The faxless payday loan lending industry says it will be kinder and gentler to consumers.

They say they’ll spend $10 million on a campaign to warn people to borrow responsibly.

Don’t buy it. If you get caught watching the industry’s fist full of $10 million, you’ll miss what its other hand — loaded with a chunk of the other hundreds of millions these lenders are snatching from desperate, working-class consumers — is doing.

Payday cash advance lenders are spending lots of their immoral gain currying favor with legislatures and statewide elected officials, including those in the Palmetto State, as well as various community, civic and civil rights organizations.

Payday lenders have been throwing money around quite liberally over the past several years as consumer advocates and others have asked lawmakers — including our state Legislature — to rein in the industry that charges triple-digit interest rates on short-term bad credit cash loans that trap borrowers in long-term cycles of debt. S.C. lawmakers are considering several proposals, including two that would outlaw the practice.

Banning it would be the best answer, but lawmakers don’t seem willing to do that. The only compromise should be in favor of a bill that would cut the usurious 391 percent annualized rate lenders can now charge to 36 percent.

Consider lenders’ contributions in South Carolina. Over the past four years, payday and title lenders have contributed $157,032 to statewide candidates and lawmakers, according to the National Institute on Money in State Politics, a nonpartisan group that tracks contributions in all 50 states. (Search its database online at www.followthemoney.org.)

About 80 percent of those contributions appear to have come from easy payday loan lenders.

The top donor is South Carolina’s Advance America. The nation’s largest payday lender contributed $39,000 over the four-year period. Add in contributions by Billy Webster, one of its founders, and that amount rises to $49,882. The next-closest donor over the four-year period is Check Into Cash, which contributed $12,300 during that time.

The lenders spread money around to statewide officials and lawmakers in both major parties, but five people received well over half of the donations.

Between 2003 and 2006:

• Attorney General Henry McMaster received $33,000
• Lt. Gov. Andre Bauer got $23,250
• Sen. Tommy Moore got $25,500 during his run for governor
• former Treasurer Grady Patterson received $10,000
• Sen. Greg Ryberg, who ran unsuccessfully for treasurer, received $7,000.

These no fax cash loan lenders aren’t simply trying to help the best candidates win. They’re fighting to keep their gravy train rolling in South Carolina, where they can still rip borrowers off with little regulation. In South Carolina, they collect $186 million a year in fees; the figure is $4.2 billion nationwide.

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The issues of payday advances in Georgia is far from dead, as the House remains split on the issue.

“Let’s limit government, let’s accept that people want to exercise their own personal responsibility - I know that’s a shocking concept - and let’s support the people of Georgia and promote their own freedom and interests,” said Rep. Earl Ehrhart, the chairman of the powerful Rules Committee, in a discussion about returning Georgia payday loans to the state.

Opponents countered that the lenders were outlawed because they trapped the neediest Georgians into an endless cycle of loans, and that repealing the ban will allow crooked companies to return.

“No matter how many revisions, no matter how many attempts to compromise, it still is a bad bill,” said state Rep. Virgil Fludd, D-Fayetteville. “It’s bad public policy to submit to take advantage of Georgia consumers who are in financial need. It’s bad public policy to lock consumers into a long cycle of debt.”

The proposal would limit customers to borrowing the equivalent of 25 percent of their monthly income and a five-day “cool off” period between fast cash loans that bans lenders from rolling them over from month-to-month. It also calls for a $1,000 fine per violation.

The payday industry has been clamoring to return to Georgia since the ban was enacted in 2004, saying there’s a need for their services from Georgians with credit so poor they can’t turn to banks for emergency funds. The lenders and their supporters argue that the measure is still one of the stiffest in the nation.

“This bill is about a free and open market and transparency,” said state Rep. Steve “Thunder” Tumlin, the Marietta Republican who sponsored the bill. “It does not turn back the hand of time. It brings forth new regulators and new regulations.”

Some also compared the quick payday loan lending fees to $25 fines that banks charge customers who overdraw from their checking accounts. “This happens every single day in the state,” said state Rep. Terry Barnard, R-Glennville, and a banker. “Get real. Vote for the bill.”

Critics, meanwhile, warned that Georgia is relaxing its payday lending restrictions as the federal government and other states are cracking down on the industry.

Last year, Congress imposed a 36 percent annual percentage rate cap on online payday loans to military service members after reports showed thousands of troops in debt to payday lenders.

At least 12 states prohibit triple-digit rates on payday loans, a cap that effectively bans payday lending, according to Jean Ann Fox with the Consumer Federation of America. Dozens of other states are also considering proposals to ban payday lenders.

“For once, we’ve done something very good in this state and other states are looking at us,” said state Rep. Carolyn Hugley, D-Columbus. “It’s time for us to stay the course and not look back.”

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Maybe you’d like a new way to take out a small payday cash loan without resorting to a shady lender.

The House has given tentative approval to personal loans up to $1,500 dollars, but instead of interest, you’d pay an upfront fee and a monthly handling charge.

Scottsdale Republican Michelle Reagan is the sponsor.

“It is a true free-market approach to reforming [pay day loan] lending,” Reagan said. “You keep hearing a lot of people in here say they want to reform the pay day loan process. Well, how can you when there’s no other options out there?”

Payday loans can exceed 300 percent interest. This type of loan tops out at around 130 percent. But Democrats say it’s just another way to exploit poor people with sub-par credit.

“We’re going through this whole pay day lending debate right now where we have these pay day lending markets all over our neighborhoods and now we want another type of lending institution to come in that provides similar types of loans,” said Democrat Steve Gallardo.

Members of the Missouri General Assembly have introduced bills to further regulate the growing guaranteed payday loan industry in the state, but controversy still surrounds the movement to standardize these businesses.

Missouri is home to 1,644 payday loan stores that charge an average annual percentage rate (APR) of 422 percent for short-term cash loans, according to a March 11 Columbia Daily Tribune article. New legislation would cap this annual rate at 36 percent, a move that would essentially eliminate payday loans in the state, according to the article.

Tony Garrett, manager of the Kirksville Advance America Cash Advance, said his company serves 150 to 200 customers at any given time. He said that despite the current payday loan debate, he thinks his business addresses a consumer need.

“I think we’re here for a reason, and I think that some people abuse that privilege,” Garrett said. “[But] there are some people that know the system and use it to the best of their abilities.”

He said his customers use bad credit payday loans to pay for unexpected expenses like car repairs, travel and past-due bills.

“Sometimes you need money and don’t have the cash for it right then, and if you go [to a bank], it could take you two to three days to get a loan,” Garrett said. “With us, it’s a same-day process.”

“I wouldn’t have been able to give my son a Christmas”

An Advance America Cash Advance customer who asked to remain anonymous said she used payday loans to make ends meet while raising her 3-year-old son. A single mother, employee and full-time student at Moberly Area Community College, she said she turned to cash advance online loans to afford car payments,gas, rent and groceries.

“In order to stay afloat, I had to [take out a payday loan],” she said. “I didn’t want to, but I had to.”

She said the high interest on payday loans is problematic, but the loans allowed her to pay for things she couldn’t afford otherwise.

“I’m glad they’re there or else I wouldn’t have been able to give my son a Christmas,” she said. “I don’t think they’d actually have these places if people didn’t need help.”

Steve Smith, professor of economics and business law, said the number of payday loan companies indicates a demand for their services. But he said opposition to quick payday advance operations arises because of high interest rates and the idea that the industry is “making a killing.”

“Frankly, also I think another reason you get opposition to payday loan places is because it’s good theater for a politician,” Smith said. “… There’s nothing better for a politician than to be able to pose - this is a somewhat cynical view, perhaps �- but to be able to pose as the protector of the little guy against big bad business.”

Smith said that although new legislation might help many individuals, it might also prevent some from getting the fast cash loan they need.

“You’re protecting them by basically taking an option away from them, and I don’t see why that is so great,” he said. “Another thing that can happen is if people are really desperate for money, they’ll get a loan anyway even if you pass those caps, but they’ll get it from an illegal lender.”

Click here to read the rest of this Truman State Index article.

A Senate subcommittee chair today criticized the absence of the chief of the agency that oversees payday loans from attending meetings considering limits on the two-week, high-interest loans.

S.C. Sen. John Hawkins (pictured), R-Spartanburg, chair of the Senate Judiciary subcommittee that considers criminal law, extended “a most cordial invitation” to Dean Bratton, the commissioner of the S.C. State Board of Financial Institutions in charge of consumer finance, to attend the next meeting 9 a.m. March 29.

Bratton sent a lower-ranking staffer to today’s meeting, and the staffer said he is no longer involved with fast payday advance lending regulation.

“Why hasn’t Mr. Bratton been here at all these meetings?,” asked Hawkins, the subcommittee’s chair. “He shouldn’t be sending someone not prepared to help us with this issue.”

Bratton said he had a previous commitment that prevented him from attending today’s meeting, and he said he plans to attend next week’s meeting. He said he attended the committee’s first meeting March 1.

“It’s not that we’re not interested; we’re very much so,” Bratton said.

The panel is considering a bill introduced by Sen. Robert Ford, D-Charleston, that would make bad credit payday loan lending a crime. Hawkins has said he wasn’t likely to support a ban, but he was concerned about practices that can trap borrowers in a cycle of debt with multiple loans. Current law now allows lenders to make loans for as much as $600 at a time, charging $90 in finance charges, the equivalent of a 390 percent annual percentage rate on a two-week loan.

Hawkins proposed provisions Thursday modeled after a Florida law. It would require lenders to:

• Make no more than one $600 loan at a time to a customer
• Wait at least 24 hours before making another personal cash loan to that customer
• Consider the ability of borrowers to repay and enter each transaction in a database that would be monitored by state regulators to ensure the law was being followed.

Rep. Alan Clemmons, R-Horry, has introduced a bill in the House to limit cash advances. It is awaiting a second hearing.

The following is a paraphased editorial from The Arizona Daily Star …

Arizona lawmakers should look at what has happened in other states before compromising with payday lenders. What they’ll find is that reform measures elsewhere have failed to help vulnerable consumers escape the cycle of debt that is often exacerbated by taking out a payday loan.

A measure introduced this week by state Rep. Marian McClure, R-Tucson, promises to give consumers more protection and make short-term, high-interest instant payday loans more affordable. But in return, the legislation, SB 1446, would lift a provision from existing law that would effectively put payday lenders out of business in 2010.

If the experiences of other states are any guide, however, the reform measures in McClure’s bill won’t make much of a difference. Worse yet, getting rid of the expiration, or sunset, provision in the law will ensure that this form of predatory lending remains in the state forever.

Among the reforms in SB 1446 is a prohibition on renewing, or rolling over, faxless payday loans. A borrower who is unable to pay off a loan on time wouldn’t be able to take out a new loan, which can be done up to three times under existing law.

To help consumers, the bill calls for a three-month repayment plan. A borrower could at any point before the loan’s due date ask to be put into a payment plan. He or she would then have 90 days to pay back the loan without incurring new fees.

Borrowers who enter payment plans would have their names added to a state database to keep them from taking out another cash advance loan to pay off the first one — a practice common among financially strapped payday clients.

Another provision of the McClure bill would make borrowers sign a statement vowing that they don’t already have another payday loan outstanding. The trouble with the measure is that similar laws in Florida, Oklahoma and Washington state have not worked.

Oklahoma and Washington, for example, each offer payment plans after a certain amount of loan renewals, according to figures provided by the Southwest Center for Economic Integrity, a Tucson organization that fights predatory lending practices.

In Oklahoma and Washington, fewer than 1 percent of no fax payday advance borrowers take advantage of the payment plans.

Florida, Oklahoma and Washington also each prohibit rollovers, yet about 90 percent of payday loans in all three states go to borrowers who conduct five or more payday transactions a year, according to the Southwest Center for Economic Integrity.

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The California Reinvestment Coalition surveyed 253 faxless payday advance lending establishments across the state and found that consumers are being misled or not given enough information about payday loans.

Entitled Payday Lenders Evade Regulations, the poll exposes that several payday lending establishments that are not in compliance with state laws.

CRC’s surveys reveal that relaxed laws and a lack of regulation are allowing California payday loan lenders to gouge consumers who don’t fully understand what they are getting into. Thus, it is no surprise that Californians spent more than $757 million in Payday Loan fees in 2004.

“After surveying 253 payday lending establishments in California, our results reveal that consumers are being misled about the interest rates and fees associated with payday loans, and they are not being informed about their rights and protections according to the law,” said CRC Payday Campaign Organizer Charisse Ma Lebron.

Several of CRC’s 247 nonprofit and public agency members surveyed payday lending establishments in San Francisco, Sacramento, Los Angeles, San Diego, Oakland, Oceanside, National City and the San Fernando Valley. CRC members and allies posed as potential first-time customers and recorded exactly what they were told by instant cash loan clerks and noted what was posted in the establishment.

What they found was alarming:

- 32 percent of the payday outlets did not post a complete Schedule of Fees, which is necessary in order for consumers to know how much the personal loan will cost.
- 70 percent of the payday lending representatives did not know what the APR of the loan was or provided an inaccurate APR associated with a two-week $255 loan.

- According to the tellers who knew the interest rates of their payday product, the lenders’ interest rates for a payday loan varied from the average 460% to as high as 2147%.

- 68 percent of payday lenders did not allow their customers to extend the term of the cash advance payday loan from two weeks to one month in order for the customer to more affordably pay back the loan.

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In a rebuke to Republican legislative leaders, the state House defeated a measure late last night that would have allowed the return of Georgia payday loans three years after the region became the only state to specifically outlaw the high-interest short-term loans.

House lawmakers deadlocked the vote at 84-84, failing to reach the majority needed to erase the ban. The bill would have replaced it with a new system of two-week payday cash advances prohibited from accruing interest, but would allow operators to charge customers a fee of 15 dollars for every 100 dollars borrowed.

The fight isn’t over yet, as the measure could return next week.

Supporters, including a host of influential Republican leaders, say the ban went too far and forced out reputable companies that require customers to prove they hold a job and bank account. In its place, they say, is a void that’s been filled by illegal lenders or murky online payday loan sites.

We’ll have more on this story as it breaks.

Here’s what the Tuscon Citizen has to say about the new bill regulating payday loans in the state:

Like Frankenstein rising from his slab, faux legislation on quick cash advance lending has risen again, this time as SB 1446.

But a law tailored by the very industry it would “regulate” won’t do Arizonans any good - unless they’re in the payday lending business.

This bill does exactly what these lenders want: It eliminates the sunset provision in the law that enabled the providing of payday advance loans in Arizona.

Who knew, back in 2000, the repercussions that would result when the Legislature exempted payday lenders from the state’s usury law? Well, legislators should have known. But at least that law included a provision to sunset in 2010.

The sun wouldn’t set, however, under this new “striker” bill by Sen. Chuck Gray, R-Mesa. Under the guise of compromise, cash loan lenders would continue preying on the poor as they pretend to bow to reforms.

Tucson Republican Rep. Marian McClure says the bill cuts annual percentage rates to about 55 percent from 400 percent.

Not so. Rather than charging $17.65 per $100 borrowed, the lenders would charge $15 per $100. On a two-week loan, that still amounts to 390 percent APR. SB 1446 also supposedly would eliminate rollover loans and cap the number of outstanding personal loans.

But it won’t, because the law puts the onus on the consumer to divulge other loans. A person strapped for cash simply won’t. And a new database wouldn’t track all payday loans; it would apply only to those people who enter a repayment plan.

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California Check Cashing Stores and Golden Gate Capital, a San Francisco-based private equity firm with $3.4 billion under management, today announced the acquisition of Fast Cash Stores, Inc.

Fast Cash, based in San Jose, CA, provides payday advance, check cashing, and other financial services to its customers.

The combined company will have more than 90 retail locations across northern California. Terms of the deal were not disclosed.

“The transaction creates the leading provider of check cashing and [no faxing payday loan] services in Northern California”, said Richard Lake, CEO of California Check Cashing Stores. “Customers should expect the same high levels of customer service and will benefit from enhanced offerings with even greater geographic coverage.”

“Both California Check Cashing Stores and Fast Cash have a strong history of great customer service,” said James Ball, President of Fast Cash, Inc. “The combination allows us to continue providing our customers with great service with even more convenient locations.”

“We are excited to continue to support California Check Cashing Stores as it further executes on its growth initiatives, both organic and through acquisition,” said Jesse Rogers, Managing Director at Golden Gate Capital.

California Check Cashing Stores, LLC is a leading retailer of alternative financial services including check cashing, short-term loans, wire transfers and bill payment services. The Company focuses on serving consumers seeking alternatives to traditional banking relationships in order to gain convenient and immediate access to cash.