our product," Fulmer said.

This entry was posted on Sunday, October 15th, 2006 at 9:41 am and is filed under South Carolina.