De Moines public officials are trying to change zoning to stop more payday loan stores from opening. This is not new, but I took issue w/ this statement:
Meyer says “payday loan stores prey on poor people and set up in poor neighborhoods.”
This is like saying restaurants prey on families b/c people can cook at home and save money.
In Colorado, the state Supreme Court soon will take up a case where two online payday lending companies say they are immune to prosecution and state regulations because they are incorporated by sovereign Indian nations.
This is not new. We all know about Indian casinos. The casinos work b/c people enter the Indian reservation and gamble. Can these Indian reservations do business on the Internet? The gray area is this: the borrower applies for a loan on a computer outside the reservation. Is this considered the state, the reservation or neither?
There is a very long article in the Havre Daily News. You can read the full article titled “Online Payday Loans Lending practices spark nationwide concerns.”
Yesterday we had a post about the Attorney General going after some Internet lenders. There’s more:
The second suit filed by McGraw’s office asks the court to order four collection agencies, Capital Collections, LLC, Claims Investigators of America, Crime Monitoring Center, and Premier Recovery Group, to comply with his investigative subpoenas and to stop collecting Internet payday loans in West Virginia.
It looks like they’re using these collection’s companies to get to the lenders.
For the record, West Virginia has made 97 settlement agreements since 2005. I was a little surprised by that number.
Four Internet lenders are playing chicken w/ the West Virginia district attorney.
“The suit claims the companies, which do business under such names as “Cash Supply,” “Web Payday,” “Payday Services,” “Payday Yes” and “Paper Check Payday,” have ignored an investigative subpoena from the Attorney General’s Office going back to 2007.”
You can read the full article titled “Attorney general goes after four Internet payday lenders” in the Charleston Gazzette.
“The two companies–County Bank Of Rehoboth Beach, Del., and TC Services
Corp., a Pennsylvania payday business that does business as Telecash–agreed to pay
refunds to New York consumers and another $300,000 in penalties and costs. In
addition, the two companies are prohibited from collecting on any outstanding
payday loans to New Yorkers.According to the complaint, Telecash and CRA Services Inc., another
Pennsylvania payday business that operates as Cashnet, made thousands of illegal payday
loans to New York consumers under a fraudulent “rent-a-bank scheme” with County
Bank. Cashnet is now defunct and didn’t contribute to the settlement.”
The total settlement will be for $5.2M. You can read the full article in the Morningstar titled, “New York to Distribute $5.2 Million Payday Loan Settlement”
New York is not alone. In Wisconsin, there was a class action lawsuit settled for $432k earlier this year. In Wisconsin, payday loans are perfectly legal, but the payday business was not licensed.
I hope some payday lenders show up to this to voice their concerns about the legislation. They’re having a district legislative hearing to discuss payday loan reform at 6:30 p.m. Monday at the Columbia Public Library, 100 W. Broadway.
I expect a little more from NPR. This reporter is pronouncing payday loans dead b/c the FDIC got banks to put $28M on the street and now no one’s taking out payday loans?
That’s like saying Pfizer is selling their prescription drugs direct, so Walgreens is going out of business.
The Federal Reserve beat the Federal Government to the punch on ATM overdraft charges. Banks will have to secure their customers’ consent before charging large overdraft fees on ATM and debit card transactions, says the AP News.
Payday Pundit makes a good insight on this move by the Federal Reserve:
“The Fed, of course, objects to the creation of the CFPA so is trying to demonstrate that it has teeth before Congress takes away some of its responsibilities.”
Legislators look for ways to make payday loans less profitable all the time. This is bad for the borrower b/c it makes the cost of doing business higher. This cost, ultimately, gets passed on to other borrowers.
In an article titled “Loan program helps ‘unbanked’ climb economic ladder: FDIC program aims to help low-income consumers avoid payday loans“; banks are getting into the small loan business. Consumer groups like this product b/c it helps build credit and is less expensive than a payday loan.
My feeling is that competition is good. Don’t put handcuffs on payday lenders. Compete with them.
You can read the full report on the FDIC small loan pilot program here.
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Ohio payday lenders have been in a dog fight for years now. Consumers want payday loans while consumer groups do not.
I thought this article titled “Payday loans the only way to get by, some customers say” does a decent job of covering both sides.
Here is an example of a rational comment:
Ted Saunders, CEO of CheckSmart, said he wants customers to compare his product to their other choices:
“There is a bank right there,” he said, pointing to a bank about 100 yards across the parking lot from his store. “They could go right there if they wanted to.”
Bill Faith of COOHIO compares payday loans to subprime mortgages and says:
“People at one point also were excited about high-interest subprime mortgage loans that helped ruin the housing market.”
Bill, the housing market crash happened b/c Wall Street lied to investors and the Federal Governent’s monetary policy. Put more simply, the federal reserve and the greed on Wallstreet. So what does this have to do with payday loans?????? Nothing!