A KLAS TV report …

When rent money is gone or the paycheck hasn’t come, many Nevadans are in need of a quick buck. Sometimes they turn to payday lenders - companies that give short-term quick cash loans with high interest.

The State Assembly’s top lawmaker is fighting to stop these predatory lenders. Speaker Barbara Buckley wants to control lending terms for loans to keep interest rates down.

Right now, these fast payday loans can last a year or more and have interest rates as high as 600, 700 or even 800-percent rates, meaning a loan for $800 could cost you more than $5,000.

Lending restrictions that went into effect this year were meant to protect consumers by regulating all payday-type lenders. This new proposed legislation would tighten those already strict regulations, and some lenders are fighting it.

When Richard Swanson collects on the loans he issues, customers like Rick Taylor can end up paying 260-percent in interest a year. But to Taylor, that’s a lot better than what a friend paid with another faxless payday advance lender.

“You’re talking 500-percent or more at some of these places and I always thought it should be state regulated or something should be done. To me it’s really a rip,” said Taylor.

Current state law put restrictions on payday lenders who charge exorbitant interest rates on contracts shorter than one year. But Swanson isn’t a payday lender.

Loan Depot is an installment loan company. His contracts simply require clients to promise to repay the personal loan. Swanson recently extended his contracts to up to two years, falling outside of the state guidelines.

“Our rates are a lot lower than the check loans, the payday loans,” explained Rick Swanson, owner of Loan Depot. “It’s a lot easier to pay back a lot less over a longer period of time to get back on your feet than a payday loan where you have to pay back every two weeks or roll it over.”

Swanson says the installment loan method of lending sets him apart from payday lenders. But state lawmakers don’t agree. Assemblywoman Buckley is proposing legislation that would catch installment lenders in the same restrictive net as cash advance loan lenders.

“So, we’re making it really clear that the law applies to all of the high interest loans,” she said.

Where the current law reads short-term loan services, Buckley wants to change it to high-interest loans. That means all high-interest, long-term installment lenders - including installment lenders like Swanson - would face the tighter lending restrictions.

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Sen. Lowell Barron, D-Fyffe, has introduced a bill designed to reform the state’s controversial Alabama payday loans.

Barron said payday lending can trap borrowers in a cycle of debt. Payday loans, which are short-term loans typically for $1,500 or less, are intended to bridge the borrower’s cash flow between paydays.

“It is my opinion that we need to address some workable reforms to the [payday cash loan] industry,” Barron said.

Barron himself came under fire for owning a number of “fast cash” operations during the last election, though he reported he sold his interests in 20 such businesses. He voted to approve a bill four years ago that placed some regulations on the previously unregulated payday loan industry. The 2003 bill allowed the businesses to charge 17.5 percent interest per transaction.

“I felt that the regulations we enacted [then] made a drastic and positive impact for consumers,” he said.

Barron said his new reform bill would give the customer a one-day right to rescind the cash advance payday loan and prohibit rollovers or renewals. The bill would also require all lenders to offer an extended payment plan with no additional interest charges to customers at any time if they are unable to repay the loan – which Barron said would eliminate the cycle of debt incurred by many consumers.

Barron’s bill would ban all military payday loans. Starting Oct. 1, a federal law restricts the interest charged to military personnel to 36 percent.

“I thought we would go a step further,” Barron said.

Sen. Bradley Byrne, R-Fairhope, has also introduced a bill that would repeal the 2003 legislation and put no faxing payday loan businesses under the ASL act.

“[This bill] would repeal the payday loan act and regulate the industry under the small loan act, and I say that this proposal is not the answer,” Barron said. “Right now, the consumer has choices when it comes to unsecured, short-term borrowing.”

Barron said regulating an industry using an act that was not designed for that purpose would not be successful.

“I encourage my colleagues not to throw the baby out with the bath water,” Barron said. “The payday loan industry needs reform, not elimination.”

New regulations for Tennessee payday loan lenders were advanced by a House panel today.

The vote came despite objections from advocacy groups who complain that it will still allow the lenders to charge more than 17 percent interest.

By an 11-to-7 vote, the House Insurance and Commerce committee approved the new restrictions for the businesses. The bill, however, is significantly different from a no fax cash advance bill defeated before a Senate panel that would have fined lenders 300-dollars each time a customer is charged an interest rate above 17 percent, the limit in the state’s constitution on consumer loans.Bill sponsor Senator Terry Smith of Hot Springs says the legslature needs to come out of hte session with some sort of regulation for the faxless payday loan industry.

The bill allows customers to rescind the checks within a day and says no check casher can threaten a criminal “hot check” charge against a client for extending a loan. The bill also allows the state Board of Collection Agencies to go after check cashers breaking the state’s laws, giving customers the greater of two-times the value of their check or one-thousand dollars.

The bill requires check cashers to tell customers their payday cash loans are to be “used for short-term financial needs only, not as a long term financial solution.”

Legislation in Washington to reform the payday loan lending industry appears to be dead. Oregon Public Broadcasting correspondent Austin Jenkins reports on what happened behind-the-scenes.

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State Representative Steve Kirby, a Democrat, chairs the House Banking Committee. He he had a package of fast payday advance lending reform bills.

One would have created a repayment plan for payday customers who get in trouble. But that and other bills never got off the House floor. He blames a ruckus by opponents of the industry.

“The industry, they were not responsible for killing these bills,” Kirby said. “This was actually people who fancy themselves to be consumer advocates who killed these bills. I’m appalled.”

One of people who opposed Kirby’s bills is Representative Sherry Appleton, also a Democrat. She says his bad credit cash loan proposals didn’t go far enough.

“I don’t just want to swat at the problem, I want to get rid of the problem. And that means that we need to have some tough legislation,” she said.

Appleton wants a thirty-six percent interest rate cap on pay day loans. But Committee Chair Kirby wouldn’t give her bill a hearing.

“You know around here when you try to go for all or nothing that’s a really good way to end up with nothing and that’s what we ended up with,” Kirby responded.

But Appleton isn’t giving up.

“And we’re going to come back and we will come back every year until we get something.”

Looking for some fast cash Monday, Tony Simmons stopped by a payday advance loan lending business on Rivers Avenue.

Simmons isn’t crazy about the interest rates tacked onto the loan, but he doesn’t want a proposal by Sen. Robert Ford, D-Charleston, to restrict the borrowing method that’s worked for him in the past.

“It’s a help,” said Simmons, a longshoreman from North Charleston. “You can’t complain. How else are you going to get the cash?”

Ford is looking to find a way to protect borrowers who might not be as savvy as Simmons from getting into a bad financial situation. He’s introduced legislation to regulate instant cash loan businesses, which opponents argue traps consumers in a cycle of debt, charging up to 391 percent interest annually on what often ends up as multiple loans.

“They are preying on people,” Ford said. “Once you get in the system, then you’re stuck in it.”Not true, argued Jamie Fulmer, spokesman of the Spartanburg-based Advance America Cash Advance, the nation’s largest payday lender.

“Consumers like this product,” he said. “Consumers understand this product. Consumers use this product responsibly. If they find themselves in a short-term financial bind, we help them get to the next paycheck.”

Ford’s bill, similar to a proposal that’s awaiting action in a House subcommittee, is set for further consideration in a Senate subcommittee this week. Ford first aimed to ban bad credit payday loans outright, but later agreed to seek additional regulations, including setting a limit on the number and frequency of loans.

John Ruoff, research director for South Carolina Fair Share, a Columbia-based nonpartisan group whose mission is to fight injustice and empower residents, said people should look anywhere else before borrowing from a quick cash advance lender.

“Take a deep breath and look elsewhere,” Ruoff said. “A place that says ‘Quick cash’ is probably the last place you want to borrow money from. There are other options.”

Payday lending charges $15 in interest and fees for every $100 borrowed. Personal loans are typically taken out for a two-week period, although some may be for a month. The typical loan is for $300, which results in $45 in charges, Ruoff said.

However, the businesses are most appealing to lower-income residents who are unable to pay off the first loan and, in turn, take out another to pay the first and a third to pay the second and so on, he said.

The loan results in 391 percent interest rate, or $1,173 in charges, if a borrower has an outstanding $300 on two-week online cash loans for each week for a year, Ruoff said. Nationally, he said, the average number of loans per customer is eight with a single company and a median of 13 loans per borrower.

Fulmer said the public deserves the option of selecting a borrowing method that suits the individual family, and payday lending is often less expensive than the alternative. Banks typically charge about $25 for bounced checks and an additional $25 charge from the merchant, he said. Credit card companies usually charge around $30 for late fees.

Fulmer said that lenders will also work with borrowers to work out a payment plan.

SOURCE: The Post & Courier

The following is a letter to the editor from The Kansas City Star:

It was gratifying to see some of our elected officials finally cracking down on the purveyors of payday loans.

Yet another denizen from the dark side of capitalism, taking advantage of the most needy and vulnerable Americans, has become big business. Folks who barely get by from one payday to the next are put in a hole, handed a shovel and told to keep digging.

They pay for “free” credit reports that tell them they have poor credit. Car dealers push “no down payment” auto loans with interest rates that make credit card rates look cheap. And on it goes — getting the most out of those who have the least.

What prompted me to write was the new warm and cuddly ad being run on behalf of the payday advance industry. Yes, these people have an association — the Commercial Financial Service Association. And they’re running ads cautioning us to take out our payday loan only for short-term emergencies. Like eating, maybe?

The first ad I saw ran behind a Mercedes ad on CNBC. The next time I saw it was during a mystery on BBC America. Is this the TV audience most likely to get an instant payday loan?

This isn’t about cautioning people about the pitfalls of payday cash loans. It’s a blatant public relations campaign trying to convince regulators that there’s no need for regulation. It’s trying to convince us that these are fine, upstanding businesses that would never, ever take advantage of working men and women needing a little help to get by for a week or two.

If you believe that, your check’s in the mail.

In The Walker County Messenger, Joe Thrash had the following, paraphased things to say …

I wanted to respond to Thomas Markham’s recent article concerning the Georgia payday loan bill that is being proposed in the Legislature.

First, I want to fully disclose that I have been employed in the check cash advance industry for the past six years, and before to my involvement in the industry, I did not have a great deal of knowledge about the service, and even shared some of Mr. Markham’s opinions. But, prior to moving into the industry, I did some in-depth research into the business, and found many of my preconceived ideas, like those presented by Mr. Markham, were both conceptually and factually inaccurate.

First, in respect to Mr. Markham’s views of the typical payday advance customer being poor, welfare recipients, unemployed, and so on.

In fact, the typical payday customers are ordinary, hard-working people who simply need some short-term cash from time to time to help cover an unexpected or unbudgeted expense. As required by law in most states where cash advance companies operate, the customers must have a steady source of income and an open and active checking account. Also, easy payday loan limits are set by regulations so that a customer is not loaned more than they can conceivably pay at the due date (the proposed Georgia law sets the limit at $750 or 25% of the total monthly income).

Additionally, he charges that the typical customer is “undereducated, who can’t read the fine print that says, “If you don’t pay off this loan next week, there’s an extra late fee charge, equal to one-quarter of the loan.” This is factually wrong.

As per the bill proposed in Georgia, as well as in the majority of states where payday advances is regulated by law, it is illegal to charge any additional late fees to a payday advance customer. Also, as a part of the Community Financial Services Association Best Practices for the Payday Advance Industry, and per the proposed Georgia law, if a customer is unable to repay a loan according to the additional contract, that customer will be given the option of repaying that loan over an longer period of time at no extra charge.

This is clearly spelled out in section 7-9-1 2 of the proposed law.

Mr. Markham also refers to the high fees of the same day payday loans. In actuality, as per the proposed Georgia law, the fee that can be charged is set at $15 per $100 borrowed (section 7-9-10, 8.e of the law). When comparing this fee to other potential charges, such as bounced check fees, overdraft fees, or late payment fees, payday advance customers realize that often this is the most economical choice they can make.

The representatives in the Georgia legislature who voted for the proposed law have taken the time to educate themselves on the payday leaning industry, and have learned that it is a viable short-term solution for many people.

Cash loans are not intended to be a long-term financial solution. However, for individuals who are facing immediate short-term, low-dollar cash needs, this kind of loan can provide a necessary service that banks just don’t offer anymore. These representatives also understand that right now in Georgia people that need this service are forced to turn to riskier or higher cost alternatives such as unregulated internet lenders or title pawn.

Throughout his commentary, Mr. Markham refers to Payday Lending as “predatory lending business.” A recent report by the Federal Reserve Bank of New York found that payday loans are NOT predatory, and may actually enhance the economic welfare of households.

Faxless payday advance loans are not for everyone, but they do play a necessary and desired role. These small, short-term loans provide hard working people with little savings and credit alternatives a reasonable and economical option for short term credit to meet unexpected expenses.

These loans are many people’s only source of convenient, dignified and understandable credit without the hidden fees or unexpected penalties that are too unpredictable for someone living on a tight budget.

In conclusion, they best way to help hard working people would be to legalize and regulate payday loans in Georgia. Regulation will assure that the service is marketed, controlled and used in a responsible manner. By continuing to ban this option, Georgia consumers are being robbed to their right to make their own financial decisions, and forced to go out of state, or even use other higher cost and riskier alternatives.

Hawaii payday loan lenders who offer short-term loans are eager to combat the image that they’re locking low-income borrowers into a cycle of escalating debt.

The lenders have teamed with consumer advocates and state lawmakers to establish regulations for the industry.

The move is meant to protect consumers with oversight by the Department of Commerce and Consumer Affairs, but check cashing companies think they’ll reap some public relations benefits.

Some states, such as Arkansas, have seen the number of cash advance companies exceed the number of McDonald’s franchises. In Hawaii, there are about 50 to 60 short-term lenders.

Hawaii is one of only four states that does not actively regulate the industry. It has laws that limit how much interest the lenders can charge, but there is no agency overseeing their operations.

There are, consequently, no accurate statistics on how many people are using the service in the state, nor are there data on whether the no fax payday loan services contribute to financial problems among borrowers.

“We haven’t seen the problem of payday lending here that some of the other communities on the Mainland have,” said Bruce Dillabaugh, deputy director of the Hawai’i Alliance for Community-Based Economic Development.

INDUSTRY CRITICIZED

Quick payday advance companies are criticized for offering short-term loans to low-income clients who can’t pay them back and, as a result, continue rolling them over to the point where they might be paying annual interest rates of nearly 400 percent.

Hawaii law allows lenders to charge a 15 percent interest rate on a loan for as little as 15 days. If a customer, for example, borrows $600 for 15 days, he would pay $90 in interest. If he can’t pay it, he can reborrow for another $90. If this cycle persists for a year, the borrower can end up paying $2,160 on a $600 cash advance loan.

House Bill 483 would prevent that from happening by offering borrowers an extended payment plan after four consecutive loans. The bill will have to be heard by the Senate Commerce, Consumer Protection and Affordable Housing committee by the end of next week to move forward this session.

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Interest rates on Arizona payday loans would be severely limited under a bill getting its first hearing today at the capitol.

Sponsor Marian McClure doesn’t like the businesses, but believes they are necessary. Her bill would eliminate the loan rollovers that boost cash loan online interest rates to stratospheric levels.

“Without payday loan stores, I believe we will go back to what we had before, which were loan sharks,” she said.

On the plus side, since payday cash advances were legalized seven years ago, McClure says she hasn’t heard of anyone getting their legs broken.

Her bill would also ban Internet payday lenders.

“That if you make an [online payday loan] in the state of Arizona, the transaction is void and you have no right to the principal or the interest. That should stop them, would you not think?”

McClure says there are already six companies in the state doing payday loans over the Internet. She hopes to regulate them, as well.

Rita Haynes, chief executive of Faith Community Credit Union, said people living paycheck to paycheck might be well advised to take out a short-term personal loan if the alternative is to miss a mortgage payment or not pay for needed medicine.

However, she said, “There’s no excuse for Ohio payday lenders to charge as much as they do … Ohio law just doesn’t protect the consumer enough.”

That’s why Faith, a credit union that serves anyone who lives, works or worships in Cleveland, designed grace loans. They have a fee of $25 for a $500 one-month fast cash loan - an APR of 17 percent.

Faith requires borrowers to set aside a little money in a credit union savings account (called a share account). The reason is simple: The difference between folks who take out bad credit payday loans and those who don’t might just be a savings account.

The Consumer Federation of America says that people who don’t have enough cash socked away to pay for an unexpected car repair or other emergency are more likely to turn to high-cost payday loans than people who save.

Haynes hopes the savings accounts will help wean customers off cash advance loans. Additionally, the credit union offers free budget and credit advice, as many community credit unions do.

On-time payments for grace loans are reported to credit bureaus, so consumers who pay off their loans are also building healthier credit. That could qualify them to take out traditional small loans, which are even less expensive and allow a longer repayment time.

SOURCE: The Cleveland Plain Dealer