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Payday Loans
March 13, 2006
Payday cash loan - from North Carolina to South Carolina
Payday cash loans in North Carolina has come under scrutiny in the past, but now the laws regulating payday cash loan industry became so tough, many more are moving just south - to South Carolina, where payday loan regulations are not too stringent.
Payday cash loan companies from Georgia also moving to South Carolina. Now there are 1,100 stores there, 6 time as many as McDonald's. South Carolina allows annualized interest rate up to 391 percent and every payday cash loan company takes full advantage of this, lending total 4.4 million loans for $150 million in fees - and that in the 12 months ending August 2004. Should McDonald's owners open a little payday cash loan stand inside?
Posted at 12:18 PM
March 03, 2006
Republic Bank will stop payday lending
Republic Bank decided to seize its payday loan activity, at the FDIC persuasion. It became the second significant player following First Bank of Delaware, to end payday loan lending.
Posted at 09:52 AM
February 23, 2006
Payday loans lenders are forced to stop making loans
Federal Deposit Insurance Corporation (FDIC) have made several payday loan lenders stop making loans, unless they can meet FDIC's guidelines.
Among payday loan lenders that can be affected by this ruling are ACE Cash Express, Advance America, Cash Advance Centers, Dollar Financial Corp. and First Bank of Delaware.
First Bank of Delaware (FBD) said it ceases making payday loans, at least temporarily. This decision forces ACE Cash Express to stop its payday loan business in Texas within 30 days, as FBD uses ACE to offer payday loan in Texas.
Posted at 11:13 AM
January 18, 2006
Arkansas payday loans come under heavy fire
Arkansas payday loan industry is severely criticized by non-profit watchdog group, Arkansas Advocated For Children & Families. The group published its research paper, Payday Lenders in Arkansas describing how payday loan stores partner with out-of-state banks to evade state law under which the payday loans stores must:
- obtain and maintain a bond of $50,000 to protect consumers
- maintain $20,000 in operating capital
- limit the maximum loan to no more than $400
- require no more then one check per customer be held at a time
- require that checks be dated on the day of the loan and not postdated
- limit the maximum fee for a payday loan at $10 per $100 borrowed plus $10
According to the research, partnership with out-of-state banks effectively make these provisions void and allows payday loan stores charge out-of-state fees. The interest charged often exceeds 400 percent.
This is the first attack on thriving Arkansas payday loan business where many low income working families are trapped in vicious debt cycle. The group just issued recommendations on Alternatives To High Interest Payday Loans.
Posted at 02:52 PM
January 16, 2006
Oregon will likely cap payday loans
Oregon payday loan bonanza may start cooling off and the local thriving payday loan industry that has enjoyed smashing fees that sometimes amount to over 500 percent in yearly interest, isn't crazy about it. But so aren't the lawmakers who receive too many complains to ignore, from the consumers who were unfortunate enough to get themselves in what seems to be a never-ending cycle of payday loan borrowing and paying back. And paying huge fees along the way.
Oregon payday loan business has grow very rapidly. There were only 184 licensed short-term loan businesses in entire state in 2001, making $107 million in loans which is about $581,000 per store on average. In 2004, there were 323 businesses, making $245 million in loans, about 758,000 per store on average.
Posted at 11:42 AM
December 23, 2005
H&R to settle payday loan lawsuits
Who would think that H&R has been in to payday loans, but apparently it did it as early as 1989. They call it something else, "refund anticipation loans", but it is all the same. According to Consumer Affairs, H&R has agreed to settle with 8 million customers from 26 states and DC.
There is another case pending in Chicago that isn't a part of the settlement. The case alleges that H&R Block and its partner, Britain based HSBC Financial Services, were involved in "racketeering charges in relation to their pushing of payday loans on customers."
My, my, racketeering in Chicago..., sounds almost like the Fed will apply RICO statute. Don't think either H&R or HSBC are going to like it.
Posted at 12:23 PM
December 22, 2005
Alberta payday loan consumers will get some money back
This could be a precedent setting case for Canadian payday loan industry. Owners of payday loan company, Instaloans, that is no longer in business, must pay close to $6 million to settle with the customers who claim they were ripped off.
We wrote back in September, that Canadian federal government let provinces regulate payday loan business to a much higher extent. This settlement could be the first with more to come.
Posted at 03:00 PM
December 12, 2005
South Dakota is the perfect place for payday loan lenders
South Dakota payday loan stores are dotting the landscape in alarmingly high numbers for those, who believe that payday loans are simply ripping consumers off. But for now, payday loan industry here has little to worry about.
South Dakota's lax lending laws, population's low income and high debt provide fertile grounds for payday loan lenders. Read more ...
Posted at 11:12 AM
Pennsylvania payday loans facing more heat
We wrote about Pennsylvania war on payday loans. See Online Payday Lending Scheme and Pennsylvania payday loan bill stories. Payday loans are illegal in Pennsylvania, so the lenders have found a way around. Now more regulations likely to come for the state government.
Posted at 10:33 AM
December 05, 2005
Illinois payday loan law goes into effect Tuesday
This Illinois state law imposes more restrictions on payday loans, we wrote about Illinois payday loans before, but here are the main points again:
- Fees on loans are capped at $15.50 per $100 borrowed, down from more than $40 on many loans.
- Loan amounts are capped at $1,000 or 25 percent of customers' monthly salary, whichever is smaller.
- Borrowers can have no more than two payday loans at a time.
- Loans can be taken out for no more than 45 days, and after that time borrowers must take a seven-day cooling off period before they can borrow more.
- Borrowers who have trouble paying off their loans have 56 days to repay with no extra interest charges.
- Borrowers are protected from facing criminal prosecution for unpaid loans and from paying legal fees and court costs.
- Members of the military are protected from having their wages garnished, deployed personnel get a deferral on paying back their loans and lenders cannot contact borrowers' commanding officers.
Posted at 11:04 PM
November 29, 2005
U.S. Navy in Northwest region wants payday loans restricted
This is similar to the effort that Florida introduced against payday loans in August. And this is the second attempt to persuade lawmakers to pass the bill that "will cap APRs (annualized percentage rates) and extend the payback period to 90 days or more .." The Navy argues quite rightfully, that "cycle of debt that can harm their combat readiness" has to be broken.
Posted at 01:45 PM
November 19, 2005
Alabama payday loan stores can be sued
Alabama consumers who took payday loans prior to 2003, can sue the payday loan company that gave them the cash. "The Supreme Court ruled that payday loans were covered by Alabama's law regulating small loans until the Legislature passed a law in 2003 to regulate the payday loans separately."
This Small Loan law limits the yearly interest rate, that consumers are charged. Of course, the fees charged by the payday loan companies amounted to much higher yearly interest rate than this limit. Hence the ground to sue.
In 2003, the Alabama payday loans fell under a separate law that, I would assume, permits higher yearly interest rates. So the consumers could be legally ripped off.
It is proclaimed as a huge victory for the Alabamians by some attorneys who represent those Alabamians, ... of course, it is a victory ... for these attorneys, ... I wonder, to what yearly interest rate their legal fees would translate ...
Posted at 11:31 PM
November 18, 2005
Oregon payday loan stores average 480 percent in interest
The Oregon payday loan stores run very profitable enterprise, to put it nicely. More like a highway robbery to me. And 480 percent is an average. Some Portland payday loan companies charge something like 520 percent a year if you convert bi-weekly charges into yearly. You can read detailed research from Oregon Student Public Interest Research Group website.
Posted at 12:18 PM
Virginia county wants to outlaw payday loans
Virginia Henrico county Board of Supervisors wants severely curtail payday loan activity for now, with the following total shutdown. The proposal on the table prohibits " payday loan companies from opening any new locations in the state and to establish a "sunset" period to phase out the existing locations."
If approved, the measure will take the war on payday loans in Virginia to the new level. Other states may follow.
Posted at 12:05 PM
October 31, 2005
Arizona payday loan stores offering concessions
Payday loan industry has attracted plenty of criticism recently in Arizona and everywhere else. Now the payday loan stores are trying to placate the state government with some minor changes in the way they operate.
Arizona payday loan industry "officials said they would support a rule that would require borrowers to sign a document affirming they do not currently have another payday loan outstanding." Such a move would protect borrowers from getting into never ending cycle of borrowing more and more money while paying more and more fees.
Posted at 05:31 PM
October 12, 2005
Phoenix considers changing zoning to stop payday loans proliferation
Arizona busiest city has decided to regulate the high interest payday loan stores by significantly tightening zoning laws. The ordinance is readied that would require payday loan stores to be at least 1,000 feet from each other. Sexually oriented shops is possibly only other category of stores regulated in that fashion in Phoenix.
The goal is to prevent what city officials call "clustering" of payday loan stores in poor neighborhoods. By doing so, Phoenix follows another city in Arizona. Tucson introduced similar bill against payday loan stores in September.
Posted at 09:46 PM
Florida town may put cap on payday loans
Jacksonville is considering what would be the lowest interest rate, a payday loan company is allowed to charge in Florida.
Initially designed to protect the military from being overcharged by payday loan stores, the bill may be extended to cover the general public as well. The interest rate would be capped at 36 percent, making it the lowest in Florida.
Under the bill, no payday loan stores can be opened anywhere within 10 miles radius from any military base. It would also ban payday lenders from contacting the commanding officers of military customers (I can't believe they are allowed to do it now) in attempts to collect, and prohibit garnishing of military wages.
More on payday loans in Jacksonville
Posted at 04:06 PM
October 04, 2005
Nevada's payday loan law needs clarification
Recently passed payday loan law is somewhat unclear. The law was designed to protect consumers from being overcharge in fees and interest. This Friday, Nevada officials will conduct workshop to clarify some confusion.
The new law requires Nevada payday loan companies to offer customers who default, three extra months to pay off their loans without being charged additional fees and interest.
Under this law, new license will be issued for businesses that offer check-cashing services, payday loans, vehicle title loans or other short-term loans that must be paid off in less than a year.
What is unclear for many payday loan companies and other lenders is how the law applies to consumers called up for military duty. The other question is exactly how much time consumers who default on loans and accept repayment plans have, before they can be taken in front of a judge.
From Las Vegas Sun
Posted at 11:23 AM
September 29, 2005
Kansas Payday loan company shuts down operations in North Carolina
QC holding, the first ever publicly traded payday loan company said it would be closing all 19 of its stores in North Carolina before Dec. 1
The Kansas based payday loan company operates over 400 stores in 23 states. It offers check cashing services, title loans, money orders and money transfers. But the bulk of the earnings comes from payday loans.
While the Carolina stores constitute less than 5% of the total store number, the closure signifies the growing troubles, payday loan companies are facing nationwide with more state and local governments looking for increasingly tough measures to curb their lending practices that many consider predatory.
More on QC Holdings problems...
See also troubles for New Mexico payday loans, Michigan payday loans and Wisconsin payday loans.
Posted at 03:59 PM
September 28, 2005
Online Payday Lending Scheme Alleged Illegal, Shuts Down
We knew this was coming - the online payday loan businesses are now being watched and are getting under greater scrutiny. But this case is unique because it's not about your common straight-forward payday lending operations... The www.acepays.com run by Ace Pays Inc. was shot down because of... charging consumers more than 600 percent annual interest on loans that were deceptively marketed as "instant cash rebates". In addition, Ace Pays Inc. failed to register as a payday lender or to obtain a license under the Credit Services Act.
What was really 'innovative' is that their online operation was designed as a membership-based program. For example, by signing up for the highest membership tier, a consumer would receive a $1,000 "instant cash rebate". Ace Pays Inc. would then deduct a $20 daily rate from that consumer bank account every two weeks. The amount charged was equivalent to an annual interest rate of 630 percent. Just like payday loan websites, www.acepays.com advertised as "GET THE CASH YOU NEED NOW!" and receive "UP TO $1,000 INSTANTLY."
"It's clear to us that the web-based membership program was a ruse to engage in an illegal payday loan operation," Pennsylvania Attorney General Tom Corbett said. "The so-called 'instant rebates' were nothing more than loans that had to be paid back ..."
Ace Pays inc., a Delaware Corporation, has shut down its online payday operations and has agreed to pay a total of $70,000 in fines and costs. It was also ordered to refund consumers the amount of interest they paid above the maximum 6 % permitted under the Pennsylvania state law.
Consumers have until December 21, 2005 to obtain a refund. They may file a complaint online at http://www.attorneygeneral.gov.
Which online Payday Loan company is next?
Posted at 12:56 PM
September 24, 2005
New Mexico payday loan stores are in for the harder times
Payday loans in New Mexico have had an easy and prosperous life for sometime. However, there is more tough criticism coming from the powerful New Mexico Public Interest Research Group (NMPIRG). That comes on the hills of just declared war against New Mexico payday loans, lead by Lt. Gov. Diane Denish.
New Mexico is one of the poorest states and it doesn't regulate payday advance loan industry. Huge fees and interest rates are common. NMPIRG demands total ban on what it calls "predatory lending" and "abusive practises". The key demand is to cap interest at 36 percent. Read more on payday advance loans in New Mexico.
Posted at 11:00 AM
September 22, 2005
Payday Loans - More Unfavorable Actions Ahead in New Mexico
A war against the payday loans is on again in New Mexico but this time Lt. Gov. Diane Denish has a backing by Attorney General Patricia Madrid who's considering using the Unfair Trade Practices Act to regulate payday loans in the state. Auto title lenders will be affected as well. Attorney General's proposals would put a cap on payday and car title loans at 54 percent APR - this would limit payday lending to the same interest rate that is allowed for pawnbrokers. The proposal will be discussed in the early 2006.
"We have only one goal: To get rid of bad actors in the lending industry.", Denish says. Read full story at payday lending in New Mexico.
Posted at 05:43 PM
September 20, 2005
Tucson is to limit number of payday loan stores
We saw the surge of payday loan stores on the Internet a year ago, and right away we knew there will be some actions taken to curb it. But what we didn't expect is such rapid growth of the brick and mortar payday loan shops...
Limiting their activities is seems to be a task of the day for many local governments and jurisdictions today. Tucson is another town to join the trend. "The city has drafted zoning restrictions that would limit where new payday loan stores may locate."
And it's not just Tucson - the same effort is being undertaken by the entire southern Arizona. If approved, payday loan stores would have to keep at least 1,200 feet between themselves, and at least 500 feet from any residential property. It's no wonder that the City Council is concerned - 70 payday loan businesses have opened in Tucson since the beginning of 2001, particularly in lower income areas of the city.
Posted at 03:08 PM
September 16, 2005
Nevada town may limit number of payday loan stores
Henderson is joining several other southern Nevada communities including Clark County and Las Vegas, to see if it should curb the growing number of payday loan stores.
That's after City Council members approved two new payday loan stores last week. The total number in the city is 31.
There is a growing concern the payday loan stores go after people who simply can not afford high interest rates.
Among new rules being considered are keeping new payday loan stores away from schools, residential areas and existing ones.
North Las Vegas in July imposed a six-month moratorium on new payday loan stores.
First they approve them, then they are concerned. Keeping them away from school? I don't know of many school children who use payday loans. Residential areas? Those poor folks that can't afford high interest rates will have to drive further to get cash. At today's gas prices ...
Posted at 01:44 PM
September 15, 2005
Payday loan protection bill is getting ready in Michigan
Payday loan companies are waiting for the new bill that Michigan lawmakers are readying for consumer protection. Differences among the legislators have delayed this payday loan legislation so far, but it did pass the state senate.
Two key provisions would limit payday loan amounts to $600 for each 31 day period and limit service fees between 11 percent and 15 percent.
Under this pending bill, every payday loan company must be licensed by state. Consumers will also be limited to only one transaction at a time.
Introducing this bill, Michigan joins to the growing number of states that seek to put some restrictions on rather unregulated payday loans.
See payday loans in Virginia and payday loans in Wisconsin stories.
Posted at 11:47 AM
September 11, 2005
Virginia city struggles to stop payday loan shops growth
Colonial Heights in Virginia is trying to find a way to stop the spread of payday loan companies in town.
The town which is rather small, has 14 payday loan type businesses, which is too high for a number of city officials. They go as far as trying to come up with certain type of permits or zoning requirements to curtail the growing number of payday loan outfits.
Posted at 12:43 PM
September 08, 2005
Payday loans in Canada will be under more scrutiny
Canadian federal government decided to let provinces have more power over payday loan industry. This was prompted by widespread complains about sky high interest rates and excessive fees charged by payday loan companies. So beginning this fall, provinces will have the right to set and enforce reasonable maximum interest rates and fees.
Currently Canadian Criminal Code caps pay day loans interest rates at 60 per cent per year. However many provincial officials say that this cap is barely enforced. With administrative fees, the cost of a payday loan can be quite high. Ontario and Manitoba demand that those fees are to be included in the interest rate advertised by payday loan shops.
Posted at 11:52 PM
August 19, 2005
A new payday loan legislation is considered in Wisconsin
A recent number of payday loan companies in Wisconsin stands at 393.
Some lawmakers suggest limiting fees and/or interest rates on payday loans. Also under consideration is to limit the number of times a loan can be extended, or rolled over into a new loan with additional fees.
Another suggestion is to establish an electronic monitoring system to enforce these limitations. From Journal Sentinel.
Posted at 04:10 PM
Georgia payday loan companies may have free access to your bank account
Payday loan shops found a loophole in a new Georgia law. This law is for consumer protection when getting payday loans.
The loophole allows a basically unrestricted access to consumer's bank account. A payday loan company can therefore withdraw money practically at will.
Governor Barnes wants a restraining order against payday loan shops.
Posted at 03:49 PM
August 15, 2005
Some Canadians pay up to 400 percent in payday loan fees
According to CBC News, many Canadians don't realize how much payday loans cost over the year. Supposedly only seven percents of the population use payday loans in Canada, many appreciating longer hours and convenient locations. They don't think that the interest charged by the payday loan shops is generally too high:
"In one example the federal consumer agency uses, a $300 loan over 14 days could easily cost fees totalling $50 - which on its own doesn't sound huge until you consider that's actually 435 per cent of the loan, measured at an annualized rate. "
Posted at 07:33 PM
August 13, 2005
Payday loan reform act was signed by Illinois Governor Blagojevich
This Legislative Update also contains several identity theft related issues among other things. But the new regulations for payday loans are our primary concern. Here are the significant new consumer protections:
(1.) A prohibition on loans that would result in a consumer being indebted to one or more payday lenders for a period in excess of 45 consecutive days. In addition, the Act establishes a cap on payday loans if the total of the principal proposed loan amount, when combined with all of the consumer’s outstanding payday loans exceed the lessor of either $1000 or 25% of the consumer’s gross monthly income;
(2.) A prohibition on new payday loans involving any consumer who has a balance on 2 exiting payday loans;
(3.) A prohibition against the payday lender taking any interest in the consumer’s personal property to secure the payday loan;
(4.) A prohibition against any charge that exceeds $15.50 per $100 loaned; and
(5.) A prohibition against rollover of payday loans.
Those provisions become effective on December 6, 2005.
Posted at 04:00 PM
Florida attorney general targets payday loans catering to troops
Charlie Christ, Florida Attorney General joined with military to highlight the danger of high borrowing costs of payday loans and seek an alternative.
Payday loans are popular among troops stationed around the country and are very easy to obtain. However, the interest rates charged on those loans are simply horrendous. And it is legal too. Florida, for example, allows "an effective annual percentage rate of 390%". That is 32.5 percent a month. If this is not a daylight robbery, I don't know what is. Worse yet, some states have no limit at all.
Many service people and their families must rely on payday loan sharks simply because they don't have any choice. Once started, it is like a swamp. Payday loan swamp: "The practice of payday loans centers on advancing a serviceman or woman a portion or all of the amount of their upcoming salary. These loans normally require repayment at high rates within a short period of time. It is often impossible to repay the loan within a few days because most military installations pay on a twice monthly basis. Despite this, the interest continues to effectively increase and the serviceman or woman is further behind by the next payday than they were prior to obtaining the loan."
The military has gotten so concerned that it determined "that the astronomical rates charged by some have an impact on “military readiness.” The debt resulting from these loans places a service member at risk of losing their security clearance, or worst case, being discharged from the military."
So what is the solution? Zero interest loans are available from the military and alas, a consumer alert was released on June 30th, specifically for military and the families to stay away from payday loan shops. It also announced the Service members Civil Relief Act which gives active duty personnel more favorable loan repayment requirements. Finally, there is an ongoing investigation of certain payday loan providers.
Read the entire article on Florida Attorney General site.
Posted at 03:08 PM
August 08, 2005
Pennsylvania tries to curb payday loan borrowing
Payday loans are easy to get for everyone with checking account and job. Some payday loan lenders will lend you money with no checking account. For a somewhat higher fee. But it is the easiness to borrow cash in advance and from several payday loan shops at once, that has lead Pennsylvania Rep. Chris Ross (R-Chester) to sponsor House Bill 1478. If approved it would limit the amount of money consumers can borrow and curtail the number of payday lenders a person can borrow from at one time. This is reported www.phillyburbs.com
The reason for such a legislation is to break the often never ending cycle of debt. Many consumers borrow too much too often and unable to pay on time. They can borrow again and again without paying with more fees each time. Of course consumer doesn't have pay those fees, they simply roll into the next period amount.
Interesting math, according to this article, initial loans are made for two weeks with fees typically range from about $12 to $20 for every $100 borrowed. So if you don't pay four weeks, it is $24 to $40 for every $100. Six weeks is $48 to $80. Hmm, there isn't much left.
Posted at 04:21 PM
August 05, 2005
Payday loan shops are making it big
Payday loans are quite easy to get these days and quite costly. As Bloomberg reports in the story on Wells Fargo, people pay to payday loan outfits up to 390% a year in interest. That makes it 32.5% monthly. Not bad even considering the fact that amounts of cash are relatively small, from $100 to $500 in most cases. Payday loans with no credit check and no checking account are the most expensive. An interesting side bar of this article is the relationship Wells Fargo has built with payday loan business.
Posted at 12:00 PM
August 04, 2005
Online payday loans will break records in 2005
Online payday loans are becoming more popular as more people are looking for a payday loan from the comfort of their homes. Yahoo reports that "Leadpile.com predicts that Online Payday Loan Sales for the remainder of 2005 will break all historic records."
Leadpile.com CEO, Andy Jacobs also says that in spite of fast growth, the online payday loan internet space is still pretty much open. But more and more companies are moving in and others are building an infrastructure to capture this growing market.
Posted at 01:41 PM
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