A payday loan company based in Overland Park has paid $519,088 to resolve an investigation into overtime pay violations.

The Kansas City Star reported that The U.S. Labor Department’s Wage and Hour Division said QC Financial Inc. owed back pay to about 900 employees. Thse professionals finally received checks - covering the amounts owed them, which ranged from $22.08 to $3,589.29 per worker - based on pay that had been withheld from them for extra work.

Wage and Hour investigators reviewed the quick payday loan company’s pay practices from Jan. 1, 2004, to March 31, 2006, and found violations of the Fair Labor Standards Act.

“We cooperated with the Department of Labor investigation, and our agreement to pay overtime wages results from a 2004 change in the way the department categorizes managers at our smaller branch locations,” said Frances King, human resources director at QC Holdings Inc.

QC Financial is a wholly owned subsidiary of QC Holdings, which went public two years ago. Deann Alvarado, acting district director for Wage and Hour in the Kansas City area, said the case involved failure to pay time-and-a-half overtime pay to nonexempt salaried managers for time worked beyond 40-hour workweeks.

She said the payday advance company also failed to include bonuses when calculating overtime pay due nonexempt salaried and hourly workers. Generally, the law requires that nondiscretionary bonuses be included in calculations to determine pay rates for the purposes of calculating overtime. The company now pays overtime to all its branch managers, King said.

QC Financial employs more than 1,000 people in more than 550 business locations in 25 states. It began in the pay day loan business in 1992 and is one of the largest companies operating in that industry.

QC Holdings, Inc., announced yesterday that the expenses related to its expansion during the last two years cut into net income in its second financial quarter.

In a release today before markets opened, the payday loan company based in Overland Park, Ks., reported net income of $296,000, or 1 cent a share, down from net income of $1.7 million, or 8 cents, a year ago at this time.

The company said second-quarter earnings were impacted by about $600,000 in fees related to discussions about a possible acquisition. Those talks were terminated, the Kansas City Star reports.

In the quarter, however, the payday loan firm showed revenue increasing by 10.2 percent to $39.8 million. On average, Wall Street expected earnings per share of 12 cents on revenue of $43.1 million. For the first half of 2006, QC Holdings reported net income of $2.8 million, down from $5.3 million a year ago. Revenue in the first half grew to $78.2 million from $69.6 million. (more…)

Not everyone knows what to do about payday loans. In troubling financial times, it can be a confusing issue. Fortunately for Mitzi Rivers, somone very important gave her a clear idea of what cash loan path to take.

"I ask God how," the Wichita mother of six explains.

She believes God recently answered her question about how to climb out of a financial pit caused by payday loan use when she stumbled into a Sunflower Community Action meeting in June about payday and car title loans.

About $330 of Rivers' paycheck every two weeks was going toward paying just the fees on seven payday advances.

"A lot of it was due to the fact that some of my bills were higher - electric and gas," she said. "Then gasoline went up. I had some moving expenses. I didn't have enough money to go from one paycheck to another."

She took out her first payday loan to get over the hump.

But soon, this was her life:

• She worked overtime - on paydays she would drive around town to each lender to pay off her debts. Each time she paid off one quick cash loan, she took out another one.
• She was so exhausted on those days that after visiting the last lender on a Friday, she would go home to bed and pray.

"Lord," she said she had thought. "I need to get out of this."

And then it was so …

Rivers was driving near Tabernacle Baptist Church on June 10 and noticed a crowd. She stopped to get information about vacation Bible school. Instead, she learned about the Sunflower meeting.

Rivers met later with J.J. Selmon, community organizer for the northeast chapter of Sunflower, a Wichita grassroots group. He told her about Communities United Credit Union. Our heroine, subsequently, called the credit union to see if it could help pay off her savings account payday loans, some credit card debt and a car loan. Selmon evenwent with her to the meeting.

She and a credit union employee sat down and took a hard look at her debt. About a week later, Rivers called Selmon, ecstatic. The credit union had approved her loan! Her new monthly payment is $300 less than what she had been paying on her troublesome payday advances.

The Witchita Eagle raises an issue that can be as risky as a payday loan: overdraft protection programs.

You can see billboard across the city for these Fidelity Bank services, advertised as "Your checkbook's best friend." And, don't get us wrong, people who occasionally bounce a check may appreciate it.

The program, like those at other banks, covers an overdrawn check instead of returning it to the merchant. Banks, of course, call the programs a courtesy to customers. Payday advance companies do the same for their loans.

But the Center for Responsible Lending calls them high-dollar loans. The group worries that some people are becoming too reliant on overdraft programs. Consumers spend $10.3 billion a year in overdraft protection fees, the bulk of that by repeat users who are continually overdrawn, a recent study by the center says.

"For repeat users of overdraft," said Eric Halperin, senior policy counsel for the center, "this is a credit source that in the long run is going to cause more harm than good."

Al Sanchez, a spokesman for Fidelity Bank, said the service is a "purely discretionary courtesy or privilege that the bank may provide to our customers from time to time … It is that simple."

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The editorial page of Sunday's Wichita Eagle talks about the recent payday loan controversy in the Sunflower State, one that has exploded so rapidly and caused such a stir that many consider it a surreal scene.

Earlier this month, a Sunflower Community Action meeting about the dangers of payday loans was crashed by hundreds of people bused in by national lender LoanMax, which paid each of its “supporters” $100 and gave them T-shirts and free box lunches in exchange for showing up.

Bribing these warm bodies to show up in support for the industry, is a tactic that reveals just how low LoanMax and other payday lenders go.

When their cash-cow businesses are threatened, they will do whatever it takes to protect them, even if that means resorting to measures like these.

State lawmakers should regulate these multiplying businesses, and there is no time like the present. Ideas include limiting people to two fast cash loans each and requiring a statewide database be set up to keep track of payday lenders and borrowers.

Or, as some argue, are the ones being preyed upon getting what they deserve for being so fiscally irresponsible? Is the problem really the lenders, or the societal factors which force people to consider payday advances in the first place? Check out the newspaper's blog to see what readers have to say about this controversial issue.

The protest against payday loan lenders in Witchita took an odd turn on Saturday. Organized by Sunflower Community Action - and meant to speed up regulations against dangerous payday loans in the state - those who came out in support of these resources were not allowed to voice their views.

Over 300 people were paid $100 by Kenneth Wayco, president of Select Management Resources (which owns LoanMax and other cash loan services), to express positive online payday loan opinions - at the meeting, however, they weren't allowed to actually express them.

After Sunflower officials told Wayco the agenda didn't allow for comments from the crowd, he left the meeting with his clients. Afterward, he said that Sunflower's action amounts to saying his consumer don't deserve credit from payday loan lenders.

"What they want to do is draw the line between people who are deserving and those that aren't," he said.

Sunflower called the meeting at Tabernacle Baptist Church to warn the public about the pitfalls of payday loans and title car loans. The docket included comments from people who have struggled to repay such payday advances. Conversely, however, Floyd Pickett was angry he didn't get to speak about how title loans helped him.

"If you don't have any money, they (banks) won't let you borrow," he said. "No one was going to help me. As long as I pay them (title loans) on time, it's all right."

(more…)

As controvery continues to swirl in Kansas - and protests over payday loans even take place - it's important to take a look at the pros and cons of such cash advances. 

As payday loan stores pop up all over the state, there's been a surge in debt for its citizens. Coincidence? No way,  says Marcia Collins.

“We see people almost everyday that are in trouble with payday loans,” said the consumer credit counselor.

The reason for this proliferation of problems? The cash loans have high interest rates, which make it very tough for borrowers to fully replay the payday loan when it's due.

Of course, those who work in the quick payday loan industry said they are most often used by people with legitimate emergencies, such as needed medicine for a sick child or necessary car repairs.

“I think it's the lesser of two evils for most people,” said Dennis Stein of Pawn Marketing, Inc.

Stein, who runs a pawn shop that also offers fast payday loans, said the only alternative for many people is to write a bad check and then face an even more severe penalty from their bank. If regulations make it too difficult for payday loan companies to operate, people may turn to the Internet, where it's easy to find a site that offers the service.

Over at Consumer Credit, though, the counselors hold out hope that people will educate themselves on the perils of payday loans and have a back up plan for those last minute money emergencies.

Wichita advocate group Sunflower Community Action hosted Friday’s conference regarding the issue, where politicians, residents and city leaders met to discuss possible future faxless payday loan regulations.

The Witchita Eagle is reporting that citizens and consumer advocates in Kansas are not pleased with payday loans. As a result, Sunflower Community Action plans to protest Saturday against some payday loan lenders and their collection practices.

The group says too many Wichitans are becoming trapped by such faxless payday loans. It has also organized a June 10 community meeting concerning  the issue.

J.J. Selmon, community organizer for the northeast chapter of the grassroots group, said he knows of people who are thousands of dollars in debt because of payday advances.

"It's not just a low-income problem. It's affecting people who have pretty good incomes. But it's the only place they could go to get a loan, and they're getting caught up in the fees," he said.

(more…)

Marty Jo Brave Bull’s truck was running on fumes, and she didn’t have the money to fill it up with gas. So she pulled into Quik Cash, a storefront at 1401 W. Sixth St., in Lawrence, Kansas.

It’s a scene that plays out across the state and the nation at an alarming rate, with a growing number of payday cash advance providers promising quick, short-term loans to get people through to their next paycheck. Industry critics say the fees are unreasonable, and that the companies exploit people who already are in financial trouble.

But the payday loan providers themselves say they’re simply filling a need, and that most customers are moderate in their borrowing habits.

“We don’t intend to offer these products in a parental kind of way. We trust our customers to make their own financial decisions. We don’t want to baby-sit them. We want to serve their financial needs,” said Tom Linafelt, a spokesman for Overland Park-based QC Holdings.

Matt P., a 31-year-old Lawrence man speaking under the condition that his last name not be used, is a prime example of how the payday loan industry can go wrong. He first used such a lender in 1999.

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Senate Bill 376 seemed relatively harmless … to the untrained eye. In reality, this was an attempt to erase existing protections that prevent the most vulnerable borrowers from falling prey to unending cycles of high-interest debt.

“The predatory lending industry is one of the fastest-growing industries in our country,�? said Sen. Chris Steineger, a Wyandotte County Democrat and member of the Senate Financial Institutions and Insurance Committee. “I’m glad to see this bill appears to be dead for the year.�?

Kansas lending laws are tougher than those of some other states, including Missouri. They restrict payday loan companies and other subprime lenders that cater to consumers with tarnished credit from renewing or extending short-term personal loans and charging an extra fee each time.

The practice, known as “flipping,�? chains borrowers to a cycle of revolving debt, as lenders charge higher fees again and again on the same loan.

(more…)