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Mayday for Payduy Loans


Jl-n the wake of the subprime loan melt


| | down, Congress and many statelegisla-
JL tures are now promising a crackdown
on the "payday"loan industry. This looks
like another illustration of
how to hurt working Amer-Paycheckicansin the name of helping
them. sure

Payday lenders offer
shorttermloans,typically
of between$100 to $50Oto workers who
need cash in advance of their next paycheck.
Consumer groups and banking industry
critics complain that the fees

charged on paydayloans are "predatory"
and ensnare the poor in a "debt trap." The
Centerfor Responsible Lending, aliberal activist
group, claims the industry costs
Americans$4.2billion a yearby charging
exorbitantfees.
Several dozen U.S. Congressmen recently
signed a letter excoriatingpayday

lenders as "unscrupulous."Lastyear,Mis


souriRepublicanJimTalent was looking for
a populist issue to save his Senate seat, so
he led the fight in Congress to enact legislation
chasingpaydaylendersfrom military
bases.Mr. Talent still lost, but he helped set
a precedentthat Democrats are pursuing
with more onerous measuresnow.

But if paydaylending is such a consumer
rip off, no one has explained why these
stores have become so popular.There are
some 25,000 paydaystoresacross America,
and in many small towns the payday
loanstoreis now as commonplace asthe local
post office. It has become something
like a $6billion industry serving 15 million
peopleeverymonth.

Consumersseemtolikethe convenience
ofinstant cashin advance of theirpaycheck
andpreferthis to pawnshopsor borrowing
moneyfrom family members. Payday lendershavegrown
in size, customer base and
profitability by discovering an unserved
niche in the loan market for convenient,
short term micro-loans. More to the "populist"
point, payday loans offer a valuable

seruice to moderate income workers. Most

borrowers have incomes between $25,000

and$5O000,andpaydayloans are cheaper

than most alternativesfor those facing

short-term financial dis-

advances tress.

Critics complain that

beatloan sharks. the annual percentage

rate (APR)on a two-week

loan of $100with a $15fee

amounts to a predatory390%. But the equiv


alentAPRcost to the borrower of writing a

bounced check can exceed 1,300%, while a

credit card late fee charge can reach 700%.

Some borrowers will also goto loan sharks

as an alternative, and we know how high

their "fees"canbe.

Georgia outlawed paydayloans in 2004,

andthousandsofworkershavesince taken

to traveling over theborder to find payday

stores in Tennessee, Florida and South

Carolina. So the effect ofthe ban has been

to increaseconsumer credit costs and in


conveniencefor Georgia consumers.

The most common proposalsin Con


gresswould cap paydayloan interest rates

at 36% APR. This would cut the fee to $1.38

for a $100loan, less than the charge for a

typical $100ATM fee, and far below the

check transaction cost. This could shut

down much of the industry. But to what

end? This debate is muchlike the contro


versy over bank ATM fees a few yearsago.

Consumer advocates demanded laws cap


ping fees, and where those took effect the

result was not so much lower charges but

fewer ATMs and thus lessconvenience.

A2OO7 New York Federal Reserve Bank

studyrejects the notionofpaydayaspreda


tory and concludes that high prices"mayre


flect too few paydaylenders, rather than

too many." It adds that more regulation

could reduce market entry and "the lackof

competition could drive rates higher." Ban


ning paydayloans might pleasecompeting

banks, credit unions and so-called con


sumer advocates, but it's hard to see how ac


tual consumers would benefit.

hrSf orlotlo?

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It is imperative that the new Commissioner understands that, unlike most
states, California does not allow a second transaction to occur until
the first has been paid in full. This eliminates the possible of a
roll-over. If he don't understand this basic fact, we are in trouble.
Once the deferred deposit is paid, he is free to leave. I believe that
the Commissioner has not been educated on the reason for paying off both
the interest and the principle before a second transaction can occur.
Please make certain someone explain this vital difference at the
meeting.

California

< just received the following and attachments from Louisa.

This survey criteria should be reviewed carefully. They are looking for
details
on back-to-back transactions. Their definition of B2B transactions is
consecutive transactions where the customer pays off or you deposit
their check
and the customer does another transaction within 5 days!!!

Clearly the 5 days is arbitrary and probably had some input from CRL.
The
insidious part of their definition occurs if you delay depositing a
customer's
check because she says she'll be in a few days after the transaction is
due and
then doesn't show. So you deposit the check, say 4 days after the loan
was due,
and the customer comes in 2 days later, that transaction would be a back
to back
transaction. And what happens if the check is deposited on time via ACH
and then
comes back within 3 days. If the customer comes back in and pays off the
loan
and takes another is that a back to back transaction?

There are many other conditions that we need to clarify about this
survey.

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Subject: Agenda Item - Report to the Legislature


The following information regarding the December 1, 2007 CDDTL Report to
the
Legislature is being provided for your review prior to tomorrow's CDDTL
advisory
committee meeting.

Information to be included in the report:

1. Demand for DDTs
2. Growth & Trends in the industry
3. Common Practices for conducting the business
4. Advertising Practices including Violations
5. Any other information regarding potential legislation needed to
protect
the consumer.
6. Recommendations for future action may include
a. Changes in Fee
b. Length of Transaction
c. Maximum Amount Provided to Consumer
d. Additional Regulation of Advertising Practices
e. Installment Loan Product in lieu of a DDT

Information from the 2005 & 2006 annual report, due by March 15, 2007,
will be
available for the report. A company survey is being considered to
request
additional information regarding the consecutive number of loans per
borrower
and the total number of checks and dollar amount that were charged off
per
categories of consecutive loans. The survey would be mailed with the
December
request for the 2006 report.

California Payday Loan Problems Loom

One of our stores was also examined this week. Our examiner said
there wasn't a problem with extending loans at the customer's
request as long as there were no additional fees. The examiner
told us that a short extension did not need to be in writing.

CDDTL act discussed. (Our examiner repeatedly said the DOC is
taking this "position" on the CDDTL.)
1. We were told that if a payday advance check is returned from
the bank, the DOC's position is that we cannot redeposit the check
at any time without the customer's written and dated permission to
do so. This written approval statement needs to include the amount
of the redeposit, date of the redeposit as well as the proposed
method - either deposit it in the bank or ACH the check. And, we
were told that it doesn't matter what the contract says either. I
asked what other recourse we would have for collecting bounced
checks if a customer refused to sign a statement allowing us to
redeposit the check on their next payday. The response was "none,
except you could take them to Small Claims Court". The examiner
agreed that this would put additional hardships and expense on the
customers, but said that is how the DOC is interpreting the law.
This would be horrible for the customers, not to mention an
increased burden on Small Claims Courts.

2. The examiner reiterated the DoC's position that all payment
were also told that there is a distinction between working out a
payment plan with a customer and accepting a partial payment while
pursuing collection efforts. If a customer makes a partial payment
on a loan, and the operator continues to pursue collecting the full
remaining balance due, this is a collection effort - not a payment
plan. Accepting the customer's payment would not require a written
statement from him or her. The examiner did suggest we send a
follow-up letter to the customer detailing the acceptance of a
partial payment and make notes in the customer's filedocumenting
any pertinent discussions.

Finally, another question arose during the exam that went
unanswered. If an operator agrees to a payment plan and documents
it with the customer, does this loan then become an installment
loan and not a payday advance? In other words, would this loan
then be subject to licensing or legal requirementsthat are outside
the CDDTL, for example lending laws?

Based on the "positions" taken by the DoC on collecting bad checks,
I believe in the long run they will end up doing more harm to the
customers than good. This is an unfortunate situation that I hope
gets resolved quickly - for everyone's sake.

MSN Hotmail - Message

Clovis News Journal: Serving Eastern New Mexico and West Texas

Payday loans draw state’s interest
By Andy Jackson: CNJ staff writer

The attorney general’s office is concerned about the lending
practices of payday loan companies and is proposing stricter
regulations.

Payday loan advocates said the companies provide a valuable service
and are already regulated.

The attorney general’s office hosted a meeting Wednesday at the
Clovis-Carver Public Library to discuss proposed regulations, which
include eliminating 14- or 30-day loans, a cap on interest (at 54
percent) and service fees.

Assistant Attorney General Joel Cruz-Esparza said the state’s
Consumer Protection Division found small loan companies are engaged
in unfair business practices. The attorney general believes many
small loan companies do not consider the borrower’s credit history
and ability to pay back a high-interest loan within two weeks to one
month.

“It’s currently difficult for people to repay small loans,”
Cruz-Esparza said. “Small loans will become repayable under these
regulations.”

Steve Solomon, vice president of administration and general counsel
for Fast Bucks Holding Corp., said the industry receives few
complaints annually with high levels of customer satisfaction.

Solomon also represents Consumer Lending Advocates, which consists
of 13 small loans franchise corporations throughout the state.

“We have had one complaint per 30,000 transactions,” Solomon said.

Small loans companies said the proposed regulations will put them
out of business.

“These regulations would be a horrible job killer,” Solomon said.
“They’ll put us out of business.”

Representatives from Attorney General Patricia Madrid’s camp
disagrees.

Pawnbrokers in this state are regulated to the same degree that’s
proposed for small loans companies, and “the pawn brokerage industry
is alive and well,” Cruz-Esparza said.
According to Madrid’s office, there are 24 licensed small loans
companies in Curry County.

Solomon said Madrid’s office spent $145,000 on a television ad
campaign aimed at eliciting complaint from the public consumer.

“This is an outrage,” Solomon said. “Madrid’s office received only
46 complaints against my industry, at $3,152 per complaint.”

Solomon suggested the Attorney General’s Office spend advertising
funds to educate the public on personal financial literacy.

Small Loans company representatives say customers are satisfied and
franchisers are profiting.

According to Fast Bucks’ Web site the average annual profit of a
franchise is more than 50 percent.

The Consumer Lending Advocates claim “Customers overwhelmingly
appreciate payday advance, 92 perecent believe it’s a useful
service.”

The Attorney General’s office has legal authority to adopt these
rules and regulations under the Unfair Practices Act.

Review: Guiding Customers To Legal Payday Loans Emediawire (press release), WA - (Payday loans)

Review: Guiding Customers To Legal Payday Loans Emediawire (press release), WA - (Payday loans)

Payday Review: Guiding Customers To Legal Payday Loans
Emediawire (press release), WA - Jun 14, 2005 (PRWEB) June 14, 2005 -- Short term loans, or payday loans as they are popularly called, have gained wide appeal in the past few years.

One bank rethinks controversial payday loans
MSNBC - Jun 13, 2005 Venture Bank of Lacey, the only Washington-based bank that offers high-interest payday loans, is considering leaving the payday business altogether.

Stocks advance in late afternoon trading BusinessWeek - 3 hours (Payday advance) ago

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Payday loans online

Thank you for copying me on the news release. In the interests of
fair and equal reporting, it would be nice if Dept of Corp. released results
of the first six months of consumer complaints relating to Payday Lending.
Sometimes good news can be just that; rather than always bad news. I think
it is important that D O J has received only 12 complaints in six months and
each of theses was related to minor procedural issues. Twelve complaints out
of approximately six million transactions is good news. The six million
transactions is arrived at by multiplying the 2000 permit holders with the
average monthly site transactions of 500. This equals one million
transactions per month or six million in six months. Twelve complaints
divided by six million transactions equals two complaints per million
transactions. This is an outstanding record.

A note from the President of Empowerment Lending

I’m a 30 year old single mother named Egge Brody. I know my name is kind of far out, my father named me that. He was a real hippie back in the early 70s, and the epitome of a women’s rights activist. My mother was active in ‘the good cause’ as well as throughout my childhood. They instilled in me a deep respect for a woman’s individuality, rights, and a determination to make this world a fair and just place for my child and grandchildren.
In the 80s my father cut his hair and put on a suit and found himself working in the loan trade, specifically unsecured personal loans. As a know-it-all teenager, I would often criticize my father for what I saw as him taking advantage of people in unpleasant situations. The 90s were good to my parents financially, as the decade was to many. Dad started his own business, and getting away from the traditional brick & mortar paycheck cashing situations, and was one of the pioneers of electronic payday loans.
Unfortunately, my father was associated with some of the unscrupulous business-types that made up this industry in the past, and when he died a few years ago, they tried to steal his share of the enterprise from me. Much to their dismay and surprise, in a recent David and Goliath court settlement, I was awarded the entire company.
My first thought was now that I’d won it, what did I want with it? Since his death, I was more concerned with not letting the thieves have it, than I was in operating it myself. I then began to ponder how I could use my father’s hard work and infrastructure to help women in need. After studying the issue, I found that in my younger years I had fallen victim to the liberal press in regards to this type of venture. I asked myself, how many of the people condemning payday loan companies have actually felt the fear and humiliation of bouncing a check. Have they had to make a choice between baby formula and gas in their car, or have paid a babysitter the last $15 dollars to their name, or have went to bed listening to their stomach’s growl so that their child could eat. How many of these people would lose everything they had if they missed just one paycheck, or maybe even just one day’s work?
With these ambitions in mind, and my father’s entrepreneurial spirit driving me…Ms. Payday Loans has risen out of the ashes of a lengthy, exhausting court battle, and I now continue with my father’s past endeavors in the hope of helping my fellow women.
I truly appreciate you visiting my site and enjoy receiving your input regarding ways to further women's rights and betterment of life.

Sincerely,
Egge Brody

Payday Loans Online