Payday Loan Times

News About the Ever Changing Payday Advance Industry

Advance America Pulling Out of Arkansas

Filed under: Arkansas — Desmond Carlisle at 3:38 pm on Tuesday, March 21, 2006

The nation’s largest payday loan company is considering closing its 30 stores in Arkansas, a move that a critics of the industry hope will begin a mass exodus of payday advance lenders from the state, according to the Arkansas News Bureau.

Notification of the decision by Advance America, Inc., to possibly pull out of the Arkansas payday loan business was contained in a one-paragraph note that was part of the South Carolina company’s 100-page quarterly filing with the Securities and Exchange Commission (SEC) on Thursday.

“The lending bank for which we market, process and service payday cash advances and installment loans in Arkansas will cease originating loans in April 2006 and will cease originating payday cash advances in June 2006,” Advance America said in its SEC filing.

Last month, following problems in North Carolina and Pennsylvania, Advance America said it was studying alternative methods for conducting business in the two states but had not determined if it would cease its payday loan operations — ones that brought in nearly $90 million in revenue in 2004 and 2005.

“We hope to stay in Arkansas and keep our stores operating there so we can continue to provide Arkansas consumers with a short-term financial option,” said Advance America spokesman Jamie Fulmer.

Anti-paying loan consumer advocates say other out-of-state banks that provide payday cash advances could be exiting the state due to a recent Federal Deposit Insurance Corporation (FDIC) determination to crack down on the short-term lending business.

“That is 30 stores that are leaving, now we have 235 more to go,” Hank Klein, president of the Arkansans Against Abusive Payday Lending, said Monday.

Last month, Advance America announced that the FDIC was investigating the bank business model that the payday loan giant uses to do business in Arkansas, Pennsylvania and several other states. Federal regulators have instructed certain banks to discontinue offering payday cash advances and alternative credit products if they could not sufficiently address the FDIC’s concerns regarding the products.

Advance America has recently shut down 117 North Carolina payday loan stores and 101 in Pennsylvania, in addition to its 30 stores in Arkansas.

Klein blames loopholes in Arkansas’ Check Cashers Act of 1999 for allowing the payday loan industry to expand in the Natural State and circumvent the state constitution, which limits interest rates on consumers loans to 17 percent annually. He has accuses the Arkansas State Board of Collection Agencies of lax regulation of current state law designed to govern payday industries. Klein said he now hoped other banks that “exploit the state’s usury law” will soon leave Arkansas.

Dallas-based Ace America’s Cash Express, which also received warnings from the FDIC last month about its payday lending practices, is a chief rival of Advance America and has 20 stores in Arkansas run by Republic Bank & Trust Co., of Louisville, Ky. On February 21, Ace announced that it would exit the Texas payday advance loan business, but had not yet decided what to do about its Arkansas and Pennsylvania locations.

Proponents of payday loans say there is a need for low-cost, short-term credit options that traditional banks to not offer, and that the payday industry is being unfairly singled out. In Arkansas and beyond, this is a fight that looks as if it will not go away anytime soon, with the adamant opponents pushing for change and the boost in revenue that the major payday loan firms continue to receive.

1 Comment »


Pingback by Payday Loan Times » Blog Archive » Local Attorney Pleased by Removal of Advance America in Arkansas

Friday, March 24, 2006 @ 3:22 pm

[...] Hey, did you hear that Advance America will be pulling out of Arkansas? Attorney Todd Turner did - and he coudn’t be happier about the news. The company,which has 30 check-cashing centers in Arkansas and more than 2,600 nationwide, announced this week that the company will no longer be able to make payday loans through First Fidelity Bank of Burke, S.D. [...]

RSS feed for comments on this post. TrackBack URI

Leave a comment

You must be logged in to post a comment.

Warning: fopen(/var/sitecache/