Gail Meyers was newly divorced with a 6-year-old daughter, a full- and a part-time job and a payday loan she couldn’t get out from under.

Every other Friday she would go to a payday lender in Columbus and hand over $345 in cash. The lender would then rip up a check from Meyers for a like amount that she wrote two weeks earlier.

The next day, Meyers would go back to the lender, write another check for $345 and get $300 in cash back - enough to keep her going for the next two weeks until she could repeat the process again.

She did this for two years until an income tax refund allowed her to repay the fast cash loan. The $300 ending up costing Meyers about $2,100.

Meyers is one of the people featured on a video being shot by a coalition attempting to tell her story and others in an effort to educate the public and push the state legislature to clamp down on payday lenders in Ohio.

Industry backers maintain payday cash advance lenders fill a need in Ohio, the interest rates charged are blown out of proportion, and the Ohio Department of Commerce is already regulating the businesses.

Two state representatives, William Batchelder, R-Medina and Matt Lundy, D-Elyria, want to introduce legislation to regulate the payday loan lending industry.

Batchelder said he wants to work cooperatively with Democrats in the Ohio House to craft a bill, but at the same time ensure people who are down on their luck and need money on a short-term basis have access to emergency, low fee payday loans.

“There are two sides to this issue,” Batchelder said. “There’s a need for these loans, obviously. The question is does it have to be done the way it is being done? I don’t think so.”

On Wednesday, Batchelder hosted a 40-minute briefing followed by a 15-minute question and answer period that was attended by more than a dozen lawmakers and other Ohio House staffers.

The lawmakers heard from members of the Ohio Coalition for Responsible Lending, including the organization’s chair, Tom Allio, executive director for the Catholic Commission of Summit County.

Allio told the lawmakers and staffers that 11 states, including Pennsylvania and West Virginia, ban bad credit payday loans, and his coalition of 44 members and growing is committed to caps on the interest rates.

The lawmakers were given information on the federal Talent-Nelson Act, passed to curb abuses by payday lenders preying on military members, and a study on the explosive 10-year growth to 1,553 lending outlets in Ohio in 2006, including a map indicating the number of lenders in each House district.

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Here are a few facts about Ohio payday loan outlets and clients:

• The number of stores licensed went from 107 locations in 1996 to 1,562 in 2006.

• Ohio has more quick payday advance lending locations than McDonald’s, Burger King and Wendy’s combined.

• In 1996, lenders were concentrated in urban areas. By 2006, every Ohio county, except Ottawa and Vinton, had at least one payday lender. Thirty-five counties had more than 10 locations, nine counties had 40 or more.

• Washington County is the county with the greatest number of faxless payday loan lenders per capita: 21 stores, or 3.32 stores per 10,000 residents.

• Most payday lenders in Ohio are chains or franchises. The two most common are Advance America and Cashland Financial Services, each with more than 100 stores.

• The Center for Responsible Lending shows that one percent of payday loans go to borrowers who repay within two weeks and borrow less than once a year, while 99 percent go to repeat borrowers.

• The average payday borrower takes out nine loans per year.

• Nationwide, the CRL estimated in 2005 that 7.6 million workers receive 83 million payday cash loans per year. Two-thirds, or 5 million borrowers, become trapped in a cycle of debt at an annual cost of $3.4 billion.

Illinois has just ordered Global Payday Loan to stop issuing loans to state residents. It also has fined the payday loan company $234,000 for charging excessive interests rates.

But the decision raises the broader question of whether states should regulate Internet conduct that crosses state lines.

The investigation began after a complaint from someone who borrowed $300. The cash loan in question fell under an Illinois provision that capped annual finance charges at 36 percent.

State investigators found serious problems with the transaction. For one thing, the loan was written with a six-day term, which did not give the borrower sufficient time to repay the loan. Furthermore, the fees on the loan exceeded the $15.50 per $100 allowed under Illinois law.

In addition, the annual percentage rate on the loan interest rate came to 2,190 percent, as the borrower was required to repay the $300 loan, plus a $90 finance charge just six days after the check cash advance had been originated. According to the Illinois agency charged with loan oversight, Global Payday then continued to violate the borrower’s rights by sending her e-mail warnings and making phone calls asserting that her account was delinquent and demanding payment.

The subsequent fine cost Global Payday $234,000. All well and good, right? Not necessarily.

According to the state’s notice of order, Global Payday is located in Jenkintown, Penn., and Salt Lake City - not in Illinois. By offering online payday loans over the Internet, the company is making such loan opportunities available to potential borrowers in all of the states, not just Illinois.

While Illinois might want to flex its muscles to protect its citizens in regulating fast payday loans in certain ways, other states may want to impose different legal requirements. In so doing, a company like Global Payday that seeks to engage in Internet business across state lines might be nagged by uncertainty when it comes to figuring out cross-border legal compliance.

Constitutional arguments could be made that state efforts to regulate e-business that, in part, comes within their borders improperly burdens interstate commerce. The argument could be made that only the federal government has authority uniformly to regulate. Such arguments have been made in other contexts. But there remains much uncertainty.

Coming months - and years - will likely determine how much authority states truly will have when it comes to Internet regulation.

Ohio payday loans, which carry effective annual interest rates of 391 percent, are coming under scrutiny from legislators and Gov. Ted Strickland.

State Rep. William Batchelder, R-Medina, said on Thursday that he is drafting legislation to impose lower interest rate caps on payday lenders, but declined to say what that final cap would be.

“This is not a problem in the inner city. This is not a problem in the rural areas. This is a general problem,” Batchelder said.

Critics say faxless payday loans contribute to bankruptcies and foreclosures, but supporters say they provide a valuable service to Ohioans who need to pay their bills without bouncing a check.

Industry supporters say the high interest rate is misleading because most of the loans are short term and the costs are less than a consumer would have to pay for bouncing a check or missing a bill payment.

Supporters are pushing for a cap of a 36 percent annual interest rate, the rate in federal legislation regulating personal loans to members of the military.

Darryl Dever, lobbyist for the Ohio Finance Service Centers Association, said that at 36 percent rate the lenders would make only a few dollars on each loan.

“You couldn’t keep the doors to your business open,” Dever said.

The number of no fax payday advance outlets in Ohio has grown from 107 in 1996 to 1,562 last year, more than the number of McDonald’s, Burger King and Wendy’s restaurants combined in Ohio, according to a report issued this year by Policy Matters Ohio, a Cleveland-based research group. There were 83 payday lenders in Montgomery County, the fourth highest in the state, according to the report.

Tom Allio, chairman of the Ohio Coalition for Responsible Lending, said more than 368,000 of the loans are made annually.

Batchelder, who met Wednesday with a bipartisan group of more than 30 lawmakers and other interested parties to discuss the issue, said he didn’t know for sure when he would introduce the bill.

Meanwhile, Strickland is “exploring ways to limit the ability of instant payday loan lenders to prey upon the poorest Ohioans,” said Keith Dailey, the governor’s spokesman.

SOURCE: Dayton Daily News 

Legislators say the new Oregon payday loan law will stop lenders from shattering the finances of it’s customers. But with cash stores closing down, some people have no where to turn for more money.

“I was going to use that money to pay for other bills, but now I’m stuck with no money,” said Rose Tubens, who receives payday loans.

Tubens borrowed $250 from her local payday lender and was going to borrow $500 more. Now the store is closing on July 2 and won’t give out anymore quick cash loans.

“It puts a big dent in our financial situation as to how to get through the month,” Tubens, who has to pay off the $250 plus interest by June 15, said.

Without an additional faxless payday advance, she doesn’t have enough money to pay her bills and the loan on her $1,000 disability income.

“It’s a never-ending cycle, I realize. But for some of us with low-incomes, that’s the only way we have to survive,” she added.

Tubens had to cut costs in other ways.

“It’s going to put me in a situation where my utilities are shut off until the bills are paid. You’d be surprised at how cheap you can eat,” Tubens said.

Tubens will have to get a smaller personal loan at a different lender, but it still won’t fix her financial situation. Her credit is shot and her unpaid loan will go to a collection agency.

“My credit is non-existant. If you don’t need money, you can borrow money. If you need it, you can’t,” Turbens said.

The Oregon resident says all she wants is a providers of bad credit payday loans that will provide reasonable rates for large loans, but it will be hard for her to get one because of her bad credit history.

The Oregon Senate approved the interest bill last week. It sets a cap of 36-percent for annual interest rates. The House already voted in favor of it and Governor Ted Kulongoski says he’ll sign it into law.

It takes effect July 1.

Blue Springs is working on regulating no fax payday loan companies.

The City Council on Monday directed City Attorney Bob McDonald to begin drafting an ordinance that would limit such establishments to one per 4,500 residents.

The council also directed him to prepare a 60-day moratorium — to be voted on at the next council meeting — on new cash advance outlets.

The city now has about 54,000 residents and 12 payday loan outlets, McDonald said. The proposed ordinance will call for minimum distances between those outlets, businesses such as pawn brokers and residential areas.

McDonald had provided a report to the council after researching Independence and Lenexa ordinances and other areas’ response to the businesses.

He said Milwaukee conducted a study that showed crime rates went up around the payday advance loan businesses because they don’t have as much security as other financial institutions.

McDonald said there are limits on what Blue Springs can do. It can’t regulate interest rates or set limits that effectively prevent any of the businesses from locating in the city. New zoning regulations wouldn’t apply to businesses already in the city.

Mayor Steve Steiner said he wanted the council to consider the issue after a suggestion from Councilwoman Sheila Solon.

Steiner said he’d talked to the Independence mayor and Brien Starner, president of the Blue Springs Economic Development Corp., who pointed out that an excess of quick payday loan companies makes it difficult to market a city to prospective businesses.

“If there’s a slew of them, they ask what’s going on in a community, ” Steiner said.

Steiner said customers of such businesses often have an income of $35,000 to $60,000. “Just people living beyond their means.”

Solon asked for the moratorium, similar to an action the city took when there was a concern about too many used-car lots. She said she was hearing complaints.

The council asked McDonald to make the bad credit cash loan regulations as tough as possible while legally defensible.

“Push it as far as you think it’s safe to do,” Steiner said.

SOURCE: The Kansas City Star

Utilities that direct customers to pay electricity, natural gas and telephone bills at bad credit payday loan stores make those customers targets for marketing of predatory loans, a National Consumer Law Center report has found.

“Utilities and Payday Lenders: Convenient Payments, Killer Loans,” a report released this week by NCLC, found more than 650 instances where payday cash advance lenders act as authorized bill payment agents for regulated utilities. Many of those payday lenders are now listed on utility websites.

“Consumers depend on utilities for survival,” said Rick Jurgens, an NCLC consumer advocate. “Utilities shouldn’t direct customers to pay bills where predatory loans are pitched, and regulators shouldn’t allow utilities to outsource services to such establishments.”

The report compared payment agents listed on 21 utility websites against a nationwide database of licensed instant cash loan lenders compiled by Steven Graves, a geography professor at California State University at Northridge.

Payday lenders make short-term loans at annual interest rates that start at 390 percent. When payment comes due, consumers frequently roll over short-term personal loans or take out multiple loans, trapping them in a vicious cycle of debt.

Searching for customers for ultra-high-cost consumer loans, hundreds of payday lenders have signed up to serve as official utility bill payment sites. Other providers of no fax payday loans act as “unauthorized” payment agents.

An estimated one in four utility customers - including many minorities, women and low-income customers - opt for in-person bill payment. Outsourcing has grown as utilities have sought to cut costs of bill payment services.

“Consumers paying utility bills in person to avoid disconnection should not be directed to high-cost payday lenders,” said Jean Ann Fox, director of consumer protection for Consumer Federation of America. “Utilities should not contribute to the payday loan debt trap.”

The following is a Letter to the Editor of The Toledo Blade…

Payday advance companies each year help thousands of Ohio families overcome unexpected financial circumstances.

When an air conditioner breaks or a car battery dies, Quik Cash and other responsible [personal cash loan] lenders provide convenient access to small amounts of money to cover those costs. Banks don’t.

While critics, including The Blade, have rushed to label payday lending as “predatory” without ever having defined what “predatory” means, recent studies debunk that myth and underscore the fact that, before restricting or eliminating such short-term credit options, public officials should better understand the consumer demand for such products and the unintended consequences any such restrictions might create.

Indeed, a January study by the Federal Reserve Bank of New York found not only that payday loans were not predatory but that by increasing the supply of credit to an under-served market, they actually enhance the welfare of the households they serve.

Another study found that further regulation of payday lending has the adverse and unintended consequence of reducing credit options for those who may have few alternatives, and that policy makers should encourage competition in the small-loan market, as competition controls prices.

The [fast payday loan] lending industry’s largest trade association, the Community Financial Services Association (CFSA), last month launched a Customer Pledge that includes a $12 million public education and financial literacy campaign and an Extended Payment Plan granting any customer - at any time, for any reason - more time to pay off the [cash advance payday loan] at no additional cost.

Let’s give reasonable, hard-working Ohio consumers access to a variety of regulated credit options and trust them to make financial decisions based on what’s best for them and their families.

Keith Jernigan
Regional Manager
QC Holdings
Vogel Drive

“The legislation does not strike a fair balance between consumer protection and fostering a competitive lending environment. In fact, the bill as presently drafted is bad for consumers, as it will restrict the range of product offerings available to them.”
- Gordon J. Reykdal, Chairman and CEO, Rentcash

Those are the words of a British Columbian payday loan provider, opposing the possible legislation regulating quick cash loans.

And it looks as if, at least for now, lawmakers in the Western Canadian province concur with his assessment.

Canadian instant payday loan provider Rentcash applauded the Government of British Columbia for its decision not to advance Bill 27 - The Payday Loan Act - as the legislative session ended.

“Many operators in the online payday advance industry - including Rentcash - were disappointed with several features of Bill 27 about which they were not consulted prior to introduction of the Bill,” said Reykdal.

Along with many other providers of fast cash, he believes that payday loans are best regulated by lenders themselves - by setting fair criteria and enforcing existing laws.

“The government now has the time to consult directly with industry operators and should amend the Bill based on their input.”

“There is precedent within Canada’s federal and provincial legislatures for broad stakeholder consultations following first reading of a Bill,” the cash loan provider said.

“The government should act on this precedent and reach out to all of its stakeholders before advancing Bill 27 in the next legislative session.”

Rentcash currently operates 62 payday advance outlets in British Columbia under The Cash Store and Instaloans banners.

The payday loan agency is a leading advocate of consumer protection measures for the payday advance industry, and was one of the first firms in Canada to ax rollovers from its product mix.

A man wearing panty hose over his head robbed an Arizona payday loan store in East Mesa on Thursday evening of last week, officials say.

Police report that the man came in the payday advance store at 11540 E. University Drive and demanded money about 6:45.

The man took an undisclosed amount of money and fled on foot. He did not brandish a weapon during the robbery.

He is described as White, 25-30 years of age, about 5′5″, with a heavyset build and possible facial hair.

The suspect in the payday cash loan heist was last seen wearing a brown jacket and blue jeans, witnesses say.

The Grand Canyon State is a hotbed of payday loan activity - to the chagrin of many legislators - and as a result, this is not the first time a notable Arizona payday loan robbery has taken place.

Last August, the notorious “cash advance clowns” hit up a number of payday cash loan institutions before being apprehended.