Payday Loan Times

South Carolina legislators gave overwhelming key approval to a bill aimed at preventing residents from being trapped in a cycle of debt through payday lending. (Read on …)

The bill that puts restrictions on payday lenders in South Carolina that was being debated yesterday passed unanimously. (Read on …)

Today South Carolina lawmakers debated new regulations that could change the way you get money from payday loans or if you can get it at all. (Read on …)

A South Carolina couple has filed a lawsuit claiming payday advance loan lenders attract borrowers to “unconscionable loans” and trap them in an endless cycle of trying to repay the loans.

State Sen. John Hawkins filed the lawsuit Tuesday on behalf of Mark and Rebecca Morgan of Horry County. Hawkins said he would seek to make the lawsuit class action.

The lawsuit names several instant payday loan lenders, including the nation’s largest, Spartanburg-based Advance America. Spokesman Jamie Fuller said the company was aware of the lawsuit but hadn’t seen the details.

“We can’t comment on the specifics of the case. We are going to defend our position strongly in court. We won’t try it in the media,” Fuller said.

The company doesn’t do anything illegal and “provides a needed service to consumers,” Fuller said. “Consumers have shown that this is a product that they like and use responsibly.”

Hawkins, a Spartanburg Republican, said the Morgans were representative of a larger group. They were “in debt up to their eyeballs,” due to cash advances he said, but would not provide specifics. Hawkins also would not make the Morgans available for an interview.

The borrowers are being “trapped into getting continuous loans to repay loans that should not have been made,” with the lenders accruing fees and interest payments along the way, Hawkins said.

The suit names payday lenders Advance America; Carolina Payday Loans; Check into Cash of S.C.; Check ‘n Go of S.C. and Local Cash Advance of S.C.

It claims the lenders violated the Consumer Protection Code with negligent lending practices, “breached their obligations of good faith, and engaged in a civil conspiracy to make unconscionable [personal loans].”

A national, faxless payday advance lending group announced Monday it is hiring a former Democratic gubernatorial candidate to be its executive vice president.

Community Financial Services Association of America is bringing in Tommy Moore (pictured), who resigned from his Aiken County senate seat this weekend, to lobby and do public relations for the payday lending industry. The businesses provide loans of hundreds of dollars for several weeks at high interest rates.

The industry has been sharply criticized recently by people who said it takes advantage of poorer consumers and the high interest rates send them into a spiraling crush of debt. But no fax payday loan lenders have said the businesses provide a vital service and consumers pay more in fees in the long run when they bounce checks while trying to pay the bills.

“At this point in my career, I saw an exciting opportunity to take on a new challenge that builds on my long history of supporting and protecting consumers,” Moore said in a news release issued by the group.

Initially on Monday, Moore would not talk about his new job. He did not immediately respond to a message left on his cell phone after the announcement was made.

Association spokesman Steven Schlein would not disclose how much Moore would be paid. The fast cash advance group paid its executive director $132,749 plus an undisclosed sum included in a $1.2 million “management fee” in 2005, the most recent year available from Guidestar, nonprofit research group.

Moore was the Democrats’ candidate for governor, receiving less than 45 percent of the vote in 2006. He had been in the state Senate since 1981.

During last year’s gubernatorial campaign, Moore received at least $7,000 in donations from the payday and car title loan industry.

“We’re deeply disappointed he would take a job like this. These are bad guys, and they do shameful things,” said John Ruoff, research director for the advocacy group S.C. Fair Share.

A bad credit cash loan lending bill will be waiting when the Senate returns in January. Moore didn’t appear to push from either side last session, but that will likely change with his new job, Ruoff said.

Simpsonville is considering restrictions on sites for fast payday loan lenders, title loans and check cashing stores.

The planning commission is rewriting an ordinance that restricts new lenders in the city.

The commission discussed the cash loan ordinance July 5 and could vote whether to recommend it to the City Council at its scheduled Aug. 7 meeting.

The ordinance would allow lenders to open new stores in service districts but bans them from commercial areas except by special exemption from the board of zoning appeals

Simpsonville has eight no fax payday advance lending stores now that would be grandfathered into the ordinance.

If a lender goes out of business, the property owner would have one year to fill that space with another lending store or the grandfather clause expires.

In April, the council passed a 90-day moratorium on new business licenses to payday loan lenders. That moratorium ends July 16.

Leaders in Rock Hill have decided to make it tougher for new payday lenders to open after the number of businesses in the city offering the short-term high-interest loans tripled in six years.

The City Council passed zoning laws on the businesses Monday night, banning new savings account payday loan lenders from opening within 300 feet of neighborhoods, churches and schools and within 1,000 feet of existing lenders.

The rules also won’t allow lenders to open in stand-alone buildings, requiring them to be in shopping centers or supermarkets of at least 30,000 square feet.

Six years ago Rock Hill had less than a dozen no fax payday advance lenders. Now the city has 38, officials said.

The boom happened after North Carolina, just 10 miles to the north on Interstate 77, banned payday lenders. Georgia also has banned the businesses.

Rock Hill officials said they want to prevent payday lenders from opening near each other because they often refer customers who cannot pay off their loans to a lender next door, where they get another loan.

The bad credit cash loan lending businesses argued against the new rules at Monday’s meeting.

“Are you going to start zoning out McDonald’s because it’s bad for your health? If you take away our product, all you’ve done is take away one of the tools that folks have to choose from when they find themselves in need of money,” said Jamie Fulmer, director of investor relations for Spartanburg-based Advance America, the nation’s largest payday lender.

Providers of payday cash advances typically offer loans of several hundred dollars for several weeks. The current cap on interest in South Carolina is $15 for every $100, which works out to 400 percent interest annually.

Fulmer said the quick cash can actually save customers money compared to fees from a bounced check or having to get their utilities turned back on.

“If you eliminate payday lending, you’ve done nothing to address the fact that people have short-term needs,” Fulmer said.

City leaders said they decided to take action on their own after state lawmakers failed to pass new regulations on the industry during this year’s session.

The zoning rules will not affect fast payday loan lenders already operation in Rock Hill.

SOURCE: The Charlotte Observer

Leaders in Rock Hill have decided to make it tougher for new providers of faxless payday loans to open after the number of businesses in the city offering the short-term high-interest loans tripled in six years.

The City Council passed zoning laws on the businesses Monday night, banning new payday lenders from opening within 300 feet of neighborhoods, churches and schools and within 1,000 feet of existing lenders.

The rules also won’t allow lenders to open in stand-alone buildings, requiring them to be in shopping centers or supermarkets of at least 30,000 square feet. Six years ago Rock Hill had less than a dozen payday advance loan lenders. Now the city has 38, officials said.

The boom happened after North Carolina, just 10 miles to the north on Interstate 77, banned payday lenders. Georgia also has banned the businesses.

Rock Hill officials said they want to prevent payday cash loan lenders from opening near each other because they often refer customers who cannot pay off their loans to a lender next door, where they get another loan.

The payday lending businesses argued against the new rules at Monday’s meeting.

“Are you going to start zoning out McDonald’s because it’s bad for your health? If you take away our product, all you’ve done is take away one of the tools that folks have to choose from when they find themselves in need of money,” said Jamie Fulmer, director of investor relations for Spartanburg-based Advance America, the nation’s largest payday lender.

Payday lenders typically offer pay day loans of several hundred dollars for several weeks. The current cap on interest in South Carolina is $15 for every $100, which works out to 400 percent interest annually.

Fulmer said the quick cash can actually save customers money compared to fees from a bounced check or having to get their utilities turned back on.

“If you eliminate payday lending, you’ve done nothing to address the fact that people have short-term needs,” Fulmer said.

City leaders said they decided to take action on their own after state lawmakers failed to pass new regulations on the industry during this year’s session. The zoning rules will not affect fast cash advance lenders already operation in Rock Hill.

Proposed limits on payday loans have been eased by a Senate panel. The amended bill was advanced to the Senate Banking and Insurance Committee.

This is the bill’s second time through the committee process. As initially introduced in February, the bill would have made fast payday advance lending illegal.

Compared with the initial compromise, the approved changes upped the limit of each loan to $500 from $400, or up to 20 percent of a customers’ gross income, and shrunk the waiting period between loans to two days from seven.

The insurance subcommittee also removed the five-per-year limit on cash loans but did keep in the creation of a database to track payday loans in South Carolina.

The bill is unlikely to pass this year. Bills not approved by either the full House or Senate by May 1 must get a two-thirds vote to be considered by the other chamber.

As the South Carolina legislature debates a new bill that would cap payday advance lending interest rates, Rock Hill is taking steps to restrict the locations of such “predatory” institutions, as one city councilman called them this week.

Automobile title loan lenders and payday lenders are currently defined under the broad umbrella of “financial institution” in the city’s zoning codes. That definition also includes facilities such as Wachovia Bank and credit unions.

But in the zoning changes that the city’s Planning Commission will discuss on May 1, the title loan lenders and pay day loan lenders are singled out from the broader definition and would have to be at least 300 feet from residential districts, churches and schools, and at least 1,000 feet from similar financial businesses.

They also cannot be stand-alone facilities and must be located within retail establishments and commercial structures of at least 30,000 square feet.

City Councilman John Gettys, who asked to put the zoning changes on the agenda, said they are steps toward restricting such “predatory lending agencies,” he said Friday.

“These types of businesses … basically target those living in poverty in manners that truly hamper someone’s ability to pay the loan back and get on with life,” Gettys said.

But Jamie Fulmer, director of investor relations for Spartanburg-based Advance America Cash Advance, chaffed at that characterization of the bad credit cash loan industry on Friday.

“You don’t make that charge against pharmacies or grocery stores that are always clustered together,” Fulmer said.

Advance America has seven locations in York County. Payday lending essentially allows people to borrow against future paychecks. The typical South Carolina payday loan period is two weeks, and the current cap on interest is $15 for every $100. That works out to a 391 percent interest, annually.

Congress passed a law in 2006 that would limit interest rates to 36 percent for military personnel. State Rep. Alan Clemmons, R-Myrtle Beach, recently introduced a bill that also would cap interest rates at 36 percent in South Carolina.

But legislation at the state level often moves slow, Gettys said, which is why he is hoping to institute restrictions on payday cash loan providers locally.

Teresa Arnold, legislative director for the South Carolina AARP, said payday lenders often refer customers who cannot pay off their loans to the business next door, where they get another loan.

Lenders with several branches in an area could refer customers between branches, Arnold added. High interest rates trap consumers in a cycle of debt, Arnold said.

“You get desperate. You think, ‘Where am I going to get the money to pay the power bill or get the groceries?’” she said. “But then you realize: You didn’t have $300 two weeks ago, and you definitely don’t have $300 today.”

AARP, a strong critic of faxless cash advance lending, supports Clemmons’ bill.

But Fulmer said the quick cash service actually saves consumers money. Fees from bounced checks are often higher than the charges from interest, he said.

“I think consumers that use this product are smart enough to know that this bridges gaps between paychecks,” he said.

About 95 percent of Advance America’s customers pay the company back on or about the day the loans are due, Fulmer said. A 36 percent interest rate on $100 would work out to $1.38 on a two-week loan.