This is a press release courtesy of the office of Oregon Representative Jeff Merkley…

The House of Representatives today approved a bill to impose a 36 percent interest rate cap on state-regulated payday cash loans in Oregon. The bill, HB 2871, provides strong protections for borrowers of the more than 850,000 short-term payday and car title loans issued each year in Oregon.

“In any other area of the law, no legislator would endorse a system that contributes to bankruptcy, divorce and despair. So we shouldn’t do that with consumer loans either,” said House Speaker Jeff Merkley (D-Portland). “We have a responsibility to provide opportunities for individuals and families to thrive. We need to support systems that build wealth, not strip wealth.”

Last year during a special session of the legislature, the House and Senate passed a 36 percent annual interest rate cap on short-term payday loans. Almost immediately, those lenders began to reorganize under the state’s conventional lending laws to avoid that cap. Under that law, a typical 60-day loan subject to the 36 percent cap could be offered without that cap if the lenders simply converted it to term of 180 days or more.

“Colleagues, this comes down to two simple questions,” said Rep. Chris Edwards (D-Eugene). “First, do you believe that there are loopholes in our previously passed legislation that will allow payday lenders to continue to charge exorbitant interest rates? And second, do you believe those loopholes should be closed? My answer to both of those questions is an unequivocal yes.”

Oregon is currently one of only 16 states that do not cap interest rates on consumer loans. Oregon had a 36 percent cap on consumer loans until 1981 when the legislature lifted it. Since then predatory fast payday loan lenders have flourished, charging rates on consumer loans that have at times exceeded 500 percent. That means a person who borrows $200 could end up paying an additional $1000 or more for the privilege of borrowing that money.

“In reality, the point of this legislation is to close the loopholes that would allow predatory payday lenders to skirt any of the previous legislation we have approved,” said Rep. Paul Holvey (D-Eugene), chair of the House Consumer Protection Committee. “This bill is a real win for Oregon consumers, as well as for the responsible consumer lenders who worked with us to craft the legislation.”

Across the country, states that had eliminated caps are reinstating them. Interest rate caps in other states range from 17 percent in Arkansas to 60 percent in , but most states have determined that a 36 percent rate cap on payday advances best guarantees access to credit while keeping usury in check. At the federal level, Congress recently enacted a 36 percent cap on consumer loans to all active duty military members and their families, underscoring the problem nationwide.

“I’m glad to see the legislature take on difficult issues and act on behalf of individual Oregonians and families, not for special interests,” Merkley said. “We all have a responsibility to restore fairness and protection for Oregon’s families – particularly those in difficult financial straits.”

The Oregon Predatory Lending Cap Act passed the House on a vote of 37-21. It proceeds now to the Senate for further consideration.

A judge urged a state Senate panel on Thursday to support legislation to end abuses by some Nevada payday loan companies charging interest rates that are “flat-out unconscionable.”

Felix Salcedo, a retired Reno justice of the peace who’s now a senior judge, added in comments to the Commerce and Labor Committee that he has seen cases of interest rates as high as 7,300 percent.

Salcedo said forms provided by the instant payday loan companies disclose the consequences of late or no payments by borrowers, “but when you’re desperate and need a couple of dollars it makes no difference what’s on that form.”

In pressing for approval of AB478, Salcedo said cases involving payday lenders have clogged courts. He said in most cases borrowers don’t show up to tell their side of the story, and lenders can get default judgments unless a judge spots an egregious case and tosses it.

Assembly Speaker Barbara Buckley, D-Las Vegas, said her AB478 would stop the abuses by closing a fast payday advance loophole in a 2005 law. Buckley describes the effect of the practices as creating “an endless cycle of debt” for borrowers.

Buckley also says almost 40 percent of civil cases in Reno’s justice courts and 34 percent of such cases in Las Vegas’ justice courts are brought by payday lenders.

Also urging approval of the bill was Capt. Scott Ryder, commanding officer of the Fallon Naval Air Station. Ryder said that a dozen payday loan store branches are clustered within a short drive of his base, and that unfair lending can ruin the lives of sailors and soldiers and hurt the country’s military readiness.

Representatives of bad credit cash loan companies identified as making use of the 2005 loophole have denied they’re evading the law. They’re expected to testify before Senate Commerce and Labor at a follow-up hearing next week.

Other companies have endorsed the bill. Buckley said that while some payday loan locations are evading the law, about 500 are obeying it.

A 2005 law change banned abusive collection practices and limited the interest rates and fees charged by payday loans companies. Lenders can charge any rate for an initial period, but if a customer can’t pay it back, the rate must drop.

That law only applied to faxless payday advance lenders that issue short-term loans, defined as one year or less. But some companies simply stretched out the terms of their loans to last more than a year, Buckley said, adding that her bill would limit fees and terms on any loan that charges more than 40 percent interest

Advance America Cash Advance Centers Inc. reported increased revenues for the first quarter of 2007 on Wednesday, representing the payday loan company’s ninth consecutive quarter of revenue growth since it became public in December 2004.

During the first quarter, total revenues increased 10.5 percent to $168.1 million compared to $152.2 million for the same period in 2006.

“We believe the operating results of the first quarter reflect the overall strength of our company and its ongoing commitment to provide shareholders with consistent bottom-line return,” said Ken Compton, president and CEO of Advance America.

The payday cash advance company reported elevated revenues of 7.6 percent in same-center sales over locations that operated during the same period last year, excluding those that closed.

Advance America operated 200 more centers nationwide than it did in 2006, which added $6 million of revenue in the first quarter.

“We feel great about the increase (in revenues),” said John Hill, CFO for Advance America. “It shows tremendous strength in the market and a growing demand for our product.”

The quick cash advance company opened 39 new centers in the first quarter and expanded its operations into a 37th state, Utah. There are 2,871 locations in the U.S.

It was an uneventful first quarter regarding legislation against the industry of pay day loans.

A bill has gone before the U.S. Senate Banking and Finance Committee that would set a limit of five payday loans per customer a year.

Jamie Fulmer, director of investor relations with Advance America, said that his company has said all along that it supports reasonable regulation of the industry that protects the consumer, but it considers the limit of instant cash loan transactions to be arbitrary.

“What about the customer that works off of commission and has to stretch out his loans to survive?” Fulmer said. “This would just push the consumer into other products that are more costly or are unsafe because they have no regulations. There is no limit on the amount of credit cards you can have in your wallet.”

Cheque Centre Group, which offers instant check cashing and personal loans, is looking to double the size of its business following a 40 million pound funding deal with a U.S. counterpart.

The Edinburgh-based firm, which has 105 branches across the UK, is looking to open 100 more by the end of this year after clinching a deal with Check ‘n Go.

The payday loan company, which offers customers instant check cashing as well as payday loans and foreign currency exchange, said it wanted to take on an extra 250 staff members to take its total to more than 600. It also plans to invest in new technology across its network of branches.

Managing director Colin Mitchell, who founded the payday advance loan business in 1996, said:

“Our growth to date has been solid and steady. But now, with significant financial backing from our new parent company, it will be a very exciting period of intensive and rapid expansion.”

He added that Cheque Centre’s high street locations would prove key in a market where banks are moving further away from their traditional local branch networks.

The deal is the only UK venture for Check ‘n Go, which has 1,600 fast cash loan branches in the U.S.

Payday advance lending is a national problem.

But payday advance lending is not a Georgia problem.

In dozens of other states, where payday lending is legal, powerful payday cash loan lobbyists have convinced lawmakers to exempt their industry from existing state usury limits. Payday lenders in these states charge over ten times the interest that most banks and credit card companies are permitted to charge and they repeatedly roll-over loans, generating new fee income without extending new credit.

The fee income providers of bad credit payday loans make from rolling-over loans is the lifeblood of their industry. Loan fees cost borrowers in other states $4.2 billion annually. But not in Georgia.

For two years, Georgia consumers have been spared the crippling cost of paying triple-digit interest on payday loans. Georgia has saved its families over $350 million in hard-earned income since banning payday lenders in 2004. Most of that money would have otherwise gone into the pockets of out-of-state companies. Instead, working families have used it to pay for groceries, school supplies and heating costs.

Faxless cash advance lenders prey on our neediest citizens. While payday loans are marketed for meeting emergency needs, only 1 in 100 loans are made to borrowers who use the product once in a year. Ninety percent of loans go to borrowers who have five or more payday loans per year, and nearly two-thirds of total payday revenues are extracted from borrowers who take out 12 loans or more per year.

These types of numbers led researchers at the University of North Carolina to conclude that “the financial success of payday lenders depends on their ability to convert occasional users into chronic borrowers.”

In this report we find that:

* Georgia families save $147 million a year because the state’s usury rate cap prevents predatory pay day loan lending.
* The existing small loan market in Georgia thrives - with consumer finance companies making $473 million in small loans each year.
* Allowing no fax payday loan lending at triple-digit interest rates will only cause families to become trapped in a cycle of debt.

WMD Holdings Group, Inc. announced its commitment to growth plans for its newly acquired online payday advance lender, Payday Advance Plus, Inc. over the next twelve months.

To fulfill net profits of $1 million from its online payday loan division over the next twelve months, the company has engaged in marketing strategies to enhance the quality of customers that can fulfill the underwriting criteria currently in place. The company is engaging multiple lead generation companies with national reach, to provide qualified online leads.

Furthermore, the company has developed a customer enhancement program to promote loyalty and goodwill amongst its clients. The program includes a referral marketing incentive to existing clients, as well as a financial education component, which will educate clients on fast cash advance products available.

On a broader perspective, an affiliate marketing awareness campaign is underway to promote cross selling across varied industries online. The company has not restricted efforts to the online world either; just two months ago the company enhanced its market reach through no faxing payday loan lending licensing approval, to operate in its California retail financial centers.

Additional licenses are being sought in Nevada and Florida to promote the payday service to the company’s soon-to-be-announced franchise division. Additional states will follow on a staged basis over the next twelve months. The net profits from the brick-and-mortar locations are separate from estimates in the online payday loans‘ division above.

“To compete in the $40 billion per year payday lending business, our marketing efforts are focused on attracting customers that are traditionally alienated by conventional banks. Most clients are hard working Middle America, when at times of economic hardship have no where to turn. Our industry fulfills their emergency needs,” said Mr. Pillay, WMD Holdings’ CEO.

He further added, “The [personal cash loan] leaders in the industry such as Advance America, (AEA), Cash America International (CSH), EZPW and First Cash Financial Services (FCFS) have shown double-digit growth over the past five years, reflecting the immense need being fulfilled in the market.”

The Arizona House has approved legislation to give new protections to bad credit payday loan borrowers.

At the same time, the bill helps the faxless payday advance industry by lifting the scheduled expiration of the state law authorizing the short-term loans.

The bill now goes to the state Senate.

The bill would erase the July 2010 automatic repeal included in the 2000 law that authorized payday loans.

Additional key provisions include limiting a borrower to one payday loan at a time and requiring lenders to check a database to verify that an applicant doesn’t have an existing instant cash loan.

Here is a Letter to the Editor from The Washington Post. Its focus? The need for cash advances.

Linda Singer, the District’s attorney general, needs a quick lesson in economics as evidenced by her plan to help poor people [”Targeting Businesses Targeting the Poor,” Metro, April 26].

The high interest rates of no fax payday loans, subprime mortgages, tax-refund-anticipation loans and international money wires are not arbitrarily set to shake money out of the pockets of the poor. Rather, high rates reflect the fact that the loans are both short term and risky. Businesses need to charge these rates because of the high level of risk associated with the loans.

Limiting the interest rates that can be charged would only reduce the availability of such cash loans to poor people, the vast majority of whom, by the way, repay their loans on time.

But of course, as the attorney general’s office would have you believe, poor people don’t know what’s best for them.

Faxless payday loan companies will now have to inform customers how much it costs to borrow cash under new rules announced by the Ontario government.

Companies will have to hang a prominent poster in their office, outlining how much it costs to borrow $100. Customers will also receive standardized information about their cash advance and must be given their cash immediately upon signing an agreement.

Government Services Minister Gerry Phillips says the new regulations will better protect quick payday advance loan customers and ensure they are treated fairly.

The province has also written a discussion paper on payday loans and is asking the public whether greater protection is needed.

The federal government recently passed legislation giving provinces the power to regulate the payday cash loan industry.

A payday advance loan lender who had two offices in White County has lost an appeal of a state ruling that he violated the law.

Dennis Bailey, who operated 13 offices in Arkansas including Searcy Fast Cash, 3205 E. Race, and Beebe Fast Cash, lost his appeal in Pulaski County Circuit Court. The Arkansas State Board of Collection Agencies had previously ruled Bailey had engaged in the check cashing business in violation of the Arkansas Check-Cashers Act, and Judge Marion Humphrey agreed on April 13.

In June, the board ordered Bailey to cease all no fax cash advance operations immediately, fining him $1,317,450. Bailey was fined $562,000, which was $1,000 for each check cashing transaction; $725,250, which was $250 for each deferred presentation transaction; $20,200 for the illegal operation of his Pine Bluff store; and $10,000 in attorney’s fees.

One of Bailey’s major contentions at the appeal hearing was there was not sworn testimony taken at the hearing and that the board’s findings of fact and conclusions of law were based solely on the argument of Peggy Matson, the board’s executive director.

At the board’s hearing last year, Matson presented a five-inch stack of documents as evidence, but did not read them to the board. Humphrey ruled that method of presenting evidence at the board’s hearing was legal.

The board ruled Searcy Fast Cash had been giving out instant payday loans without a license. The businesses’ parent company is BMB Finance Company of West Plains, Mo.

Bailey’s company also operated businesses in Cabot, Little Rock, Bryant, Corning, Harrison, Mountain Home, Sheridan, Walnut Ridge, Fordyce, Camden, Hot Springs, Newport, Pine Bluff and Magnolia.

“All of his stores are closed, and now we’re asking the court to give us a judgment in that case so we can execute against all of his assets,” Matson said. “He will be personally liable.”

Bailey is now attempting to transfer his assets, but they have already been tracked by the state.

“We have another hearing coming up in Faulkner County that is almost the same as the Bailey case,” Matson said.

Every easy payday loan store is audited twice a year by the board. Items which are required include: Posting their license on the wall; showing customers the actual adjusted percentage rate on their particular transactions; holding checks only until their the due date and not beyond; posting fees on the wall; allowing no customer more than one transaction per location; exceeding legal loan limit (checks cannot be more than $400, and the highest amount of a loan is $350).

Matson said Bailey was ordered to refund any fees for cashing checks and making loans to customers, and said customers did not have to repay outstanding loans.

“They owe him no money,” Matson said. “They do not have to repay these loans.”

The equivalent annual percentage rate for loans offered at the Searcy office, which closed last year, was 521 percent.

Bailey had also been found guilty of selling tobacco without a permit by the Arkansas Tobacco Control Board and had violated regulations of the Arkansas Beverage Control.