Arkansans Lose $68 million Every Year to Payday Lenders
Low-income Arkansans lose more than $68 million annually to payday lenders thanks to loopholes in the state’s payday lending law. The Arkansans Against Abusive Payday Lending collated this figure. In its report, the group stated that the 1999 law, which regulates the industry, is full of gaps that allow payday loan operators to prey on the poor. And the saddest thing is that the state agency, which is supposed to oversee payday loan operations, is lax in the enforcement of the few rules that exist.
So poor Arkansans who are already finding it difficult to make ends meet, are forced to pay the price. According to experts, the biggest problem is caused by the 1999 Check Cashers Act, which allows the payday loan industry to grow in Arkansas. This industry has also managed to circumvent the state constitution, which limits interest rates on consumer loans to 17 percent annually. And what does the Arkansas State Board of Collection Agencies, which regulates the industry, have to say about these accusations? Nothing much, except that they are ’simply not true’!
Consumer activists blame the 1999 Check Cashers Act for allowing the payday loan industry to expand in Arkansas and circumvent the state constitution, which limits interest rates on consumer loans to 17 percent annually. There have been other studies in Arkansas that show that most payday loan stores that operate in Arkansas are located near military bases and largely target minorities, the elderly and the low-income.
The worst part is that seventy payday lenders licensed by the state are not regulated due to the state board’s "soft" interpretation of the 1999 act and another 139 payday lenders that operate in the state offer usurious loans are not regulated by five-person regulatory board. The saddest part is that these facts have been around for quite some time now and the lawmakers don’t think it is important to take any action.