As a new military payday loan amendement makes its way to Congress, the Pentagon is throwing its considerable weight behind ensuring its passing. 

It has cites some of the worst cases and abuses of such pay day loans - among 3,000 case studies involving active duty military personnel - the armed forces has recently seen the Pentagon said:

• A U.S. Navy E-5 (Petty Officer, Second Class) began with three payday loans in March 2004 to take his family to visit his cancer-stricken grandfather. By October 2005, he had four payday loans, totaling $2,300 costing. him $600 every month just in rollover fees.

• An Air Force E-4 (Senior Airman) had faxless payday loans with two lenders, totaling $900 owed in principal. She paid $200 in fees each month to rollover the loans for seven months. When she entered financial counseling, she had other military installment loans, one for $7,000 with a 61 percent APR.

• A U.S. Air Force E-4 obtained a $500 no faxing payday loan that ballooned into a $10,000 loan with an annual percentage rate (APR) of 50 percent. The woman ended up paying $15,000 for the money and much more in a personal loss after the financial problems contributed to her divorce.

Just through this tro of examples, it's easy to see why army representatives would like to see changes made in current military payday loan laws.

First, Cash Now, a well-known payday loan company, announced that is would utilize new technology to double check on potential bad cash advances or clients.

Now, the same firm is taking advantage of another breakthrough to make it even easier for individuals to receive faxless payday loans.

In Virtual Terminal, Cash Now has found what it considers to be - by far - the most advanced Web-based platform for processing electronic payments available today. With its easy-to-use, yet powerful user interface, Virtual Terminal enables Cash Now licensees and system users to schedule a single transaction or a series of recurring transactions with a few simple keystrokes.

The progream supports the processing of credit card, debit card and electronic check (ACH/ATM) transactions. These transactions can be processed in real-time or can be scheduled to occur at a future date designated by the user. The idea is to make the acquisition of instant payday loans as simple as possible.

The goal, of course, is for Cash Now to continually integrate its technologies with other fast payday loan sub prime credit reporting agencies, while identifying potential bad loans and reducing loss exposures for the Cash Now licensees utilizing the company technology.

As reports come in that individuals in Great Britain are suffering from mounting debt, the prospects at home aren't much higher at the moment. More and more Americans are considering the use of payday loans because they have little confidence in their financial future otherwise.

In fact, surveys shows that consumer confidence slid to a three-month low in August, as people worried about the direction of the economy and their own balance sheets in the months ahead. It's, therefore, little wonder the popularity of faxless payday loans increased.

The RBC CASH Index, based on results from the international polling firm Ipsos, showed confidence ebbed to 74.8 in early August. That marked a sharp drop from July's showing of 80.1. It was the second month in a row that confidence dropped, andthe lowest reading since May.

Economists blamed the deterioration in confidence mostly on rising energy prices and a cooling in the once-hot housing market.

With housing prices not going up as much as they had been, people aren't feeling as wealthy. They can't simply rely on home equity to get them through difficult times - and the result is curiosity about quick cash resources, such as an instant payday loan.

"Right now consumers are feeling insecure. They are worried about their inability to finance their standard of living in the face of higher gas prices, a softening economy, a slowing job market and a cooling housing market," said Peter Morici, an economist and professor at the University of Maryland's Robert H. Smith School of Business.

The economy - and the job market - have shifted into a lower gear. Economic growth slowed to a 2.5 percent rate in the April-to-June quarter as consumers and businesses turned cautious.

The nation's unemployment rate in July rose to 4.8 percent, a five-month high. As a result of all these factors, consumers are growing more anxious about future economic conditions. An index measuring their expectations about the next six months - including the overall economy's prospects as well as their own financial situations - declined in early August to 21.8, down from 34.2 in July.

What does it all mean? There's no reason to panic, but an increased number of people will probably look into the possibility of a cash advance or faxless payday loan in order to dig themselves out of debt holes.

In an effort to avoid situations where customers cannot pay back an instant payday loan on time, and to increase profits through efficient lending, Cash Now has integrated the Cash Now Loan Verify feature into its business.

This advancement will allow the payday loan company to integrate its technologies with other payday loan, sub prime credit reporting agencies and identify potential bad loans, while reducing loss exposures for the Cash Now licensees utilizing the company technology.

The integrated Loan Verify has one of the most extensive databases in the market today. Whis is this advantageous?

Because the more accounts tracked, the more likely it will be to accurately evaluate the customer in the check-out line. The Loan Verify negative database (accounts with returned checks) includes more than 22 million accounts.

With more than 120,000 merchants and 260 collection agencies contributing to the database more than 300 times per day, the Loan Verify continually expands its up-to-date information, expediting faxless payday loan customer service and reducing check losses.

"We are very excited about this feature and the capabilities" said Kevin Price the Cash Now CEO.

The low cost payday loan business is booming, Mr. Price continued, as the number of outlets now offering the sub prime low-dollar, super-quick loans has doubled to over 20,000 in the last four years. Industry growth from predominantly stand-alone check cashing storefronts, has been fueled largely by the Internet and savvy, new marketing techniques.

Behind the success of many of the new breed of payday loan lenders is the Florida-based payday loan lead generation and software system licensed by Cash Now Corp.

Payday loan companies are quickly realizing that the marketing solutions offered by Cash Now to generate new borrowers for their cash advance products are more cost effective and productive than using their own systems.

Having garnered plenty of support, a military payday loan report has made its way all the way to Congress this week.

The Defense Department study sent shows that Congress must stop predatory, no fax payday loan lenders from preying on our soldiers, sailors and aviators, said President Michael Calhoun of the nonprofit Center for Responsible.

The Pentagon paper says payday advance lenders should charge no more than 36 percent annual percentage rates on their loans to service members, the same cap many states impose in their usury laws in order to ban payday loan sharking. Senator Jim Talent was mainly responsible for moving on this issue.

"I applaud the Defense Department's report," Mr. Calhoun said. "Military families need protection from these predators. We must protect the people who protect us."

Congress asked the Department of Defense to investigate these faxless payday loan lenders and how they gouge our service people and hurt the country's preparedness for war.

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As the Navy continues its push against military payday loans, it should be encouraged by the success of Pioner Services in helping clients this year.

The company saw the effects that such bad credit payday loans can have and set a goal to save military families $100 million in high-cost, predatory debt by providing educational opportunities and services that help service members break the financial debt cycle.

This week, Pioneer Financial Services announced that they've already reached the half-way point in that campaign, achieving more than $50 million in documented savings for service members and their families.

"To date, Pioneer Services Representatives have certified more than 17,000 military families in our 'Break the Debt Cycle' program," said Tom Holcom, president of Pioneer Financial Services Inc. "Part of the certification process is showing these families ways to break out of debt and work toward financial independence."

Amen. The savings are documented through the instant payday loan application process and meticulously recorded. As each service member reduces the amount of interest he or she will pay on credit cards, payday loans, and other high interest debt with the help of a debt management loan, the numbers are added to a detailed spreadsheet.

Pioneer Services Representatives expect to report $100 million in savings by the end of the year.

"We have helped thousands of families work on improving their credit scores and monitoring for identity theft. But the real excitement begins when they choose to enter their current debts into a series of financial calculators and learn they can save hundreds or thousands of dollars," said Holcom. "And every dollar a military family saves is a dollar they can add to a Thrift Savings Plan, a savings account, or use for everyday needs. All that matters is that they're able to focus on their duties, rather than on their finances."

That's the main trouble with a military payday loan. Yes, it causes fiscal hardship, or can. But it can also affect the readiness of those about to go into battle.

The Department of the Navy is continuing to fight payday loans through raising awareness of predatory lending and informing both sailors and their families about the pitfalls of dangerous debt cycles.

According to Keith Goosby, Financial Coordinator for Regional Support Office Task Forces in San Diego, Calif., predatory online payday loans may be putting sailors in financial peril, not only affecting their job performance, but in some cases jeopardizing security clearances.

"Overall readiness of the Navy is impacted when financial aspects of personnel are not what they should be. Additionally, shipmates are impacted when they have to deploy because of someone else's lack of financial readiness," Goosby said.

Francis H. Dong, Associate Director of the National Association of Securities Dealers, said that 75 percent of no faxing payday loan customers are unable to repay their cash advance in two weeks, the normal length of a loan. Dong also said active duty members are three times more likely to use a predatory lender than are civilians.

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Cash Now Corporation, one of the largest instant payday loan players in the nation, announced plans to launch a specific check cashing software, for the casino industry, on August 28.

The payday loan company had successfully implemented and monitored the performance of its 1st BETA Casino check cashing software which it deployed in June of 2005.

Such software was deployed in a Northwestern USA Casino offering a resort type year-round gaming and resort paradise. The casino, with its non-stop gaming action, adds round-the-clock fun for every grownup visiting the establishment and has pushed the Cash Now retail capabilities to new heights.

Kevin Price, the Cash Now CEO, sees a huge growth and demand for the product, which should open up another vertical market for the Cash Now revenue stream aside from typical faxless payday loans.

"To the best of our knowledge and research, we are the only company that has successfully developed and deployed this industry specific solution. For the customer it represents convenience and for our client it means immediate conversion.

The company sees this solution as a is a win win situation for both the consumers and the Cash Now client."

The nation's biggest payday lender, Advance America, will begin selling prepaid debit cards within the next few months, according to the chain's president, Ken Compton.

Based in Spartanburg, S.C., the company hopes to offer the prepaid debit card at 200 store locations by the end of September, and at as many as 2,000 stores by the end of the calendar year.

Critics of the company and the payday cash loan industry as a whole said the card is just another way to prey on consumers. Packaging high interest loans in the form of a debit card, rather than a post-dated check, the company can skirt laws recently enacted to limit exorbitant interest.

Advance American has been shut down or limited in many states, and is searching for new legal ways to make its payday loans, The Spartanburg Herald-Journal reports.

The company recently released its earnings for the second fiscal quarter, and while revenue increased overall, it took a hit in many of its big markets. Payday loans were banned in North Carolina altogether, and recent regulations in Illinois, Pennsylvania, Arkansas and Indiana have adversely impacted earnings.

With interest rate caps affecting the profitability of its loans, Advance America is reeling from declining stock price and looking to repackage its products to regain traction. It is sure to meet serious opposition from some consumer groups if it proceeds.

QC Holdings, Inc., announced yesterday that the expenses related to its expansion during the last two years cut into net income in its second financial quarter.

In a release today before markets opened, the payday loan company based in Overland Park, Ks., reported net income of $296,000, or 1 cent a share, down from net income of $1.7 million, or 8 cents, a year ago at this time.

The company said second-quarter earnings were impacted by about $600,000 in fees related to discussions about a possible acquisition. Those talks were terminated, the Kansas City Star reports.

In the quarter, however, the payday loan firm showed revenue increasing by 10.2 percent to $39.8 million. On average, Wall Street expected earnings per share of 12 cents on revenue of $43.1 million. For the first half of 2006, QC Holdings reported net income of $2.8 million, down from $5.3 million a year ago. Revenue in the first half grew to $78.2 million from $69.6 million. (more…)