More than 15 members and supporters of Socialist Alternative held signs and handed out flyers at an intersection near the Tacoma Mall, drawing awareness to the outrageous practices of payday loan stores and prompting the public to attend an upcoming city council meeting at which the topic will be addressed.

Drivers overwhelmingly showed support by honking their horns and giving thumbs up.

Making promises of affordable, quick credit, providers of fast cash loans often prey on the most vulnerable of the working class, the poor, while thriving on their borrowers’ inability to repay the loan on time, thus creating a cycle of recurrent fees and debt. Some borrowers actually end up acquiring multiple loans in order to financially stay afloat.

Not surprisingly, these payday lenders donated over $200,000 to state politicians in 2006, amounting to nothing more than a bribe to protect their interests.

These politicians allow no fax payday loan profiteers an exemption from Washington State usury law, which caps interest rates at an already astounding 36%. No wonder there has been an explosion of payday loan stores in poorer neighborhoods. With high interest rates and exorbitant fees, balances can accrue to more than ten times this amount (360%) over a one-year period.

At the city council meeting on June 5, the campaign plans to mobilize people opposed to the way payday loan lenders operate, and demand the city rescind these special privileges and provide living-wage jobs and financial assistance alternatives to these quick cash advance lenders.

One of the signs, “We Need Real Paydays, Not Payday Loans,” demonstrated an alternative.

Workers cannot expect that the two parties of big business that legalized unethical payday lending some ten years ago in Washington State will end these high-interest loan rip-offs and provide living-wage jobs and the healthcare that we need. This can only be achieved by the mobilization and struggle of working-class people.

The president of one Nevada payday loan company is speaking out against that payday loan high-interest assembly bill that went to the State Senate on Thursday.

The bill, AB-478, would mandate that companies only charge their highest interest rates for only 90 days, then lower the interest rate to prime-plus ten percent. Some of those companies currently charge as much as five, six, or seven hundred percent.

Carl Hull is President of Advanced Payday Loans and Check Cashing in Reno. He says AB-478 would hurt the industry and the consumers. He explains that his business helps people consolidate multiple no faxing payday loans into payments spread over a year.

He says if this bill becomes law, for certain people, payments could only be consolidated for over three months. He admits this plan simply doesn’t work for consumers.

Hull says the Nevada payday loan bill would also negatively impact the lending industry. He says without being able to consolidate loans over a year for a segment of customers, lenders could be forced into bankruptcy.

If the bill passes, Hull says interest rates as high as more than seven-thousand percent could still be charged on certain short-term payday advances.

The bill made its way to the Senate floor, but on Thursday afternoon, Senator Randolph Townsend asked that the bill be placed back on the back burner, so that wording could be changed.

The Senate is scheduled to vote on AB-478 on Friday, May 25th.

As faxless payday loan lenders have flourished throughout Virginia, they’ve had to fend off opponents from nonprofit groups that advocate for the poor at the General Assembly.

Those groups, like the Virginia Poverty Law Center, try to persuade lawmakers to consider the effects of laws on consumers for a wide range of bills. To counter their influence, personal cash loan and car title lending companies have spent at least $1.4 million on political contributions and lobbyists over the past five years - and that doesn’t include the hard-fought 2007 session.

A new group of religious and nonprofit groups have banded together with businesses to form a coalition called Virginians Against Payday Loans. They will have a chance in 2008 to rally behind a bill to repeal payday lending if state Sen. Marty Williams, R-Newport News, is re-elected.

“Those folks have got their act together,” said Williams, who spoke to the group at its first meeting in Yorktown on Monday.

The group, formed by Newport News business owner Ward Scull, was created specifically to ban payday lending or get the annual interest rate set at 36 percent. The fast payday advance industry, which will be legally forced to charge that percentage to the military this fall, says it can’t survive making loans at this level.

Payday loans charge an average of 368 percent annual interest in Virginia, and car title loans charge even more. Either a person’s future paycheck or vehicle is pledged to secure the loans. Because banks often won’t extend the small loans that these stores make, the industry says, it’s performing a needed service.

A slew of bills during the 2007 General Assembly session to repeal the industry - either outright or functionally by imposing the 36 percent cap - were eventually killed. Then the industry pulled its own compromise bill that would have established a database and allowed consumers to have three loans at a time.

That angered Williams, who was willing to give the industry a chance to compromise before he would be willing vote to repeal. He thinks that the actions of the pay day loan industry represented by the state’s 791 loan stores have put enough lawmakers over the top to kick the industry out of the state.

“I would almost assure them that they’ve got better than a 75 percent chance of being successful,” Williams said of repeal bills possibly succeeding in 2008.

Not including the 2007 session, payday and car title loan companies have paid their lobbyists at least $374,000 in the past three years. The payments are often hard to find because they come from obscure organizations.

Williams says he doesn’t know how many no fax cash advance contributions that he’s returned so far and worries about missing them because he doesn’t recognize the names.

“To the best of my ability, we’ve returned every check,” he said.

Williams returned $500 in February that Cash Advance donated and two other $500 donations from QC Holdings - rare moves in state politics. Read the rest of this entry »

A Senate committee Wednesday afternoon approved two bills to prevent payday cash advance and car title lenders from charging triple-digit interest rates.

The bills, already approved by the House, were sent for a vote on the Senate floor with minor amendments.

They expand a bill passed by the Legislature last year, though it does not go into effect until July 1. That bill limited payday lenders to charging a one-time fee of $10 per $100 loaned and no more than 36 percent annual interest on loans that are renewed or rolled-over. Payday cash loan lenders are limited to two rollovers. Oregon’s 360 payday lending stores make loans averaging about $300 for two weeks and charge an average 528 percent annual interest.

One of the bills passed by the Senate Commerce Committee, House Bill 2204, would extend the 36 percent cap approved last year to car title lenders, which use a car title rather than an upcoming paycheck as collateral in making small, short-term loans. Car title lenders also charge triple-digit interest rates.

A second bill approved Wednesday, House Bill 2203, would make out-of-state online payday loan and car title lenders subject to the 36 percent cap for loans made in Oregon. It also gives the state authority to create an electronic tracking system that would enable lenders to see if a person seeking money had loans outstanding with other lenders.

Everyone on the five-member committee, chaired by Sen. Floyd Prozanski, D-Eugene, supported the two bills except for Sen. Roger Beyer, R-Molalla, who said the bills restrict consumer choice.

The committee approved an amendment to the car title bill at the request of Rep. Tina Kotek, D-Portland, to prevent car title lenders from circumventing the 36 percent limit through sell-lease deals. Through such agreements, car title lenders buy a car from a borrower, who then leases the car and makes monthly payments to buy it back. The amendment puts such leasing agreements under the 36 percent cap that applies to cash loans, as well.

Bill supporters say the restrictions are necessary to prevent payday and car title lenders from taking advantage of vulnerable and desperate low-income Oregonians. Borrowers often roll over their personal loans repeatedly, paying high interest each time.

Lenders typically charge a total $240 for a $300 loan after three roll overs. Desperate borrowers also sometimes turn to a second lender to pay the first, and a third to pay the second, in a downward spiral of debt.

Payday and car title lenders say the regulations will put them out of business. Most borrowers like their services, they say, and those with poor credit will have nowhere to turn for money if the check cash advance lenders are forced to leave.

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File boxes stuffed with documents containing the personal information of fast payday loan customers were found in a trash bin Tuesday morning.

The trash bin off North Prospect Avenue in Illinois contained documents from Check into Cash, a company that issues payday advance loans. The bin, in an alley adjacent to the shopping center in which Check into Cash is located, contained boxes filled with hundreds of papers, such as consumer loan documents, account registers, collection notes, customer history reports and customer information sheets.

They included Social Security numbers, addresses, photocopies of driver’s licenses and other personal information.

“Wow. That’s something,” said Roberta Hazen, who with her husband, Roger, has taken out no fax payday loans from Check into Cash. “Why did they just dump it? Nowadays you should shred everything before you throw it out. They should have been more cautious.”

A Check into Cash manager who declined to give his name said the boxes were mistakenly thrown away and employees, when alerted to the mistake on Tuesday, promptly removed them from the trash.

The payday loan company takes privacy issues very seriously, and it is not company policy to throw out documents such as those found in the Dumpster, the manager said.

The company has initiated “a very thorough investigation process to find out what happened,” said Lauren Hosie, associate general counsel for Cleveland, Tenn.-based Check into Cash. “We’re taking steps now to remedy what happened,” she said.

The cash loan company has fired the employee responsible for the disposal of the documents. And it is in the process of notifying customers whose information was in the trash.

“This puts their customers at risk for identity theft,” said Paul Stephens, policy analyst with the Privacy Rights Clearinghouse, a California-based consumer advocacy group.

An identity thief could use personal information such as Social Security numbers to pose as someone else and open cell phone accounts, credit cards and other accounts. A state law that took effect in January makes it a crime for people to knowingly facilitate identity theft by throwing out information that the public could gain access to without shredding or destroying the information.

“The law states that you have to prove a person who was lax with these business records had the intent to commit identity theft or some violation of the Illinois Financial Crime Law,” said Champaign Deputy Chief Troy Daniels. The department does not have any plans to open an investigation into this cash advance payday loan matter.

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Payday loan and car title lenders turned out in force early Monday morning to tell a Senate committee why they oppose a bill that would put a 36-percent limit on consumer loans under $50,000.

“Thirty-six percent won’t work,” said Osjha Anderson of Atlanta, a lobbyist representing Georgia-based Northwestern Title Loans, which operates 16 car title stores in Oregon. “We will be gone. We’re not crying wolf. You will shut this industry down.”

People packed a Capitol hearing room and spilled out into the lobby to gather around television monitors during the hourlong public hearing, which began at 7:30 a.m. Many of them sported fluorescent green stickers that said “I Choose Payday Advance.” The Senate Commerce Committee will have a work session on the bill May 30.

House Bill 2871, which was approved by the House, is aimed at closing loopholes that payday and car title lenders might use to continue charging triple-digit interest rates, despite a 36 percent cap passed by the Legislature a year ago. Oregon’s 360 payday lenders on average charge 528 percent annual interest on small, short-term loans, typically for about $300 over two weeks.

Church representatives, food bank operators, consumer advocates, the Oregon Law Center and a lobbyist for the AARP of Oregon, the powerful retiree’s group, testified in support of the fast cash advance bill. Three out of four members of AARP support the bill, said Rick Bennett, the group’s lobbyist.

Jonas Monast, a lobbyist for the Center for Responsible Lending in Durham, N.C., said low-income residents with poor credit would still have access to small loans even if payday loan and car title lenders left the state. After payday lenders left North Carolina, he said, business doubled for traditional consumer lenders. Small loans are still available to people in the 34 states that have capped interest rates, in most cases at 36 percent annual interest, he said.

Most conventional no faxing payday loan lenders in Oregon, however, oppose the cap. It unnecessarily puts conventional lenders at a disadvantage with banks and credit unions that are bound by less restrictive federal regulations, said Paul Cosgrove, a lobbyist for the Oregon Financial Services Assoc. The group represents conventional consumer lenders, which make installment loans of two months or longer, unlike short-term payday loans.

Pam Sessions, who runs a payday advance lending store in Roseburg, said she supports a family of seven, including a disabled husband, and would face a 72 percent reduction in revenue under the 36 percent limit.

Payday loans work just as state lawmakers claim - for about 10 percent of the borrowers.

For the other 90 percent - around 386,598 Virginians in 2006 - the system sucks them in the same way neighborhood loan sharks did back in the day. Today’s borrowers may not get their legs broken, but they sure endure the pain and agony of rapidly escalating debt.

State lawmakers blew a chance in their most recent session to prohibit these loans or at least cap them with acceptable interest rates. As it is, with annual percentage rates reaching 782 percent, these loans are nothing short of usury.

On the campaign trail, lawmakers should be asked to explain their position on payday loans, as this topic will surely face them again come January.

Voters should get ready for half-truths and deceptions. Lawmakers will point to the state’s latest report and say that the marketplace is working, and people are figuring out themselves that online cash loans might not be right for them. As evidence: 12,354 fewer Virginians in 2006 turned to payday loans.

But that avoids the larger truth. The industry still saw the number of loans and amounts increase substantially despite fewer borrowers: 433,537 Virginians made nearly 3.6 million loans worth more than $1.3 billion.

To support these numbers, the industry lured in most of the borrowers so that they had to roll one loan into another - at an average $45 fee per pop. Some 96,831 people were so trapped that they took out more than 13 loans. And 12,486 Virginians that’s 38 percent more than in 2005 - were sued by easy payday loan lenders.

But lawmakers don’t want to see those people. Instead they concentrate on the minority of borrowers who take out just one loan.

They posture that these loans fill a real need when people are short on cash and hit a financial snag just shy of payday. Lawmakers like to pretend this, because they, too, have benefited from the phenomenal growth of the no fax payday advance industry.

Since the General Assembly legalized this brand of loansharking, campaign contributions from lending and consumer credit companies rose from $72,260 in 2002 to $399,776 in 2006, according to the Virginia Public Access Project.

And, unlike the industry’s borrowers, lawmakers don’t ever have to worry about paying the money back.

Except, of course, through their votes.

SOURCE: The Roanoke Times

Lawmakers deadlocked yesterday on whether to extend the state’s authorization for instant payday loans, creating uncertainty about the fate of a bill that would give new protections to borrowers.

Members of a House-Senate conference committee disagreed over proposals to extend, maintain or erase the current “sunset” expiration date of July 1, 2010, that’s in the state law enacted in 2000 to permit lenders to make payday loans.

Now offered through hundreds of businesses across the state, payday cash loans are for amounts between $50 and $500, excluding fees. They work by having a borrower sign a postdated check for an amount that includes both the money borrowed plus fees. At the end of the loan’s two-week period, the lender redeems the check for the face amount.

The industry and its supporters argue that payday loans fill a marketplace need for small loans for individuals facing a cash crunch. Critics say the industry’s practices results in exorbitant costs for borrowers who cannot afford to immediately repay the loans and end up renewing the loan.

Key provisions of the bill (SB1446), other than the sunset, include limiting a borrower to one savings account payday loan at a time, requiring lenders to check a database to verify that an applicant does not have an existing loan, requiring lenders that use the Internet to sign up borrowers to get a state license, and giving borrowers the right to repay a loan over a longer period than the original period.

As approved by the House on May 1, the bill would have erased entirely the 2010 sunset as part of a compromise in which the industry agreed to new restrictions on its lending practices and accepted new requirements to report to state regulators.

House conferees on Monday held out for that position, but the Senate conferees voted 2-1 to keep the current 2010 sunset so lawmakers can get reports from regulators and review the payday advance loan industry’s performance.

“We have very little information on how this industry is conducting its business,” said Sen. Debbie McCune Davis, D-Phoenix.

Including either proposed sunset would kill the cash advance bill, the end product of at least two years of work that saw the industry make a lot of concessions, said Rep. Bill Konopnicki, R-Safford.

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What more evidence do they need?

The state legislators who are so willing to do the bidding of a predatory business should check the latest evidence. The numbers for 2006 are in, and what they reveal is that the amount of misery and destruction wrought by faxless payday advance lenders is growing.

These short-term lenders tempt people in distress to take a step that too often pushes them down a financial rabbit hole, one it’s hard to climb out of. They prey on people in crises, with few resources. They charge fees that are flagrantly usurious: The average rate on a fast payday loan in Virginia last year, expressed as an annual percentage rate, was 368 percent, and they went as high as 782 percent.

No matter how the industry’s lobbyists spin it, these are Tony Soprano numbers.

Add in all these conditions, and you have a situation in which borrowers take on loans they can’t repay. So they roll them over, again and again, until their obligation grows so unsupportable it pushes them over the brink.

Legislators had plenty of chances this year to fix the mess they created when they invited providers of faxless payday loans into Virginia. They had good bills before them, to bring the interest rate down to a level that passes the conscience test, the same 36 percent that applies to other small consumer loans and to payday lending to the military.

While the payday lending industry likes to say it simply offers a solution to short-term needs that people should and do use prudently, the data prove otherwise. The typical Virginian who took out a guaranteed payday loan in 2006 ended up taking out 8.3 loans. Two-thirds of the 433,537 borrowers took out more than one loan.

While there were slightly fewer borrowers last year, they borrowed more money, and more often. That’s dangerous.

And 96,831 Virginians took out at least 13 payday cash advances - a condition that could be described as an addiction. That’s 96,831 pieces of evidence that the General Assembly is letting Virginians down, letting down those who most need protection.

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Phil Betourne works full time at a grocery store in Canton and makes enough money to, in his words, “get by.”

But Betourne is not getting by. He’s falling behind. His unpaid public utility bills are piling up and he is facing foreclosure on his home.

Each month, Betourne signs his paycheck over to payday advance lenders, but the money he makes doesn’t cover the interest owed on short-term, high-interest loans.

When his wife was involved in an automobile accident, and banks would not lend him money, Betourne took out his first loan with a payday lender. One quick cash loan led to two, and two to four and now Betourne has 10 going simultaneously.

“I feel so stupid, but what was I supposed to do? Go out and rob a bank? I did what I thought was necessary,” he said.

Betourne is caught in a vicious cycle of borrowing, repaying and then borrowing again.

His story is emblematic of a growing problem in Ohio as the number of families with these short-term payday loans now exceeds 400,000, feeding an industry that has grown from 107 store fronts in 1996 to 1,586 a decade later with profits exceeding $290 million, according to Policy Matters Ohio, a Cleveland-based progressive research organization.

Critics argue payday lenders pick the pockets of the poor and the financially vulnerable with usurious loan origination fees and exorbitant interest rates of up to 391 percent.

The industry says no fax cash advance lenders are catering to customers who have nowhere else to turn and the annual percentage rates are exaggerated and misleading due to the short-term nature of the transactions.

Lawmakers get involved
The debate is only expected to intensify in the coming months as private discussions have been initiated among the highest levels of government and a broad-based organization of church and advocacy groups has emerged to draw attention to Ohioans caught in a debt trap.

In a recent private meeting with some of the largest mortgage lenders operating in the state, Gov. Ted Strickland asked one of the participants, Larry Litton, why Ohio suffered from some of the highest foreclosure rates in the country?

“He (Litton) did respond that [instant payday loan] lending was out of control,” said Strickland spokesman Keith Dailey who confirmed the story.

“There’s some congruence on that opinion that payday lending is a concern on its face as well as potentially in relation to the foreclosure rates in the state,” Dailey said.

Strickland has asked Ohio Department of Commerce Director Kim Zurz to meet with stakeholders and consumer groups to review the situation. Tom Allio, executive director for the Catholic Commission of Summit County, is chairing the Ohio Coalition for Responsible Lending, a statewide organization of 28 groups.

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