Payday Loan Times

The Virginia Senate unanimously passed a bill Friday that that would fix a loop hole that was opened to payday lenders starting January 1st. (Read on …)

Senate legislation introduced today was designed to tighten down on payday lenders who were getting around the new regulations that took effect January 1st. (Read on …)

Waynesboro has joined Staunton and Harrisonburg in the fight to cap payday loans, and the city also approved a referendum pamphlet at its Tuesday night meeting.

The Waynesboro City Council passed a resolution Tuesday night to ask the Virginia General Assembly to cap payday lending rates at 36 percent.

Staunton and Harrisonburg passed similar resolutions in recent weeks. Payday loans are short-term cash advance loans offered at high interest rates, mainly to people who need some money before their next pay day.

The resolution says the high interest rates target vulnerable people.

The city council is also moving forward to inform Waynesboro voters about what will be on the referendum ballot next month.

Residents will be voting on several projects in the city. The city council approved a pamphlet Tuesday night that will explain each project to the voters.

The council will use the general fund to pay for the printing and distribution of the no fax payday loan pamphlets, which will be given out in two weeks.

Following in the footsteps of their northern neighbor, Waynesboro, VA leaders will consider petitioning for stricter payday loan lending laws, an issue the state has struggled with unsuccessfully for years.

Inspired by a parallel motion endorsed last month by Staunton, the Waynesboro City Council plans to formally ask the General Assembly to put an interest cap on the booming lending industry, whose current annual rates approach 400 percent.

“If you can’t afford to live from paycheck to paycheck, you can’t afford those kinds of interest rates,” said Vice Mayor Nancy Dowdy, who put the cash advance payday loan issue on the city’s agenda. “I have a real problem with people in a crisis situation being taken advantage of like that.”

After years of growing increasingly concerned about the impact of such lending, she said, this was a welcome opportunity to voice the city’s position. She credited Staunton’s resolution - believed to be the first of its kind in the state - with creating a “template” for others.

Passed on a unanimous vote, the Staunton measure asks for a 36-percent interest cap on all personal cash loan lending, the same ceiling by which most other small loan providers in Virginia must abide

Calls for such a restriction have been common among those who consider the payday loan business predatorial, but protested by industry lenders themselves on the grounds it would devastate their profit margins and effectively run them out of the state.

(Read on …)

Payday advance lending opponents in Virginia have gotten more organized this year - and the new group spearheading the fight plans to keep the issue at the forefront through this fall’s elections.

Virginians Against Payday Lending reiterated at its meeting Tuesday in Newport News that it doesn’t plan on compromising on passing legislation that would cap the loans’ interest rate at 36 percent.

The cash loan lenders, which charge almost 400 percent annual interest, have said 36 percent would put them out of business.

The group opposing the personal loans believes it has a good shot this year because it is better-organized and has gained momentum. A group of leaders from different faiths and political persuasions, including the Family Foundation of Virginia and the Rev. Jonathan Falwell, are joining the fight.

To counter a payday loan industry argument that there are no alternatives, the group is working with credit unions to develop loan programs that cater to payday loan customers.

Unlike his Staunton counterpart, Del. Steve Landes said he would support a cap on faxless payday loans.

In the past, Landes said he has been one of the legislators who have said that something needs to be done about the high-interest loans and has co-patroned legislation to do away with payday lenders and set caps on the rates that they can charge.

“The cap is at least the minimum that we should do,” Landes said in a phone interview last week.

City Council will decide today whether to approve a resolution that would asking the General Assembly to cap all consumer instant cash loans at 36 percent throughout the state.

In an interview, Del. Chris Saxman said that while he supports reform legislation, setting a specific cap on what a business can charge would set a dangerous precedent.

Landes said this is the first time he has heard of a locality drafting a resolution about payday loans. Localities have taken similar actions with immigration, but the issue is usually something that impacts the locality. This resolution is different because it is more of a statewide issue, he said.

It is always good for local governments to express their viewpoints, but there is not a lot that they can do with this issue at the local level.

A 36 percent cap is reasonable, Landes said. However, he said he would be willing to consider capping the payday advances at a higher rate if that would get something done on the issue. In the past session of the General Assembly, legislators considered capping rates between 36 and 72 percent.

“If there needs to be some negotiation, I’m willing to look at that,” he said. “We’ve not been able to get the payday lenders to agree to some level that most people would believe is fair.”

There are people who want to use a high-interest loan services, Landes said. In order to survive, cash loan lenders need to charge higher rates than other businesses.

(Read on …)

City Council will consider a resolution requesting the General Assembly to enact laws that would cap interest rates for payday advances and other consumer loans made in the Commonwealth.

Councilman Bruce Elder drafted the resolution with the assistance of City Attorney Douglas Guynn. The resolution would recommend that any loans be capped at a 36 percent annual percentage rate.

“This is something my entire council has an interest in getting moved forward,” Elder said in an phone interview Sunday night.

Elder said the resolution is drawn from a Senate amendment that protects members of the armed forces from predatory lending practices such as cash advance payday loan stores.

“We’re trying to encourage the the General Assembly to do what we perceive is the right thing,” Elder said. “To provide the same protection for our citizens that the federal government has provided for military families.”

The Talent-Nelson amendment capped annual percentage rates at 36 percent for members of the military.
According to the site of the Center for Responsible lending, an individual receives a faxless payday loan after writing the lending company a postdated check that is of higher value than the money they will be borrowing.

The site says many customers renew their loans multiple times, with only one-percent of individuals falling in the category of one-time borrowers.

A November report issued by the center states that payday loans in Virginia averaged an annual percentage rate of 386 percent.

“It is my intent to get this before every city council, town council and board of supervisors in the Commonwealth,” Elder said.

(Read on …)

Marlies Sanders was driving through the rain in the car - the one she had barely held onto by taking out a personal cash loan - when she got the calls, which went through to her voicemail.

She pulled over. It was her friend, who had just gotten a call from a person calling herself Ms. Medley saying that the Spotsylvania Sheriff’s Department was going to issue a warrant for Sanders’ arrest. The second message was from Medley herself, saying the past-due Allied Cash Advance payday loan debt was a felony because it exceeds $200.

“If I do not hear from you, then I will issue a warrant out for your arrest,” the caller said.

A lawsuit filed by consumer rights lawyer Dale Pittman says Medley was actually an Allied Cash Advance employee impersonating an officer. The lawsuit alleges that Allied Cash Advance started illegally hassling Sanders after she couldn’t pay back a no fax payday loan.

Virginia law prohibits the lenders from threatening borrowers with criminal prosecution if they can’t pay their loan off on time. But the lenders and the collection agencies they hire have been sued by private attorneys and attorneys general in several states in recent years for crossing the line.

The lenders are allowed to sue their customers in civil court, and they are increasingly taking advantage of that right. In 2006, the number of lawsuits against Virginians increased 38 percent, with 12,486 people getting sued for not paying off their online payday loans.

In Sanders’ case, an employee of Allied called from the company’s Fredericksburg office number and left voicemails saying she was with the Spotsylvania Sheriff’s Department, the lawsuit says. It also mentions that impersonating a law enforcement officer is a violation of Virginia’s criminal code.

Pittman, who has other similar cases pending in Virginia, is talking to authorities about pressing criminal charges. In his other cases, companies have illegally threatened criminal prosecution, but this was the first where they actually impersonated law enforcement, he said.

No one knows whether Medley is really the Allied Cash employee’s name.

“We have not determined who it is,” said Pittman, “and we don’t know if it is an alias or not.”

The payday loan company couldn’t be reached for comment at its Miami headquarters, and Pittman said he has heard nothing from them.

(Read on …)

A payday loan employee recently wrote in to the Daily Press in Virginia regarding the use of cash loans…

A July 12 letter, “An interest- rate fix,” seeks to further the misguided perception that payday customers routinely convert our product into long-term debt.

As a long-standing employee of a payday advance company, I can say with certainty that nearly all of our customers use these short-term loans responsibly. And they are dutiful about repaying the loans within the specified time period. Virginia regulations do not allow customers to roll over their loans, so the interest is not compounded and does not result in long-term debt.

The letter writer also urges a 36 percent APR cap for faxless payday loans, and incorrectly believes that “legitimate lenders have no problem” operating under such a restriction.We could not stay in business with a 36 percent APR cap — the equivalent of less than $1.40 per $100 advanced. In fact, many of our customers choose our service in part because other financial institutions find it difficult to offer short-term, unsecured loans.

The truth is our customers know what it costs to borrow money, and compared with the fees connected to bouncing a check, paying a credit card bill late and even many ATM withdrawal charges, it costs less to get a pay day loan.

The Virginia Interfaith Center for Public Policy today was to release the faith community’s “Faithful Pledge” campaign to end the current system of payday advance lending and cap the interest rate on those short-term loans at 36 percent.

A 2002 bill exempted the instant payday loan industry from Virginia’s cap of 36 percent. The industry now charges interest rates of at least 10 times that on some two-week loans — a practice the Interfaith Center describes as immoral.

Last year the Virginia General Assembly took up various measures to limit the interest on the short-term loans, but attempts to set a lower limit failed.

The “Faithful Pledge” campaign is the faith community’s response to this resistance.

“We will not back down,” Ann Rasmussen said in a news release. She is policy director of the Virginia Interfaith Center. “The ‘Faithful Pledge’ campaign is the faith community’s speaker box, amplifying our voice as we speak truth to power and call on our state legislators to enforce Virginia’s usury cap law and limit the interest rate of [bad credit payday loans] to 36 percent.”