Only one more Utah payday loan store might be allowed in Sandy if the suburb decides to shut its door to such businesses.

The City Council has postponed for two weeks a vote on whether to limit non-depository financial institutions - those offering payday loans, check cashing, deferred-deposit advances or car-title loans - to one per 10,000 residents and to require at least a mile between such stores.

That would leave room for only one more store in Sandy, which currently has 10 outlets after three moved in last year. Four more companies hope to open instant cash loan stores in Sandy, but their applications are on hold until the council decides whether to limit the operations.

Councilman Scott Cowdell, who supports restrictions, asked city staffers to study whether such stores have a history of attracting crime.

But his council colleague Steve Fairbanks said the issue has been clouded by “emotional reactions” to the industry’s high interest rates, which typically start at 400 percent a year. He also disputed the notion of any correlation between bad credit payday loans and drug-related crimes.

Fairbanks would prefer to let the market decide how many stores locate in Sandy. Without competition, he argued, the outlets would have no incentive to consider lowering their rates.

“We’re hurting the people we think we’re saving,” Fairbanks said.

Salt Lake City and Salt Lake County also are considering density restrictions on payday cash advance lenders. South Salt Lake, West Valley City, Taylorsville, West Jordan, South Jordan, Draper and Midvale already have them.

At a public hearing this week, three people who work for Check City, including general counsel John Swallow, told council members the check cash advance industry provides an emergency cash source for low- and middle-income consumers when banks won’t help.

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Gov. Arnold Schwarzenegger promised Wednesday to work for the “swift passage” of legislation that would help the state crackdown on onerous California payday loan practices targeting the military.

The governor’s endorsement of Assembly Bill 7 followed the release of a draft report from his top military advisers, who urged him to step in.

The task force, which included some of the top military commanders of San Diego area bases, cited an alarming increase in revoked security clearances that threatens military readiness in times of growing world tensions and which has also taken a personal toll on families of those struggling to climb out of debt.

“The governor is encouraged that this legislation reflects the recommendations of his advisory council on military affairs,” said Bill Maile, a spokesman for Schwarzenegger. “The administration is a sponsor of the bill and will work with the authors to ensure its swift swift passage.”

Assemblywoman Lori Saldana, D-San Diego, and a co-author of the measure, said the task force recommendation will boost its chances. A similar effort to curb military payday loans failed in the Senate last year.

“It’s important that we act quickly to protect our military families,” she said.

Meanwhile, a nationwide consortium of payday loan companies announced Wednesday that it has adopted a series of self-policing measures aimed at protecting all borrowers, not just the military.

In most cases, payday lenders offer cash advances for a fee. Generally, the loans are short term, until the next payday. When fast cash loans are not repaid on time the annualized interest can quickly grow to triple digits. But, those who cannot repay wind up borrowing more for longer periods of time, accruing a crushing amount of debt quickly, according to critics.

Congress imposed a 36 percent interest rate cap on loans to service men and women effective Oct. 1, but failed to specify which federal or state agency would have police powers. The measure by Saldana and Assemblyman Ted Lieu, D-Torrance, would conform California law with federal law, thereby giving California the ability to act.

“Without action by California, the state will have no authority to enforce the provisions of the federal law, effectively diluting the protective measures of the federal law,” the task force noted.

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The plethora of instant cash loan businesses that have seemingly popped up all over the place in South Dakota may be facing a new restriction.

The state Senate is scheduled to consider a measure today that would limit those lenders to one personal loan at a time of 500 dollars per person.

State legislators thought that was the law when they passed regulations earlier, but an audit found that some of the businesses were making several loans of 500 dollars to individuals.

The businesses argued that they thought the law said 500 dollars for each loan, no matter how many payday advance loans were provided.

The pending legislation would make it clear that each customer can have only one loan of 500 dollars from a single business.

Opponents say that’ll drive those people down the street to get a faxless cash advance from each small lender. The debate will likely continue for awhile.

Democrats who control the state Senate promised today to put new limits fast payday advance lenders, which they called a growing industry that preys on the poor by charging interest rates that can amount to 500% or more.

Senate Majority Leader Judy Robson (D-Beloit) said curbs they are considering include limits on how often Wisconsin payday loans can be rewritten or “rolled over” and a possible cap of $600 on the amount that is borrowed.

Robson said she knew of one person whose $500, supposedly cheap payday loan ended up costing a total of $2,500.

Payday loan lenders “prey on the vulnerable” and locks them into a “cycle of poverty,” added Sen. Jim Sullivan (D-Wauwatosa).

Robson and Sen. Jon Erpenbach (D-Middleton) said they would also pass through the Senate changes that would let cell phones, small business phones and fax numbers be added to the popular “no call” list, which has more than 1.1 million lines registered.

Sen. Mark Miller (D-Monona) also promised to push a bill prohibiting magazine publishers from sending renewal notices earlier than six months before a subscription expires and Sen. Pat Kreitlow (D-Chippewa Falls), but it was the cash loan statements that casued the most stir.

SOURCE: The Milwaukee Journal Sentinel

The payday cash loan lending industry, often under attack by consumer groups, rolled out a new list of best practices Wednesday at a time when Democrats in U.S. Congress have threatened more scrutiny over high-cost loan products.

The Community Financial Services Association of America said it has launched a $10 million “national public education campaign aimed at informing consumers about the responsible use of payday advances.” The group represents many of the payday lenders providing loans that are often due when the borrowers get their next paycheck.

The trade group said its members would offer an extended repayment plan for borrowers having trouble paying off short-term loans. The extra time will come without any new fees or accrued interest, the trade group said.

Also, the trade group said its members will “refrain from advertising the payday advance services for frivolous uses.”

Bad credit payday loan stores have frequently attracted scrutiny from consumer groups, in part because some borrowers take out the short-term loans and then continue rolling the credits over, racking up more and more fees.

Last year, Congress passed a law that cracked down on cash advance payday loan companies operating around military bases. Also, with growing home foreclosure rates attributed to high-cost subprime mortgage loans, lawmakers have said they want more scrutiny over industry lending practices.

Members of the trade group include Allied Cash Holdings LLC, Advance America, Check ‘n Go, Moneytree, Inc., and Check Into Cash, Inc.

Governor Tim Kaine said today he would make “significant changes” to a package of Virginia payday loan lending industry reforms if the bill comes to him.

The House passed the bill last week. Now the Senate must either agree to changes made in the House, sending the bill to Kaine, or reject the amendments - forcing negotiations between House and Senate members.

Kaine told reporters that he would “make some significant changes to that bill.”

The measure would create a statewide database to track no fax payday loans and limit borrowers to three at one time. Borrowers would have to wait 24 hours before taking out a loan after paying off another, and those who’ve taken out four consecutive loans could enter into a 60-day extended payment plan, during which time they could not take out another loan.

The House version requires payday advance loan lenders to automatically offer the extended payment plan to borrowers who had two other loans within the past year.

Congress capped the annual interest rate on payday loans to military personnel at 36 percent. Kaine says there shouldn’t be two different interest rates for fast cash loans in Virginia.

Vicky Greathouse needed cash when her mother-in-law passed away, but she said her longtime bank turned her away. The Glendale woman found help at a quick payday advance store.

Last week, Greathouse testified at the state Capitol in defense of the much-criticized quick-cash stores, saying they serve a purpose.

“People need a choice and a place to go in case something comes up and they need to make it from one payday to the next,” Greathouse said.
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The no fax needed payday loan stores, allowed to open in Arizona in 2000, have multiplied in seven years. Glendale has about 40 outlets, most in the southern part of the city.

The stores offer quick cash for those in tight spots, but that comes with high interest rates.

“In our day, we called them loan sharks,” said Ricki Ray, a Glendale resident who is the president of her neighborhood association near 43rd and Glendale avenues.

Ray said the stores destabilize neighborhoods.

The Glendale City Council in October did what it could to curb the bad credit cash loan industry, prohibiting the stores from opening within a quarter-mile of one another. Mayor Elaine Scruggs called on the state Legislature to do more.

Lawmakers, including Rep. Chad Campbell, a Democrat whose district includes a sliver of southern Glendale, have introduced a handful of bills this session to regulate the industry by lowering interest rates and reducing the number of times an individual can roll over personal loans, delaying payment but accruing higher fees.

The bill that appeared to have the most momentum was House Bill 2224, pushed by Rep. Marian McClure, R-Tucson.

But McClure’s bill failed in committee Feb. 12.

The proposal would have required that people taking a loan be entered into a database and tracked so that they could not obtain another quick loan, spiraling into a cycle of high-interest debt.

State law already prohibits multiple Arizona payday loans, but there are no teeth for enforcement. McClure argues that a tracking system is necessary for any reform to take root.

But some lawmakers and industry lobbyists balked at the government tracking.

Although some have said they felt taken advantage of by the system, Valley resident Patty Rogers told lawmakers she has worked for such stores and borrowed instant payday loans herself and was treated with respect.

“I’m missing why we’re trying to protect people from themselves in this industry and not others,” said Rep. Eddie Farnsworth, R-Gilbert, as he referred to credit card companies and interest-only mortgages.

McClure, who was angry that the bill was killed by fellow Republicans, said last Tuesday that she would regroup with the potential to still get a reform measure passed this session.

Some are not convinced the industry of payday advances can be reformed.

Kelly Griffith with the Southwest Center for Economic Integrity in Tucson said states that try to regulate payday loans have not succeeded because the businesses are designed to keep borrowers in debt.

The legislation that allowed the stores to open in Arizona is scheduled to expire in 2010. Griffith sees that as the best solution to the problem.

McClure said the alternatives to payday loans are not palatable, including Internet lenders offering loans at even higher rates than the local stores.

“I would rather have a storefront we could regulate and watch,” she said.

SOURCE: Arizona Central

Springfield Ward 7 aldermanic candidate Joe Rock said Monday he would like to do away locally with the Illinois payday loan business, several purveyors of which are on MacArthur Boulevard.

“I intend to be that voice on the city council to help rein in this type of predatory business that I believe is a real cancer on our city,” Rock said.

Rock, a barber/stylist, said he “would never open up one of my small businesses next to a place like that. … They hurt business. They don’t bring value to our neighborhoods.

“Helping to remove some of this type of predatory business … would certainly help to bring in more legitimate businesses.”

He also called the payday advance businesses “a magnet for crime.”

Rock staged his news conference across the street from Springfield Currency Exchange.

However, Dave Williams, manager of that business, said its two locations, including one downtown, do not make instant cash loans. His business cashes checks, sells money orders, takes utility bill payments and provides other services.

“If he’s talking about predatory lending, he has no business being in front of my store,” Williams said.

Rock later said, “I apologize for any misunderstanding,” adding that he was only targeting so-called payday and title loans.

Faxless payday loans are generally for small amounts up to $1,000, and can charge hundreds of percent in annual interest.

“I think that anybody who needs a $250 loan for something as essential as food or clothing can find that sort of thing for free out there,” Rock said, citing charities.

He said he knows the state regulates easy payday loan stores, but questioned if the state is enforcing its own regulations and said he would use the “bully pulpit” of an aldermanic seat to push to remove such businesses from Springfield.

A representative of the Illinois Small Loan Association could not be reached Monday, a national holiday, and a spokesman for Advance America Cash Advance was traveling and could not immediately be reached.

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The following is an editorial in Oregon’s The Register-Guard:

Trying to control predatory cash loan lenders is like playing the Whack-a-Mole game at the local arcade. Smack down one mole with your mallet and, sure enough, another pops up somewhere else. Then another. And another.

The state Legislature last year finally approved a new state law cracking down on the exorbitant interest rates that the Oregon payday loan industry uses to prey on desperate, cash-strapped residents. It didn’t take long before payday lenders began applying for a different license that enables them to continue charging the same piratical interest rates.

Last week, the House passed four new bills that close some mole-sized loopholes in last year’s payday loan legislation. That law, which does not take effect until July, limits charges on short-term loans to $10 per $100 on original loans and no more than 36 percent annual interest on subsequent rollovers.

Here’s a quick look at each of the new bills:

• House Bill 2203 would impose the same 36 percent annual interest rate cap and 10 percent limit on origination fees to out-of-state businesses that the new law applies to in-state payday cash advance lenders.

• HB 2202 would require a license for check cashing businesses and cap fees at $5 or 3 percent of the check, whichever amount is greater.

• HB 2204 would limit annual interest rates on car title loans to 36 percent and allow only a one-time origination fee of no more than $10 per $100 borrowed.

• HB 2205 would require consumer finance licenses for lenders and tighten language adopted last year by state regulators.

These are all solid bills that should help protect the working poor, students, seniors on fixed incomes and others who have been victimized by the faxless cash advance industry.

Not surprisingly, payday lenders are whining that the new rules will drive them out of business. That’s what they said last year when Oregon lawmakers finally were shamed into capping interest rates. The Legislature acted after cities across the state began adopting their own ordinances and a statewide coalition of religious groups and charities was preparing to put a statewide initiative measure on the ballot.

Of course, instant payday loan lenders have absolutely no intention of going out of business in Oregon, just as they haven’t gone out of business in neighboring California and Washington or the many other states that have clamped down on this rapacious industry.

Instead, they’ll start looking for new loopholes that allow them to continue gouging the poor.

When state lawmakers get tired of whacking moles, they should add Oregon to the growing list of states that have imposed a blanket interest rate limit on consumer cash loans of all types. It’s the only proven way to keep predatory lenders from taking advantage of the state’s poorest and most vulnerable citizens.

Lawrence Meyers is the co-founder of Payday Lender’s Capital, which provides financing for payday lenders. He penned the following, summarized article for The Independent Mail:

The guaranteed payday loan lending industry inspires much debate. Unfortunately, opponents couch this debate in emotion while rendering arrogant moral judgments rather than focusing on facts and basic economic reality.

Here are the facts: There is a need for short-term, unsecured credit. People living paycheck-to-paycheck have an occasional need for emergency cash. Options are limited. If you lack collateral, banks won’t give you a loan. Period.

So what happens if your car breaks down and you can’t get to work until it’s fixed? Will a bank lend you $300? A friend might, but asking may be embarrassing or not an option. Maybe you can get a cash advance payday loan from a credit union (if you’re a member), but that’ll take days if not weeks. You could write a bad check to the mechanic, but you’ll get dinged for $60 in fees.

Emergencies happen. That’s called “life.” A payday loan is a quick, convenient way to address emergency needs. They are neither the least nor the most expensive option.

Customers overwhelmingly endorse the product. There are 23,000 bad credit cash loan offices in the United States, assisting 12 million customers.

Now for the primary myths:

“Payday loans charge exorbitant fees.”

Exorbitant to whom? While opponents scream about “effective APRs,” they refuse to believe that customers don’t care about APRs. They care about flat fees. Period. Values are subjective unless you are a payday loan opponent and force your values onto the customer.

Opponents refuse to believe that consumers are actually smart enough to know what they are doing. They choose a payday loan because it is the right choice for them. It’s also worth nothing that between average default rates of 6 percent and monthly operational expenses of $9,000, fast payday advance offices require a minimum fee of $13 per hundred borrowed to generate any profit.

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