Payday Loan Lowdown

Finally, somebody has the heart to help our hapless armed forces. No, nobody’s ventured to go out to Iraq or Afghanistan… A group of 70 people have planned to help the military wage war with an enemy closer home — payday loans. Kansascity.com reports:

An impressive alliance of 70 consumer and veterans groups is supporting a congressional amendment to protect military personnel and their families from potential predatory loans. The groups say the proposal by Sen. Jim Talent, a Missouri Republican, and Sen. Bill Nelson, a Florida Democrat, will guard military personnel against 300 percent payday loans that can ensnare their families in webs of debt and create financial stress and reduce their military readiness

Read more:Payday loan rate cap aims to help service members

Leaders of Keizer city, Oregon have decided that a state law restricting payday loans is enough for their city and have decided against further discussion of a separate law with an earlier time frame. Oregon’s payday-loan law will take effect in July. It sets a $10 loan fee for each $100 borrowed, caps interest at 36 percent annually and requires a minimum loan duration of 31 days. Statesmanjournal.com reports:

Councilors had two main concerns, Keizer Mayor Lore Christopher said. "There were suggestions that this could become a campaign issue," she said. "And there just wasn’t any support for it." The other issue is the use of resources toward something that already has been decided.

Read more:Keizer will await 2007 payday-loan law

Fast Cash loan service, a payday loan company with offices in Arcadia and Eagle Rock faces allegations of deceptive business practices and fraud. The complaint against the firm was filed by the California Attorney General’s Office recently. The complaint seeks nearly $2 million in civil penalties of which, $350,000 will be in restitution to former customers. The firm though is now defunct. According to the complaint, Fast Cash is alleged to have charged excessive and illegal penalties to customers who wrote bad checks to secure payday loans.

The firm threatened lawsuits, and tried to squeeze settlements. When none of these threats worked, the firm even deceived the court to win improper judgments against over 400 customers. California law allows a lender to collect a penalty when a customer bounces a check used to secure a payday loan. The penalty is equal to the amount of the check and has a $15 handling fee. Pasadenastarnews.com reports:

The complaint says Fast Cash demanded customers pay four times the amount of the bad check. Any customer who refused to pay was taken to small claims court. According to AG spokesman Aaron Carruthers, since a majority of the borrowers did not attend the hearings, and Fast Cash did not divulge the nature of its loans, the court generally ordered that the penalty be paid.

Read more: Payday loan firm faces charges

Things seem to be getting brighter and brighter on the payday loan front — sorry, it is only getting brighter for consumers, not the payday firms. New Mexico Gov. Bill Richardson and Attorney General Patricia Madrid recently filed new payday lending regulations that are supposed to better protect consumers against predatory lending practices. Charlotte.bizjournals.com reports:

The regulations would require all payday loans be interest free and charges would be capped at $15.50 per $100 loan. It also would allow consumers to enter into a longer payment plan, a minimum of 130 days, after a second renewal of the loan. Consumers would be allowed to borrow only amounts not greater than 25 percent of their gross monthly incomes.

Read more: State officials file new payday lending regulations

I know this bit of news is a bit old, but hey who cares? Whenever a payday loan center shuts down, it’s time for some partying. In this instance, it is a Mountain Home check cashing business that has closed, partially complying with an administrative order issued last month. Baxterbulletin.com reports:

Investigators with the Arkansas State Board of Collection Agencies found the 14 stores operated by Dennis Bailey of Fordyce, including Fast Cash of Mountain Home, have closed, said Peggy Matson, executive director of the State Board of Collection Agencies Check-Cashers Division. A sign on the door of Fast Cash of Mountain Home on State Highway 62 East directs customers to call BMB Finance Company, a business Bailey owns in West Plains, Mo.

Read more: Payday loan company shuts doors in MH

While payday loans are bad in general, they are especially disastrous in the case of lower-income families. A recent report by the Brookings Institution concludes that low-income families generally pay more than upper-income families for the same consumer item or service, largely because they rely on alternative providers like check-cashers, pawnshops and rent-to-own stores. Buffalonews.com reports:

The report said reducing these extra costs of living for lower-income families by just 1 percent would give them more than $6.5 billion they could use to buy a home, save for retirement or pay for education and health care for their children.

Read more: Report urges curbing abuses against poor

Did you know that in last five years, relief societies have paid over $2.5 mn to help troops out of debt? One wonders why our famed armed force is so weak and unable to fight predatory payday lenders. Estripes.com reports:

Though paycheck-lending agencies aren’t springing up around military bases in Japan and South Korea like they are stateside, U.S. servicemembers needing quick cash or lower monthly credit debt payments still get caught in the “downward spiral” of predatory practices, Finch said. In Japan, U.S. servicemembers find them online.

Read more: Payday loans aren’t the answer to financial woes

Advance America proves that payday lenders are not ones to give up without a good fight. The payday lender recently resumed operations in Pennsylvania, three months after state and federal officials pressured it to stop a loan program that critics said charged exorbitant interest rates. Chron.com reports:

The Spartanburg, S.C.-based company has designed a new type of short-term loan that it says is legal under Pennsylvania law. Its new "Choice" line of credit allows borrowers up to $500 a month for a $150 participation fee. Customers must also pay interest, finance charges and minimum monthly payments of $20.

Read more: Advance America Resumes Pa. Operations

It’s payday loan payback time in Canada as the Conservative government is preparing to introduce legislation that would finally rein in Canada’s mushrooming payday loan industry, delegating power to the provinces to regulate the business and protect consumers. And guess what, the payday loan industry itself is lobbying to be regulated in order to eliminate bad apples while allowing reasonable short-term rates. Canada.com reports:

The bill would address concerns that payday lenders are charging consumers exorbitant rates of interest on small loans - sometimes in the tens of thousands of per cent interest.

Read more:Federal government to introduce legislation on hot payday loan issue

The payday lending industry seems to have taken utmost advantage of Virginia’s business-friendly climate. Now, opponents of payday lending have begun to raise their voice against this type of loan and are demanding an outright ban. Roanoke.com reports:

Yet of a slew of bills introduced this year to curb predatory lending practices — to prohibit rollover loans, limit the number a person could take out in a year and extend the pay-back time — none made it out of the House of Delegates.

Read more: Payday loan reform is past due