According to a report by the Center for Responsible Lending, payday lenders are approximately eight times more concentrated in California’s Latino and African-American neighborhoods. (Read on …)
Sacramento wants to stem the proliferation of quick-cash operations like payday advance loan lenders and check-cashing stores that officials say prey on lower-income neighborhoods, encourage blight and trap consumers in devastating spirals of debt.
The City Council voted unanimously Tuesday in favor of a 45-day moratorium on new stores, action prompted by a national focus on the industry and one official’s survey of its growth in her district.
“I view them as predatory lenders – legalized loan sharks, actually,” said City Councilwoman Sandy Sheedy, who represents the struggling Del Paso Heights neighborhood, where on one street, four such stores operate in a mile-long stretch, and two more have applied for permits.
“You don’t see them targeting wealthy ZIP codes,” she said.
Sheedy said the temporary halt on approving new no faxing payday loan lenders gives the city time to consider how a permanent ordinance might be structured. Other cities have required special permits and kept stores away from churches, parks and other quick-cash stores.
Since payday lending became legal in California in 1997, more than 3,500 stores have popped up in strip malls and street corners. City records show there are at least 61 payday lenders in Sacramento, many of them lining streets of lower-income neighborhoods, such as Del Paso Heights and south Sacramento.
The payday industry says it is simply offering customers a product they want, at a reasonable price. Even with the costly fees, industry officials say a cash loan is often the best option for a consumer who needs cash fast.
“A cash advance, a credit card late fee, overdraft protection – if you put all those next to each other, a payday loan often winds up being least expensive, and convenient,” said Greg Larsen, a spokesman for the Sacramento-based California Financial Service Providers, which represents the state’s payday lenders and check-cashing companies. “Consumers make the choice and this makes sense to them.”
Taking out a personal loan is, as the sign above Advance America on Stockton Boulevard says: “Quick, easy and hassle-free.”
SOURCE: The Sacramento Bee
In the 10 years since payday loans were legalized in California, at least 81 payday lenders have opened in Sacramento. Some city officials say that’s more than enough.
A committee of city council members voted unanimously Tuesday to recommend that the full council adopt an emergency ordinance placing a moratorium on new check cashing centers.
The 45-day moratorium would give city staff time to work on permanent zoning restrictions for new faxless payday advance lenders to prevent multiple businesses in the same neighborhood.
“They’re everywhere,” said City Councilwoman Sandy Sheedy, who proposed the moratorium. “How many do we need?”
Consumer groups say borrowers pay up to 456 percent APR for a two-week payday loan, and that payday lenders target low income communities.
Charisse Lebron, a consumer advocate who testified before the city council’s Law and Legislation Committee, said fast payday loans lead borrowers into a “quagmire” of debt because they often can’t repay the entire loan with their next paycheck.
The owner of a Broadway clothing store adjacent to a payday loan center said he worries about the people he sees going in and out of the business, but had reservations about the moratorium.
“It’s America,” said Eric Murrell. “It’s capitalism.”
The Oceanside City Council last week approved restrictions on new payday cash loan businesses in an effort to help protect young Marines from being saddled with exorbitant interest rates.
The move reflects a national effort to regulate the businesses that often set up near military bases, such as Camp Pendleton, and prey upon young troops who need money between paychecks.
In January, Maj. Gen. Michael R. Lehnert, the commanding general for Marine Corps installations west of the Mississippi, asked the council for help in protecting young and often unsophisticated enlistees from the high interest rates.
The regulations the council unanimously approved last night place new cash advance lending companies in the same category as adult businesses and massage parlors, requiring them to obtain conditional-use permits before opening.
They also will have to be located away from churches, parks and schools.
Despite the unanimous vote, two council members expressed concerns with the changes to the city’s zoning laws. Councilmen Jerome Kern and Jack Feller said the changes likely give an advantage to existing lenders, who will not be affected.
Kern also said young Marines haven’t received enough instruction on borrowing from the faxless payday loan businesses: “We’re kind of closing the barn door after the horse is out,” he said.
Councilman Rocky Chavez disagreed. “The Marines are being counseled quite a bit,” he said.
After the vote, Sgt. Maj. Jeffrey Dixon said, “We give classes, but unfortunately so many times they don’t want to tell us.”
At least 21 payday advance loan lenders operate in Oceanside, according to a city staff report. Countywide, the city ranks second only to San Diego in the number of such establishments. San Diego has no laws regulating the businesses.
Congress approved a law, which takes effect Oct. 1, limiting the interest rates that can be charged to service members to 36 percent annually. The rates at payday lenders often go as high as 400 percent annually, but the loans are typically short term.
Police are looking for a man who robbed Check into Cash Pay Day Loans Co. at 875 Oak Park Blvd. in Pismo Beach about 12:45 p.m. Tuesday.
The unidentified robber was reportedly wearing a black mask and black sweatshirt. He claimed to have a gun in his pocket and escaped the fast payday advance store with an unspecified amount of cash.
“He entered the business and threw a bag at the clerk,” said Cmdr. Jeff Norton of the Pismo Beach Police Department. “He simulated having a weapon. It is still under investigation whether this is related to the robbery in Nipomo.”
A bank robbery under similar circumstances occurred Monday afternoon at the Mid-State Bank & Trust branch at 615 West Tefft St. in Nipomo.
According to witnesses, the Check into Cash robber was either white or Hispanic, approximately 6 feet, 1 inch tall and weighed about 180 pounds.
The Nipomo bank robber was described as a white, heavy-set man in his late 30s who was wearing a dark ball cap with white lettering, a blue sweatshirt, baggy jeans and latex gloves. Witnesses also reported that he had a goatee and what looked like fake sideburns, officials said.
The payday loan company offers small, unsecured, short-term loans ranging from $100 to $1,000, until the borrower’s next payday.
UniSource Energy Services, the electricity provider in Nogales, has announced plans to eliminate the option for customers to pay in cash at ACE Cash Express locations.
The decision has nothing to do with economics, convenience or cost cutting. Instead, the company is trying to protect its most vulnerable clients, said Joe Salkowski, the public information officer for the utility company. It wants to distance itself from this instant payday loan chain.
“We’ve had conversations with our friends in the low-income advocacy group about directing our customers to make payments where extremely high-interest loans are available,” Salkowski said. “In recognition of those concerns we’re going to look for another way, (in which customers may pay.)”
While the majority of customers pay online or with checks, some people do not have bank accounts and can pay only in cash. In Nogales, those people can go directly to the UniSource office, but for those who live elsewhere the only option was to pay at the aforementioned payday loan company.
In January, Maj. Gen Mike Lehnert, commanding general for Marine Corps installations west of the Mississippi, asked the Oceanside City Council to do something about bad credit payday loan lenders who charge high interest rates to members of the military.
It’s an issue that affects military personnel across the nation. Nearly 200 payday lenders operate in the county, which is home to more than 113,000 active-duty members of the military serving at 14 bases and commands.
With quick payday advance lenders nationwide charging as much as 400 percent interest, Congress passed a law, effective Oct. 1, limiting interest rates that can be charged to military personnel to 36 percent annually.
Additionally, a regional Military Joint Task Force on Financial Health has been set up by Navy and Marine officials to address service members’ financial issues.
“Financial health is a priority regarding our sailors and Marines,” task force spokesman Brian O’Rourke said in an e-mail yesterday. “We consider financial health to be just as important as physical health or mental health. It’s also a combat-readiness issue for us.”
This check-cashing service is among 22 providers of fast payday loans in Oceanside, which has the second most among cities in San Diego County. Military officials have voiced concern that safeguards are needed to protect Marines and sailors from high interest rates.
The city of San Diego has 85 payday lenders, the most in the county. Oceanside is second with 22, according to the California Department of Corporations, which licenses the businesses. Lehnert said he approached the Oceanside council for help because the city is home to so many payday lenders, which Camp Pendleton Marines use for short-term loans until their next paycheck.
On Monday, the city made its first response.
The Planning Commission voted to recommend that the City Council pass an ordinance requiring lenders to get a special operating permit. The commission recommended that instant cash loan companies not be allowed within 1,000 feet of a similar business or 500 feet of a home, church, park or school.
Similar regulations
The law is similar to regulations for massage parlors and pool halls.
Although San Diego has the most payday lenders in the county, it has no plans for regulations, city spokesman Kevin Klein said.
California Corporations Commissioner Preston DuFauchard has determined that Margaret Diego (dba The Cash Center Inc., The Loan Center Inc. and TLC) willfully violated the California Deferred Deposit Transaction Law (CDDTL).
Diego has been ordered to desist and refrain from violating the law, ordered to pay penalties, and the personal loans in question have been declared void. Diego has operated The Cash Center Inc., a payday lender in the city of Reseda in Los Angeles County, without the required license from the California Department of Corporations.
The investigation by the Department found that Margaret Diego willfully violated sections 23024, 23036, and 23037 of the law by entering into eighty seven (87) deferred deposit transactions with at least 13 separate consumers, in some cases while existing faxless payday loans were still outstanding with those same consumers.
The Commissioner also determined that Diego failed to preserve necessary records of transactions and that The Cash Center Inc., The Loan Center Inc, and TLC were operating without a license from the Department as required under the CDDTL.
The Cash Center was ordered to stop operating a payday advance loan lending business without a license. Additionally, as part of this action, the Commissioner ordered that 87 illegal deferred deposit transactions arranged by Diego, totaling $21,870, be voided. Furthermore, the Commissioner has determined that Diego shall be required to pay a penalty of $35,000 ($2,500 per citation) to the Department.
The Cash Center’s main office is in the city of Reseda in Los Angeles County. The violations occurred at the Reseda location and were discovered by a Department of Corporations examiner.
As defined by state law, a deferred deposit transaction is a written transaction whereby one person gives funds to another person upon receipt of a personal check and it is agreed that the personal check shall not be deposited until a later date. These loans are sometimes referred to as “payday advances” or “payday loans.”
California Corporations Commissioner Preston DuFauchard has determined that GVG Financial Services, Inc., has willfully violated the California Deferred Deposit Transaction Law.
GVG has been ordered to desist and refrain from violating the law, ordered to pay penalties and the loans in question have been declared void. GVG is a payday loan company operating eight stores in Orange and Los Angeles Counties.
The investigation by the Department found that GVG willfully violated sections 23023, 23024, 23035, and 23036 of the law by entering into fifteen (15) deferred deposit transactions with consumers, while existing no faxing payday loans were outstanding with those same consumers, failing to provide the customers written agreements and proper consumer notices.
Specifically, GVG failed to provide its customers with information, such as charges, fees, quick payday advance rates and the Department’s toll free number.
As part of this action, the Commissioner ordered that the 15 illegal GVG deferred deposit transactions, totaling $3,920, be voided. Furthermore, the Commissioner has determined that GVG shall be required to pay a penalty of $37,500 ($2,500 per violation) to the Department.
GVG’s main office is in Santa Ana and has stores in several surrounding communities. The instant cash loan violations occurred at GVG’s Garden Grove location. A separate order prohibiting unlicensed activity was issued to Cain Rodriguez-Silva, the manager of the Garden Grove store.
The reason this was deemed unlicensed activity was because the personal loans were not in the name of the company, but in the name of Rodriguez.
They have names such as “Payday Loans” and “Cash Advances” and they can put you in a difficult financial position. Now, one local councilwoman wants to put limits on these businesses.
It seems like you see them almost everywhere - businesses that are designed to give you quick, easy access to cash. But a Sacramento City Council member says these lenders are most prevalent in poor and working-class neighborhoods.
Council member Sandy Sheedy has prepared a report entitled “Predatory Lending.” She’s recommending the city council use its power to limit the power of the quick payday loan stores.
Here’s the problem, as the report puts it:
In a typical scenario, a borrower writes a check for $100 and receives $85 in cash. In two weeks, the payday advance loans lender cashes the check. The annual percentage rate of interest for the transaction is 459%. So the borrower paid $15 dollars to use $85 dollars.
The report says borrowers get trapped in a cycle of debt when they use these services on a regular basis. One customer who spoke with CBS13 says the stores do provide a good service, but there’s plenty of room for improvement if they want to play fair.
The Sacramento council member’s report recommends using city land use powers to limit where future check-cashing stores can do business, and possibly putting a moratorium on new fast cash loan stores altogether.