Payday Loan Times

Cliff Voss was short on cash and needed to make truck payments. But when he strolled down to the Advance America payday loan center in Ashland, the office was closed. He had to head to Medford.

"They’re your last resort to save your ass if you’re a working-class schmo like myself,” Voss said. “My family and my friends don’t have any money to lend, and I’m not the type of person to ask my boss for it. If you’re a person on your own, you’ve gotta do what you’ve gotta do.”

Voss is a line cook at a restaurant in Ashland and had just got back from a vacation with his girlfriend. Not receiving a fast cash advance would probably mean more debt because of late insurance and car payments.

The payday loan business is facing a growing battle in the Oregon Legislature. The voice of consumers such as Voss - actually showing support for these resources - needs to be heard. He said he has received about 10 payday loans in his life and, despite the astronomical fees, he has always paid them back on time. He has no regrets.

(Read on …)

On Thursday, social activists, church leaders and others urged a Senate committee to propose a tough law regulating payday lenders, who charge high interest on small loans, for the Legislature's special session next week." The Oregonian had the report.

Why wait?" asked Angela Martin, campaign manager for Our Oregon, a nonprofit progressive political group collecting signatures for a ballot initiative that would dramatically cut the amount payday payday loan lenders could charge. "It is a problem that can be solved as early as next week," she told the committee, which met in Portland.

Payday advance lenders said the initiative, or a law patterned after it, would put them out of business and force people needing short-term, small loans to turn to lenders on the Internet and across state borders, to pawn shops, to car title lenders, to illegal sources or to bouncing checks.

Such legislation "will reduce revenue in our industry by 70 percent," said Mark Thomson, representative of a national payday loan group called Community Financial Services Association of America.

A payday loan proposal

Sen. Floyd Prozanski, D-Eugene, chairman of the Senate consumer protection committee holding the hearing, said he and Debi Farr, R-Eugene, who is chairing a House committee examining the payday loan industry, are negotiating with legislative leaders on a proposed cash advance reform bill for the special session next week.

Prozanski said prospects are good that they will settle on "some reasonable regulations." Gov. Ted Kulongoski and Democratic legislative leaders say they will settle for no payday reform law in the special session that is not at least as restrictive as the initiative.

The initiative for the Nov. 7 ballot would limit fees on an initial payday loan to a $10 fee plus 36 percent annual interest, or $13, per $100. The borrower would have 31 days to repay the loan. Only two rollovers at 36 percent interest would be allowed.

State officials said in a review of 546 cash loans from 30 payday lenders last year, they found borrowers on average took out 16 loans a year.

Karry Miller, 44, an office clerk and single mother from Milwaukie, told the committee she now owes money to four payday lenders and expects her electricity and phone to be turned off.

"I'd like to stop this cycle," she said. "I want my paychecks back."

It looks like Governor Ted Kulongoski may be listening to those who want to see regulations on payday loans and other industries that prey on consumers.
The governor said he'll propose a bill next year to limit charges by Oregon check-cashing services to 3 percent or $5, whichever is greater. Critics say check cashers' fees are unreasonably high and hit people who can least afford them, generally low-income residents without bank accounts.

"Charging working Oregonians a fee equal to 8 percent of their take-home pay just to cash paychecks is simply unacceptable," the governor said Tuesday in a statement for closing ceremonies of the state employees' food drive.

Luanna Stoltz, owner of a Portland cash advance company, said she was unsure how the governor's proposal would affect her limited check-cashing business. She cashed checks more as a service than moneymaker, she said. The Oregonian was unable to reach several other owners of check-cashing or payday loan stores.

Most activists and legislators concerned about financial exploitation of low-income residents are focused on regulating payday loan lenders, which charge high interest for short-term paycheck advances. Legislative leaders say they may try next week in the special session to adopt a bill to tighten controls over payday advance lenders. (Read on …)

What do you do if you've rolled over your payday loan and just find yourself fighting an uphill battle? Ruby and Ronald Stoker of Junction City, Oregon, got into trouble when they took out a payday loan for $700, according to the Oregon Student Public Interest Research Group, then bounced a check for the amount plus the $140 fee.

Overdraft fees, a lot of stress, and one rollover later, the couple was left with two options by the fast cash advance company:

1. Pay the full amount owed.
2. Pay another $140 fee to roll over the payday loan for another two weeks — and, in the process, retain their status as a "preferred customer."

This is where the real problem hit. The Stokers rolled over the cash loan and, when it came due again, rolled it over a third time. In order to keep up with the escalating fees they had been sucked in by, they took out two additional payday loans and a car title loan — for a debt that ultimately exceeded $2,000. Luckily, they were able to find help.A local credit union, which helped them refinance their repayment, got them out of this mess, but the lesson is clear. If you are in a position where a payday loan is the best option you've got, be sure you can make the payment date. Rolling them over is how you get yourself into serious trouble.

The point of instant payday loans is to pay off debt, not dig yourself an even deeper hole.

A recent editorial in The Oregonian has a message for the state legislature: it is possible to focus on multiple issues at once. While Governor Ted Kulongoski is urging the Legislature to “limit its attention” in an April 20 special session to allocating money for human services and schools, one writer doesn’t understand why it can’t also focus on the issue of payday loan regulations.

Nearly all other states have adopted laws preventing the payday loan industry from preying on vulnerable poor people with short-term payday loans and penalties that combine to create interest rates of more than 500 percent.

But the Oregon Legislature whiffed on this issuesin its last regular session. House Republicans stopped the payday loan legislation. Now groups are gathering petition signatures to put payday loan initiatives on the November ballot.

This should not be that hard. Some Republicans don’t like the restrictions in the payday loan initiative, but polls suggest an overwhelming percentage of Oregonians do.

Oregonians are right. The runaway payday loan industry must be reined in.

How many more people are going to walk out of payday lenders with payday advances they will never pay off? Whatever happens, Oregonians are not going to look back to April 20 and wish that legislators had limited their attention.

According to The Oregonian, four payday loan companies have filed a lawsuit challenging the new Portland law passed to govern them. The suit asks the Multnomah County Circuit Court to declare the city ordinance invalid on grounds it violates the state Constitution.

The four Oregon payday loan firms have also asked the court to bar the city from enforcing the law, passed last month, until the case is decided. The suit argues that Portland’s law conflicts with a state law passed in 2001 to regulate the short-term payday advance lenders.

“The state has pre-empted local legislation by adopting its own law earlier,” said John Junkin, a Portland attorney representing the payday lenders.

Portland City Commissioner Dan Saltzman called the lawsuit “shameful,” and said that the city took action because state law does not have caps on interest rates, and consumers need protection. The new Portland ordinance requires the 71 agencies in the city that issue payday loans to pay a $1,500 fee annually for a permit. They must also:

• Give borrowers a payment plan if they have trouble repaying.
• Collect at least 25 percent of a payday loan’s principal before extending it.
• Give borrowers up to 24 hours to opt out of a cash loan.

The payday loan companies filing suit are Evergreen Financial Investments Inc., based in Nevada, and three Oregon companies: Anyday’s Payday, Pacific Finance Corporation Inc. and Paycheck Advance.

The ongoing Oregon payday loan fight is getting personal, even religious. A Eugene, Ore., pastor spoke with the Daily News and recalled a parishioner who was living on Social Security and became mired in debt after taking out a couple of payday loans.

"I asked if I could come over and look at the paperwork, and I couldn't believe it. She actually had one loan annualized over 1,000 percent. It took my breath away," said Tom Dodd, pastor at United Lutheran Church in Eugene.

Reformers are taking another shot at regulating Oregon's surging payday loan industry — possibly via a citizen-referred ballot measure — and a growing number of citizens say they're using a religious perspective to really drive home the issue.

"We have a strong tradition against usury — the strong taking advantage of the weak. To me, it's really a central example of how power is misused, and the faith community ought to stand with those on the short end," Dodd said.

But lenders say they're being unfairly demonized for providing a service that consumers demand. They point to the low number of consumer complaints — 17 out of 750,000 loans processed in Oregon — as evidence of their value, especially to people whose bad credit and urgent circumstances might otherwise preclude them from quick cash.

(Read on …)

The City Council of Gresham, Oregon will not regulate payday loan interest rates but is considering placing restrictions on terms and conditions, according to the Oregonian. With an estimated 14 payday lenders scattered across strip malls and on most of the city’s major streets, Gresham is one of several municipalities contemplating ways to limit (or at least control) Oregon payday loan proliferation.

The city’s payday advance lenders say they provide an essential service, a good source of cash for people who need a brief loan fast. But annual interest rates that range from 391 percent to 520 percent have consumer advocates urging action. The Gresham City Council must decide whether to regulate payday loans by mirroring a Portland payday loan law passed last month in the state’s biggest city.

Cities aren’t allowed to cap the payday companies’ interest rates, said Gresham City Councilor David Widmark, who proposed joining Portland’s effort. But the city can try to keep people from digging a hole of debt that they can’t climb out of, and that means limiting their reach.
(Read on …)

Eugene, Springfield and other cities in Oregon should follow the lead of the city of Portland in regulating payday loans, urges an editorial in the Eugene Register-Guard.

The newspaper calls on state and county governments to control the industry, saying that it is not a municipal responsibility. But House Republican leaders killed a bill last year that would have reduced the interest rates that lenders charge and made other important changes.

Last Wednesday, the Portland City Council approved an ordinance that partially fills the void left by the state government. There are no strict regulations on Oregon payday loan companies statewide, one of the few states that can make such a dubious claim. City officials in the localities of Gresham and Troutdale are expected to vote on similar meaures next month.

The paper urges Eugene, Springfield and other communities to protect the many Oregonians who are charged excessive APRs (annual percentage rates) for their cash loans.

(Read on …)

Portland City Commissioners passed the first ordinance in the state this week to protect consumers from some of the lending practices of payday loan businesses. This comes on the heels of recent state legislature criticism on the matter.

A no faxing payday loan can allow people with bad credit to deal with unexpected bills. But a lack of regulation means interest rates on some loans can be astronomical.

Mayor Tom Potter says that, while Portland City cannot cap interest rates, the new ordinance gives consumers 24 hours to cancel a loan, as well as the right to pay down principle and make installment payments.

"I think when you charge 912.5 percent interest annually, that's unconscionable," Potter said. "And I think that our society has to wake up and realize that there are some things that are just unacceptable. And this is one of those things."

Gresham, Troutdale and Eugene are considering similar ordinances - but Oregon remains one of only seven states with no interest rate limit on instant payday loans.