Categories

A sample text widget

Etiam pulvinar consectetur dolor sed malesuada. Ut convallis euismod dolor nec pretium. Nunc ut tristique massa.

Nam sodales mi vitae dolor ullamcorper et vulputate enim accumsan. Morbi orci magna, tincidunt vitae molestie nec, molestie at mi. Nulla nulla lorem, suscipit in posuere in, interdum non magna.

Payday Loans Are Bleeding American Workers Dry. Finally, the …

We’ve all seen the ads. “Need cash fast?” a speaker asks. “Have bad credit? You can get up to $1,000 within 24 hours.” The ad then directs you to a sketchy-sounding website, like 44cash.com, or a slightly-less-sketchy-sounding business, like PLS Loan Store. Most of us roll our eyes or go grab another beer when these commercials air. But 12 million people a year turn to payday lenders, who disguise the real cost of these loans. Borrowers often become saddled with unaffordable loans that have sky-high interest rates.

For years, states have tried to crack down on these deceptive business practices. Now, the Consumer Financial Protection Bureau (CFPB) is giving it a shot. On Monday, the New York Times reported that the CFPB will soon issue the first draft of new regulations on the $46 billion payday-lending industry. The rules are being designed to ensure borrowers have a better understanding of the real cost of payday loans and to promote a transparent and fair short-term lending market.

On the surface, payday loans sound like a good idea to many cash-strapped Americans. They offer a short-term loan—generally two weeks in length—for a fixed fee, with payment generally due on the borrower’s next payday. The average borrower takes out a $375 two-week loan with a fee of $55, according to the Pew Charitable Trust’s Safe Small-Dollar Loans Research Project which has put out multiple reports on payday lenders over the past few years. But payday lenders confuse borrowers in a couple of ways.

First, borrowers are rarely able to pay back their loans in two weeks. So they “roll over” the payday loan by paying just the $55 fee. Now, they don’t owe the $375 principal for another two weeks, but they’re hit with another $55 fee. That two-week, $375 loan with a $55 fee just effectively became a four-week, $375 loan with a $110 fee. If, after another two weeks, they still can’t repay the principal, then they will roll it over again for yet another $55 fee. You can see how quickly this can spiral out of control. What started as a two-week loan can last for months at a time—and the fees borrowers incur along the way end up dwarfing the principle. Pew found that the average borrower paid $520 in fees for the $375 loan, which was rolled over an average of eight times. In fact, using data from Oklahoma, Pew found that “more borrowers use at least 17 loans in a year than just one.”

Second, borrowers are often confused about the cost of the loan. The $55 fee—payday lenders often advertise a fee of $15 per $100 borrowed—sounds like a reasonable price for a quick infusion of cash, especially compared to a credit card with a 24-percent annual percentage rate (APR). But that’s actually an extremely high price. Consider the standard two-week, $375 loan with a $55 fee. If you were to roll that loan over for an entire year, you would pay $1,430 in fees ($55 times 26). That’s 3.81 times the original $375 loan—an APR of 381 percent.

Many borrowers, who badly need money to hold them over until their next paycheck, don’t think about when they’ll actually be able to pull it back or how many fees they’ll accumulate. “A lot of people who are taking out the loan focus on the idea that the payday loan is short-term or that it has a fixed $55 fee on average,” said Nick Bourke, the director of the Pew research project. “And they make their choice based on that.”

Lenders advertise the loans as a short-term fix—but their business model actually depends on borrowers accruing fees. That was the conclusion of a 2009 study by the Federal Reserve of Kansas City. Other research has backed up the study’s findings. “They don’t achieve profitability unless their average customer is in debt for months, not weeks,” said Bourke. That’s because payday lending is an inefficient business. Most lenders serve only 500 unique customers a year, Pew found. But they have high overhead costs like renting store space, maintaining working computers, and payroll. That means lenders have to make a significant profit on each borrower.

It’s also why banks and other large companies can offer short-term loans at better prices. Some banks are offering a product called a “deposit advance loan” which is nearly identical to a payday loan. But the fees on those loans are far smaller than traditional payday loans—around $7.50-$10 per $100 loan per two-week borrowing period compared with $15 per $100 loan per two-week period. Yet short-term borrowers are often unaware of these alternatives. In the end, they often opt for payday loans, which are much better advertised.

The CFPB can learn a lot about how to (and how not to) formulate its upcoming regulations from state efforts to crack down on payday lenders. Fourteen states and the District of Columbia have implemented restrictive rules, like setting an interest-rate cap at 36 percent APR, that have shutdown the payday-loan business almost entirely. Another eight states have created hybrid systems that impose some regulations on payday lenders, like requiring longer repayment periods or lower fees, but have not put them out of business. The remaining 28 states have few, if any, restrictions on payday lending:

The CFPB doesn’t have the power to set an interest rate cap nationally, so it won’t be able to stop payday lending altogether. But that probably shouldn’t be the Bureau’s goal anyways. For one, eliminating payday lending could have unintended consequences, such as by driving the lending into other unregulated markets. In some states, that seems to have already happened, with payday lenders registering as car title lenders, offering the same loans under a different name. Whether it would happen on a large scale is less clear. In states that have effectively outlawed payday lending, 95 percent of borrowers said they do not use payday loans elsewhere, whether from online payday lenders or other borrowers. “Part of the reason for that is people who get payday loans [are] pretty much mainstream consumers,” Bourke said. “They have a checking account. They have income, which is usually from employment. They’re attracted to the idea of doing business with a licensed lender in their community. And if the stores in the community go away, they’re not very disposed towards doing business with unlicensed lenders or some kind of loan shark.”

In addition, borrowers value payday lending. In Pew’s survey, 56 percent of borrowers said that the loan relieved stress compared to just 31 percent who said it was a source of stress. Forty-eight percent said payday loans helped borrowers, with 41 percent saying they hurt them. In other words, the short-term, high-cost lending market has value. But borrowers also feel that lenders take advantage of them and the vast majority want more regulation.

So what should that regulation look like? Bourke points to Colorado as an example. Lawmakers there capped the annual interest payment at 45 percent while allowing strict origination and maintenance fees. Even more importantly, Colorado requires lenders to allow borrowers to repay the loans over at least six months, with payments over time slowly reducing the principal. These reforms have been a major success. Average APR rates in Colorado fell from 319 percent to 129 percent and borrowers spent $41.9 million less in 2012 than in 2009, before the changes. That’s a 44 percent drop in payments. At the same time, the number of loans per borrower dropped by 71 percent, from 7.8 to 2.3.

The Colorado law did reduce the number of licensed locations by 53 percent, from 505 to 238. Yet, the number of individual consumers fell just 15 percent. Overall, that leads to an 81 percent increase in borrowers per store, making the industry far more efficient and allowing payday lenders to earn a profit even with lower interest rates and a longer repayment period.

Bourke proposes that the CFPB emulate Colorado’s law by requiring the lenders to allow borrowers to repay the loans over a longer period. But he also thinks the Bureau could improve upon the law by capping payments at 5 percent of borrower’s pretax income, known as an ability-to-repay standard. For example, a monthly payment should not exceed 5 percent of monthly, pretax income. Lenders should also be required to clearly disclose the terms of the loan, including the periodic payment due, the total cost of the loan (all fee and interest payments plus principal), and the effective APR.

The CFPB hasn’t announced the rules yet. But the Times report indicated that the Bureau is considering an ability-to-repay standard. The CFPB may also include car title lenders in the regulation with the hope of reducing payday lenders’ ability to circumvent the rules. However, instead of requiring longer payment periods, the agency may instead limit the number of times a lender could roll over a borrower’s loan. In other words, borrowers may only be able to roll over the loan three or four times a year, preventing them from repeatedly paying the fee.

If the Bureau opts for that rule, it could limit the effectiveness of the law. “That kind of tries to tackle a problem of repeat borrowing and long-term borrowing but that’s a symptom,” Bourke said. “That’s not really the core disease. The core disease is unaffordable payments.” In addition, it could prevent a transparent market from emerging, as payday lenders continue to take advantage of borrowers’ ignorance over these loans. “The market will remain in this mire,” Burke added, “where it’s dominated by a deceptive balloon payment product that makes it difficult for consumers to make good choices but also makes it difficult for better types of lenders to compete with the more fair and transparent product.” Ultimately, that’s in the CFPB’s hands.

[…]

Catholic group urges tougher laws for payday loans | The Salina Post

Image 0c2ec165a2628d34a2a56adda76d5da5


Catholic group urges tougher laws for payday loans

Posted 6 hours ago

By Post Staff

WICHITA, Kan. (AP) — A group representing Catholic bishops in Kansas wants lawmakers to approve tougher state regulators for payday lenders.

The Wichita Eagle reports that Kansas Catholic Conference executive director Michael Schuttloffel says the short-term, high-interest rate loans take advantage of people’s desperation. He says many borrowers get stuck in a cycle of taking out more loans to pay back the first. He called them “bad for society.”

The Consumer Federation of America says the annual finance rates can be as high as 390 percent in Kansas.

Kansas Community Financial Services Association lobbyist Whitney Damron says the small loans can be lifesaving. He says it’s misrepresentative to judge a one-month loan by a 12-month rate.

Schuttloffel says that he thinks the issue can be a rare example of bipartisanship in Topeka.



Commenting Disclaimer Be respectful. Do not use obscene, profane or vulgar language. Do not make accusations or personal attacks Comments considered to be ‘trolling’ or for the sole purpose of angering others will be removed.

Open Comments […]

Kansas Catholic Conference pursuing tougher laws for payday loans

The Kansas Catholic Conference plans to push for tougher state regulations on the payday loan industry on the grounds that the loans prey on the poor.

The loans, which are short term and have high interest rates, take advantage of people’s desperation, with a business model that is “designed around ensnaring people into a trap that they can never escape from,” said Michael Schuttloffel, executive director of the Catholic Conference, which represents the state’s bishops.

Many people who take out a payday loan get stuck in a cycle in which they have to keep taking out more loans to pay back the first, he said.

“We just think it’s bad for society,” Schuttloffel said.

Whitney Damron, a lobbyist who represents the Kansas Community Financial Services Association, said short-term loans of $100 can be life-saving for some of the people who use them.

“What do you want these people to do when the baby formula runs out?” Damron said. “… They don’t have an alternative.”

Kansas has some restrictions on payday loans. State statute caps short-term loans (seven to 30 days) at $500. It sets 15 percent as the maximum finance rate, meaning that a person will owe $15 for every $100 in loan money.

People may not have more than two loans at a time. Lenders must provide forms in both Spanish and English.

Still, Schuttloffel and others say the loans need better regulations. The annual finance rates can be as high as 390 percent in Kansas, according to the Consumer Federation of America.

Damron said it is misrepresentative to judge a one-month loan by a 12-month rate.

He noted that people have 24 hours to back out of the loans and said adults should have the right to enter into these agreements. He said it is typical business practice, though not law, for lenders to require that a person has a job and checking account before granting a loan.

“Our position has been this is a straightforward transaction. The consumer understands it’s capped at $500 … and our customers are satisfied with the product,” he said.

The Legislature convenes Jan. 12. Schuttloffel said his organization hasn’t drafted legislation and is still introducing lawmakers to the issue. But he is hopeful they can act on changes this year.

Lawmakers from across the political spectrum have expressed interest in tackling the issue. The topic got a hearing last year, but no legislation was put forward.

Sen. Steve Fitzgerald, R-Leavenworth, a conservative, said it’s important to distinguish between predatory loans and high-risk loans. “It’s a matter of attempting to find people who can be preyed upon … rather than just high risk loans,” he said. He is interested in studying the issue to make sure the law draws a clear dividing line.

Rep. Louis Ruiz, D-Kansas City, an outspoken progressive, expressed interest in a bill tightening regulations on payday loans.

“I don’t know where it’s going to come from or who’s going to bring it to the forefront, but I think there needs to be some regulation on that and also regulation on other industries that prey on people,” Ruiz said, pointing to car dealers who offer loans he called predatory. “They’re preying upon people who can’t afford anything different.”

Senate President Susan Wagle, R-Wichita, would not say whether she would support a bill. She said she’d have to see it first.

Schuttloffel said that he thinks the issue can be a rare example of bipartisanship in Topeka.

“We’re real hopeful we can work with people, left, right, in between and of all faiths,” he said.

Reach Bryan Lowry at 785-296-3006 or blowry@wichitaeagle.com. Follow him on Twitter: @BryanLowry3.

[…]

Countering the ill effects of payday loans – Catholic Diocese of Salina

Salina — Predatory lending has emerged as a concern of the Catholic Church in Kansas.

In one of four election-year videos issued this week by the bishops in Kansas, Salina Bishop Edward Weisenburger asks Catholics to urge their state lawmakers to consider stricter regulations to protect vulnerable citizens. (To see all four videos, go to http://salinadiocese.org/home/religious-liberty.)

Catholic Charities of Northern Kansas has been working to help victims of predatory lending since 2007. It launched a new program last year, the Kansas Loan Pool Project, that offers a structured loan to qualified participants to help them escape extreme high-interest borrowing known as “payday” or “paycheck advance” loans.

Those lenders have moved aggressively into Salina, Hays, Manhattan, Junction City and Concordia. Online lenders can reach anyone with access to the Internet.

Catholic social teaching doesn’t prohibit the charging of reasonable interest on loans. However, it does consider exorbitant interest — usury — as wrong.

In the video, Bishop Weisenburger says usury is one of the practices “that are plainly harmful to the poor and simply contrary to the teachings of Christ.”

“It’s always been a Church teaching, but we never talk about it anymore,” added Michael Schuttloffel, executive director of the Kansas Catholic Conference, the public policy arm of the four Kansas bishops.

“Charging an unjust interest rate as being wrong was universal,” he said, but that has changed.

Even Pope Francis weighed in on the topic earlier this year, calling usury “a dramatic social ill.”

“When a family has nothing to eat, because it has to make payments to usurers, this is not Christian, it is not human,” the pope said. “This dramatic scourge in our society harms the inviolable dignity of the human person.”

Kansas is among 35 states that have few or no regulations on payday lending.

The Consumer Federation of America, an association of non-profit consumer organizations, reports that in Kansas, loans are capped at $500, with the finance rate and fees capped at 15 percent. Only two loans can be outstanding at one time.

That doesn’t sound unreasonable until you understand how payday lending works, explains Claudette Humphrey, who directs the Kansas Loan Pool Project for Catholic Charities.

An individual can secure a $500 loan with no credit or background check, using only proof of income, hence the “payday” or “paycheck advance” term. The loan typically is due in 14 days, with up to 15 percent interest charged, resulting in a balloon payment of $575.

Most borrowers can’t pay back the loan in full in 14 days, so a new loan is issued to pay off the first loan, with interest then charged on the new loan balance. That 15 percent interest rate on a two-week loan compounds to 390 percent over the course of a year.

“Every two weeks, it’s a brand new loan. That’s how they get away with it,” Humph­rey said. “Some people stay in it for over a year, some two years, some three years.”

Title loans use the vehicle title as collateral and typically must be repaid in a month. Although the loan usually is for less than the vehicle is worth, the borrower risks losing the vehicle if the loan isn’t repaid on time. The Consumer Federation of America says that for a typical title loan, annual interest can compound to 300 percent.

Payday lenders target people who likely can’t pay back the loan, Humphrey said. People who have good credit can go to a bank or credit union or even use a credit card for a cash advance, she explained.

Many payday borrowers are on fixed incomes and feel they have nowhere else to turn, while others with relatively good-paying jobs have expenses that exceed their incomes because they haven’t made smart financial decisions.

People don’t think about the consequences of a payday loan, even if they realize the risk.

“It’s hard to explain. It’s a horrible feeling” to be that desperate for cash, said Humphrey, who found herself in the same situation several years ago.

“You know you need the money, and here’s a place that will give it to you. All you’re thinking is, ‘I’m keeping the lights on,’ ‘I’m fixing my car’ … whatever it is,” she said. “You don’t think two weeks ahead.”

Humphrey said she was able to escape the cycle of trying to pay off two payday loans by asking her family for help. Many borrowers, however, don’t have that support system and have nowhere to go.

People have had their wages garnished, lost their vehicles or been evicted or had their utilities cut off, she said.

At least five clients have told Humphrey that if it hadn’t been for the Kansas Loan Pool Project, they would have considered suicide.

“This project literally, and sadly, has saved lives,” she said.

Catholic Charities first began working to help victims of payday lending in 2007. The Salina Area Savings and Education Loan Program, which still operates, combines funding from University United Methodist Church in Salina and loan processing by Bennington State Bank to offer short-term loans to help Saline County residents get out of high-interest debt and establish credit. Catholic Charities screens applicants for the loans.

But Catholic Charities wanted to expand the assistance throughout the Diocese of Salina, as well as offer one-on-one financial counseling and education for clients.

A grant from the Catholic Campaign for Human Development, facilitated by Catholic Rural Life, funded the administrative costs for the Kansas Loan Pool Project. The United Methodist Health Ministry Fund donated $25,000 and Catholic Charities fronted another $25,000 to guarantee the loans; that money is kept on deposit. Sunflower Bank of Salina agreed to administer the loans.

Initially, 18-month loans of $1,000 were available, but to help provide assistance to more people, loans have been scaled back to $700 for 12 months.

Once an applicant is approved, Humphrey meets with the borrower monthly to help craft a budget, ensure that loan payments are made on time and learn more about financial management.

That monthly connection is key to the program’s success, says Michelle Martin, executive director of Catholic Charities of Northern Kansas.

“No one else at this time is doing this,” Martin said of the case management her office is providing.

She wants to expand the program, but Humphrey’s time is consumed by the 32 open loans she currently manages.

“To do it right, we need to expand it to all of our 31 counties,” Martin said, but so far the funding isn’t available. The CCHD grant ends next June, so her staff is focusing efforts on trying to replace that funding first before looking for more money to expand the project.

Although there have been some loan defaults, Humphrey considers the program a success.

“One client paid off her loan, which raised her credit rating, and she was able to secure a conventional loan for a car without having a co-signer,” Humphrey said. The woman called Humphrey to share her good news.

Both Humphrey and Martin said there shouldn’t have to be a Kansas Loan Pool Project.

The 15 states that have restricted or banned payday lending have seen the amount of money owed by borrowers drop significantly.

The Pew Charitable Trust reported last October in the third of a three-part study that in Colorado, where lump-sum repayment was banned and replaced by installment payments over six months, borrowers paid 42 percent less annually than under the conventional model.

The Pew study found that 12 million people annually spend more than $7 billion on payday loans. On average, a borrower takes out eight successive loans of $375 each per year, spending $520 on interest.

Its survey found 5.5 percent of adults nationwide have used a payday loan in the past five years. In Kansas, that number is 8 percent.

In states where payday loans have been restricted, the Pew study found that most borrowers chose other options: They cut back on food and clothing expenses, delayed paying some bills, borrowed from family or friends, or sold or pawned possessions.

And, in the states that have restricted payday lending, borrowers have not sought similar loans through online sources, the Pew study showed.

The Pew study urges the 35 states that have few restrictions on payday lending to:

• Limit payments to an affordable percentage of a borrower’s periodic income. The Pew study indicates that payments above 5 percent of gross income are often unaffordable. One of Humphrey’s clients had a monthly income of $800 but had been approved for a second $500 payday loan while her first $500 payday was still active.

• Spread costs evenly over the life of the loan.

• Guard against harmful repayment requirements or collections practices.

• Require concise disclosures that reflect periodic and total costs upfront.

• Set maximum allowable charges.

The Consumer Financial Protection Bureau, established by Congress, says it recognizes that demand exists for small-dollar loans.

“These types of credit products can be helpful for consumers if they are structured to facilitate successful repayment without the need to repeatedly borrow at a high cost,” CFPB stated in April 2013. “However, if the cost and structure of a particular loan make it difficult for the consumer to repay, this type of product may further impair the consumer’s finances.”

The federal government has stepped in by capping interest charged on loans to U.S. military personnel at 36 percent. However, states have the right to govern their own banking practices for non-military residents.

Both Schuttloffel, head of the Kansas Catholic Conference, and Martin of Catholic Charities say the likelihood of the Kansas Legislature taking any action is slim.

“The Legislature probably won’t do anything,” Schuttloffel said.

Martin said too many other issues, such as educational funding, have more importance in Topeka than helping victims of payday lending.

In addition, restricting lending practices is seen as anti-business, and under the current legislative environment, those issues tend to be off the table, Martin added.

“The federal government has capped the interest rate for military members, so it can be done,” Martin said.

Despite the lack of state regulation and uncertain funding for the Kansas Loan Pool Project, Martin and Humphrey are determined to keep the program operating.

“It’s the right thing to do,” Martin said. “There are too many people out there in need.”

[…]

How One State Succeeded In Proscribing Payday Loans | SQ Pixels

Image home_apply_online.jpg

Payday Loans Columbus ?ill supply instantaneous cash advance payday loans ?nto your bank account as m?ch a? $one quick cash usa t?ousand. ?ou not to make the cash advance payday loans process ? embarrassing trip. ?ou’ll feel t?at getting t?e cash advance y?u ?ant online with Payday Loans Columbus i? admittedly simple ?nce you f?ll o?t our application. It takes m?ch les? t?an simply 5 minutes t? apply fo? a quick cash advance now t?en get the cash you ?ant straight aw?y.

EZMONEY focuses ?n Payday Loans , Money Advance Loans , Installment Loans and Title Loans ?ll of o?r short-time period loans ?re created to offer yo? quick entry to simple cash in ord?r to show you how to make end? meet. We understand that eve?yone ha? diffe?ent financial ne?ds. That’s t?? reason we offer quite ? lot ?f loan options ?hich m?ght b? designed with y?u in thoug?ts. Visit ?ne am?ng our locations at t?e moment allo? ?s to f?nd a loan t?at wo?ks best fo? yo?. A-All Monetary has created a swift process for cash advance loans. Applicants ?ill find out if t?ey ar? accredited for our payday loans ?ithin minutes. ?f authorized, you may select t? hav? ?our cash deposited directly ?nto ?our checking account ?n a single day. ?t’s th?t simple! PayDay Loans – ?o You N?ed Money N?w? Pay Day Loans – Apply Online

You poss?bly ?an repay an online cash advance with an ACH payment. (?h?s can b? a type ?f digital debit ?ut ?f you? checking account.) ?hroughout the mortgage software, one of many items ?f information requested ?s yo?r checking account routing num?e?. On-line lenders use that inf?rmation to deposit t?e payday quick cash loan into your account. T?en wh?n the loan i? du?, th?y will debit th? mortgage ?mount and charges instantly f?om y?ur account. ?his occurs when borrowers, unable t? repay t?? loan, take out new loans or rollover the previous one. You pay t?e charges on y?ur loans o?e? and ?ver again, wit? ?ut ever having th? ability to repay the mortgage. ?n ?ther phrases, one-third of payday loan debtors accounted fortwo-thirds ?f payday loans m?de ?n Washington State in2009. Watch ?ut for Web Loans PDF Check u? out at

Payday loans are loans prima?ily based ?n your pay examine. Th? standard ?ourse of ?s once authorised f?r ? mortgage the payday lender ?ill deposit funds instantly into yo?r checking account. At ?ou? next pay ?ate t?e lender ?ill robotically deduct t?? principal and costs fr?m ??ur checking account. These fees range from around $9 t? $30 pe? $100 borrowed. So in the event ?o? get $300 deposited into you? checking account, ?n yo?r next payday $327 t? $390 ?ill be robotically deducted ?ut of ??ur account relying ?n the fee in ?our pa?ticular mortgage. ?f the complete deduction ?ill be m?de then the mortgage ?s paid in f?ll and you might be done.

Kansas Metropolis installment loans ?ave barely completely ?ifferent qualifications. ?eed ?ifferent fast money options? Sell ?our gold fo? cash! Perh?ps ? payday ?r money advance loan isn’t t?e proper match for you. If not, sell ?our gold f?r quick moneyWe purchase gold ?ere in Kansas Metropolis. ?nd we’ll ?ossible pay ?ou 2 to 3 instances extra on y?ur gold than you may find els?where within th? area. Plea?e see Rates ?nd Phrases to check th? provision of ?n-line loans and extensions in ?our ?tate. CashNetUSA shouldn’t ?e ? lender in all states. ?n s?me states, CashNetUSA w?ll (i) a?t as ? Credit score Service Gr??p t? arrange a mortgage ?etween you and a th?rd-party lender, ?r (ii) in Texas, ?ct ?s a Credit score Entry Business ?etween ?ou ?nd ? thir?-occasion lender. Select ?our Stat? and Get Cash

[…]

Payday lender ACE Cash Express is hit with a $10M fine


Payday lender ACE Cash Express is hit with a $10M fine

28th July 2014 · 0 Comments

By Charlene Crowell
NNPA Writer

(NNPA) – For the second time in as many years, the Consumer Financial Protection Bureau (CFPB) has fined a major payday lender. On July 10, Director Richard Cordray announced that one of the nation’s largest payday lenders, ACE Cash Express, will pay $10 million in restitution and penalties for directing its employees to “create a sense of urgency” when contacting delinquent borrowers. This abusive tactic was used to perpetuate the payday loan debt trap.

CFPB has ordered ACE Cash Express to provide consumers with $5 million in refunds and the same amount in penalties for its violations. The firm operates in 36 states and in the District of Columbia with 1,500 storefronts, 5,000 associates and online loans.

“We believe that ACE’s aggressive tactics were part of a culture of coercion aimed at pressuring payday borrowers into debt traps,” said Cordray. “Our investigation uncovered a graphic in ACE’s training manual that lays out a step-by-step loan and collection process that can ensnare consumers in a cycle of debt. When borrowers could not pay back their loans, ACE would subject them to illegal debt collection threats and harassment.”

Commenting on CFPB’s actions, Mike Calhoun, president of the Center for Responsible Lending, said, “This enforcement action also confirms what our research found long ago: payday lenders depend on keeping vulnerable consumers trapped in an endless cycle of debt of 300-400 percent interest loans. . . .It’s real, it’s abusive and it’s time to stop.”

CRL research shows that payday loans drain $3.4 billion a year from consumers. Further, CRL has long held that the payday industry preys on customers who cannot repay their loans.

Now, with CFPB releasing an item from ACE Cash Express’ training manual, that contention is proven to be true. The ACE graphic shows how the business model intends to create a debt cycle that becomes increasingly difficult to break and urges its associates to be aggressive.

Across the country, the South has the highest concentration of payday loan stores and accounts for 60 percent of total payday lending fees. Missouri is the only state outside of the South with a comparable concentration of payday stores.

Last year, another large payday lender, the Fort Worth-based Cash America International, faced similar enforcement actions when CFPB ordered it to pay $5 million in fines for robo-signing court documents submitted in debt collection lawsuits. Cash America also paid $14 million to consumers through one of its more than 900 locations throughout the United States, Mexico and the United Kingdom.

On the same day that the CFPB’s enforcement action occurred, another key payday- related development occurred.

Missouri Gov. “Jay” Nixon vetoed a bill that purported to be payday reform. In part, Gov. Nixon’s veto letter states, “allowing payday lenders to charge 912.5 percent for a 14-day loan is not true reform. . . Supporters point to the prohibition of loan rollovers; but missing from the legislation is anything to address the unfortunately all-too-common situation where someone living paycheck-to-paycheck is offered multiple loans by multiple lenders at the same time or is encouraged to take out back-to-back loans from the same lender. . . .This bill cannot be called meaningful reform and does not receive my approval.”

Speaking in support of Gov. Nixon’s veto, Pastor Lloyd Fields of Kansas City added, “The faith community applauds Governor Nixon’s moral leadership in holding lawmakers to a higher standard on payday lending reform. Missourians deserve nothing less.”

On the following day, July 11, the Federal Trade Commission (FTC) fined a Florida-based payday loan ‘broker’ $6.2 million in ill-gotten gains. According to FTC, the firm falsely promised to help consumers get payday loans. After promising consumers to assist them in securing a loan in as little as an hour, consumers shared their personal financial data. However that information was instead used to take money from consumers’ bank accounts and without their consent.

Speaking on behalf of the FTC, Jessica Rich, director of FTC’s Bureau of Consumer Protection, said, “These defendants deceived consumers to get their sensitive financial data and used it to take their money. The FTC will continue putting a stop to these kinds of illegal practices.”

Looking forward, CFPB’s Cordray also sees a need to remain watchful of payday developments.

“Debt collection tactics such as harassment and bullying take a profound toll on people – both financially and emotionally”, said Cordray. “The Consumer Bureau bears an important responsibility to stand up for those who are being wronged in this process.”

This article originally published in the July 28, 2014 print edition of The Louisiana Weekly newspaper.

[…]

Payday lender ACE Cash Express is hit with a $10M fine | New …


Payday lender ACE Cash Express is hit with a $10M fine

28th July 2014 · 0 Comments

By Charlene Crowell
NNPA Writer

(NNPA) – For the second time in as many years, the Consumer Financial Protection Bureau (CFPB) has fined a major payday lender. On July 10, Director Richard Cordray announced that one of the nation’s largest payday lenders, ACE Cash Express, will pay $10 million in restitution and penalties for directing its employees to “create a sense of urgency” when contacting delinquent borrowers. This abusive tactic was used to perpetuate the payday loan debt trap.

CFPB has ordered ACE Cash Express to provide consumers with $5 million in refunds and the same amount in penalties for its violations. The firm operates in 36 states and in the District of Columbia with 1,500 storefronts, 5,000 associates and online loans.

“We believe that ACE’s aggressive tactics were part of a culture of coercion aimed at pressuring payday borrowers into debt traps,” said Cordray. “Our investigation uncovered a graphic in ACE’s training manual that lays out a step-by-step loan and collection process that can ensnare consumers in a cycle of debt. When borrowers could not pay back their loans, ACE would subject them to illegal debt collection threats and harassment.”

Commenting on CFPB’s actions, Mike Calhoun, president of the Center for Responsible Lending, said, “This enforcement action also confirms what our research found long ago: payday lenders depend on keeping vulnerable consumers trapped in an endless cycle of debt of 300-400 percent interest loans. . . .It’s real, it’s abusive and it’s time to stop.”

CRL research shows that payday loans drain $3.4 billion a year from consumers. Further, CRL has long held that the payday industry preys on customers who cannot repay their loans.

Now, with CFPB releasing an item from ACE Cash Express’ training manual, that contention is proven to be true. The ACE graphic shows how the business model intends to create a debt cycle that becomes increasingly difficult to break and urges its associates to be aggressive.

Across the country, the South has the highest concentration of payday loan stores and accounts for 60 percent of total payday lending fees. Missouri is the only state outside of the South with a comparable concentration of payday stores.

Last year, another large payday lender, the Fort Worth-based Cash America International, faced similar enforcement actions when CFPB ordered it to pay $5 million in fines for robo-signing court documents submitted in debt collection lawsuits. Cash America also paid $14 million to consumers through one of its more than 900 locations throughout the United States, Mexico and the United Kingdom.

On the same day that the CFPB’s enforcement action occurred, another key payday- related development occurred.

Missouri Gov. “Jay” Nixon vetoed a bill that purported to be payday reform. In part, Gov. Nixon’s veto letter states, “allowing payday lenders to charge 912.5 percent for a 14-day loan is not true reform. . . Supporters point to the prohibition of loan rollovers; but missing from the legislation is anything to address the unfortunately all-too-common situation where someone living paycheck-to-paycheck is offered multiple loans by multiple lenders at the same time or is encouraged to take out back-to-back loans from the same lender. . . .This bill cannot be called meaningful reform and does not receive my approval.”

Speaking in support of Gov. Nixon’s veto, Pastor Lloyd Fields of Kansas City added, “The faith community applauds Governor Nixon’s moral leadership in holding lawmakers to a higher standard on payday lending reform. Missourians deserve nothing less.”

On the following day, July 11, the Federal Trade Commission (FTC) fined a Florida-based payday loan ‘broker’ $6.2 million in ill-gotten gains. According to FTC, the firm falsely promised to help consumers get payday loans. After promising consumers to assist them in securing a loan in as little as an hour, consumers shared their personal financial data. However that information was instead used to take money from consumers’ bank accounts and without their consent.

Speaking on behalf of the FTC, Jessica Rich, director of FTC’s Bureau of Consumer Protection, said, “These defendants deceived consumers to get their sensitive financial data and used it to take their money. The FTC will continue putting a stop to these kinds of illegal practices.”

Looking forward, CFPB’s Cordray also sees a need to remain watchful of payday developments.

“Debt collection tactics such as harassment and bullying take a profound toll on people – both financially and emotionally”, said Cordray. “The Consumer Bureau bears an important responsibility to stand up for those who are being wronged in this process.”

This article originally published in the July 28, 2014 print edition of The Louisiana Weekly newspaper.

[…]

The Skanner Newspaper – Consumer Finance Protection Bureau Slaps Payday Lender ACE Cash Express With $10 Million Fine

For the second time in as many years, the Consumer Financial Protection Bureau (CFPB) has fined a major payday lender. On July 10, Director Richard Cordray announced that one of the nation’s largest payday lenders, ACE Cash Express, will pay $10 million in restitution and penalties for directing its employees to “create a sense of urgency” when contacting delinquent borrowers. This abusive tactic was used to perpetuate the payday loan debt trap.

CFPB has ordered ACE Cash Express to provide consumers with $5 million in refunds and the same amount in penalties for its violations. The firm operates in 36 states and in the District of Columbia with 1,500 storefronts, 5,000 associates and online loans.

“We believe that ACE’s aggressive tactics were part of a culture of coercion aimed at pressuring payday borrowers into debt traps,” said Cordray. “Our investigation uncovered a graphic in ACE’s training manual that lays out a step-by-step loan and collection process that can ensnare consumers in a cycle of debt. When borrowers could not pay back their loans, ACE would subject them to illegal debt collection threats and harassment.”

Commenting on CFPB’s actions, Mike Calhoun, president of the Center for Responsible Lending, said, “This enforcement action also confirms what our research found long ago: payday lenders depend on keeping vulnerable consumers trapped in an endless cycle of debt of 300-400 percent interest loans. . . .It’s real, it’s abusive and it’s time to stop.”

CRL research shows that payday loans drain $3.4 billion a year from consumers. Further, CRL has long held that the payday industry preys on customers who cannot repay their loans.

Now, with CFPB releasing an item from ACE Cash Express’ training manual, that contention is proven to be true. The ACE graphic shows how the business model intends to create a debt cycle that becomes increasingly difficult to break and urges its associates to be aggressive.

Across the country, the South has the highest concentration of payday loan stores and accounts for 60 percent of total payday lending fees. Missouri is the only state outside of the South with a comparable concentration of payday stores.

Last year, another large payday lender, the Fort Worth-based Cash America International, faced similar enforcement actions when CFPB ordered it to pay $5 million in fines for robo-signing court documents submitted in debt collection lawsuits. Cash America also paid $14 million to consumers through one of its more than 900 locations throughout the United States, Mexico and the United Kingdom.

On the same day that the CFPB’s enforcement action occurred, another key payday- related development occurred.

Missouri Gov. “Jay” Nixon vetoed a bill that purported to be payday reform. In part, Gov. Nixon’s veto letter states, “allowing payday lenders to charge 912.5 percent for a 14-day loan is not true reform. . . Supporters point to the prohibition of loan rollovers; but missing from the legislation is anything to address the unfortunately all-too-common situation where someone living paycheck-to-paycheck is offered multiple loans by multiple lenders at the same time or is encouraged to take out back-to-back loans from the same lender. . . .This bill cannot be called meaningful reform and does not receive my approval.”

Speaking in support of Gov. Nixon’s veto, Pastor Lloyd Fields of Kansas City added, “The faith community applauds Governor Nixon’s moral leadership in holding lawmakers to a higher standard on payday lending reform. Missourians deserve nothing less.”

On the following day, July 11, the Federal Trade Commission (FTC) fined a Florida-based payday loan ‘broker’ $6.2 million in ill-gotten gains. According to FTC, the firm falsely promised to help consumers get payday loans. After promising consumers to assist them in securing a loan in as little as an hour, consumers shared their personal financial data. However that information was instead used to take money from consumers’ bank accounts and without their consent.

Speaking on behalf of the FTC, Jessica Rich, director of FTC’s Bureau of Consumer Protection, said, “These defendants deceived consumers to get their sensitive financial data and used it to take their money. The FTC will continue putting a stop to these kinds of illegal practices.”

Looking forward, CFPB’s Cordray also sees a need to remain watchful of payday developments.

“Debt collection tactics such as harassment and bullying take a profound toll on people – both financially and emotionally”, said Cordray. “The Consumer Bureau bears an important responsibility to stand up for those who are being wronged in this process.”

Charlene Crowell is a communications manager with the Center for Responsible Lending. She can be reached at Charlene.crowell@responsiblelending.org.

[…]

Payday loan case reveals brutal interest rates | Wichita Eagle

Tiffany Kelker was stuck.

In January 2011, finding herself in need of some financial assistance after the holidays, she had taken out a $600 “payday loan” from an online lending business that advertised fast cash.

In the ensuing months, however, the Billings, Mont., mother of five watched as the company withdrew money electronically from her bank account, according to court documents. Eventually the lender took more than $1,800 in interest charges alone, which court records calculated as an annual percentage rate of 780 percent.

Kelker would eventually file suit against Geneva Roth Ventures Inc., an Internet-based lending operation headquartered in Mission, Kan.

The Montana case was only the latest in a collection of legal issues involving Geneva Roth and its CEO, Mark Curry. Several other states already had barred the company from doing business, according to court records.

The Montana case highlights the controversial tactics such companies use – and the increased scrutiny their tactics have attracted from state and federal agencies.

“Payday lending is right up there among our top issues,” said Nikhil Singhvi, staff attorney for the Federal Trade Commission.

Those companies that make up the industry can be hard to track.

The office listed on Kansas paperwork as the Geneva Roth headquarters in Mission features no sign in front, although state records still list it as an active company.

Despite multiple attempts, Curry could not be reached for comment for this story. Curry’s Montana lawyer issued a statement on his behalf, however, saying Geneva Roth is no longer in business and was happy to resolve the Montana case.

‘Wild West mentality’

Whatever the status of Geneva Roth, Curry established himself as a significant figure within the industry. He was an early member of the Online Lenders Alliance, a group founded in 2005 purportedly to serve as a kind of industry watchdog.

The goal of the alliance, according to its website, is “to protect the industry against potential damage caused by inept lenders.”

“Like many new Internet industries, it can be a little bit of a Wild West mentality,” said Peter Barden, a spokesman for the alliance. “And the folks that brought it together wanted to create some really good rules based on integrity, with the focus on the consumer.”

But while industry proponents argue that online payday lenders offer an important and quick form of financial relief not available elsewhere, critics accuse these companies of charging exorbitant interest rates, failing to adequately inform consumers about fees and trapping vulnerable individuals.

In recent years, numerous state agencies have joined the Consumer Financial Protection Bureau and FTC to crack down on predatory lenders.

In Arkansas, for instance, Geneva Roth agreed to pay $60,000 to the attorney general’s office after the state argued that the company’s annual interest rate for its customers ranged from 364 percent to 1,365 percent – exponentially higher than the 17 percent loan interest rate the state’s constitution allows.

(Although the defendants – Geneva Roth Capital Inc., Geneva Roth Ventures Inc., LoanPointUSA.com and Curry – denied violating any Arkansas laws, they agreed to stop doing business in the state. In this lawsuit, as in others, Geneva Roth was listed as doing business as LoanPoint.)

Kansas officials said they had received no complaints against Geneva Roth, and complaints in Missouri are not public record.

But in Connecticut, a cease-and-desist order issued by the state banking commissioner accused Geneva Roth of charging multiple customers interest rates in excess of 700 percent. Other states – including California, Indiana, Oregon and Washington – also have banned Geneva Roth from doing business within their boundaries.

And then there was Kelker’s case in Montana.

As loan payments were continually taken from her bank account, Kelker fell behind on other bills. Unsure what to do, she found herself locked in a nightmarish situation.

“I thought, how am I going to get these people off my back?” Kelker said. “Because it just felt like there was no end to the madness. I was paying them and paying them and paying them, but there was just no end.”

After a meeting with a consumer credit counselor aimed at managing some of her debt, Kelker was referred to Montana-based attorney John Heenan, who agreed to take her case pro bono.

The case would later grow into a class action lawsuit that included more than 380 Montana residents.

In court filings, Geneva Roth denied Kelker’s allegations, adding that because any loans were made outside the state of Montana, the claims didn’t fall under state law.

In the end, however, the company agreed to forgive outstanding debts, according to court documents, and Heenan said that totaled hundreds of thousands of dollars. Curry’s company also agreed to pay a $233,000 settlement, most of which was dispersed among the plaintiffs, and cease business dealings in Montana unless it registers with the state, according to court records.

Heenan describes the online lending industry as a “cat and mouse” game, with some lenders going to great lengths to remain a step ahead of regulators. Some, for instance, have moved into Native American tribal jurisdictions or overseas as a way to avoid prosecution. Others operate under a variety of names in an effort to make their companies’ dealings difficult to track.

And unlike storefront lenders, which feature concrete business locations, online lenders often work in the shadows of the Internet.

“That can add a level of complexity for the consumer that a storefront won’t have,” said Singhvi of the FTC, which has reached settlements with some companies stemming from alleged deceptive practices. “Because a consumer can very easily go back to a store and resolve any consumer complaint face to face.”

Finding the players

Tucked into suburban Johnson County, the building listed on a state business filing as Geneva Roth Ventures Inc. sits on a quiet residential street, not far from a Target and a collection of fast-food restaurants. The building itself is rather unremarkable – unlike other nearby businesses, there are no signs indicating what services it might offer.

“I don’t know what they do,” said an employee at a neighboring business. “I don’t know if they’re a call center or what.”

On a recent weekday, a receptionist at the building told a Star reporter that Curry was unavailable. Another employee offered to take the reporter’s information, although the message would go unreturned.

A week later, an employee arrived at the locked front door to greet a visitor.

Asked what company was operating out of the building, she initially declined to answer.

But when asked whether it was, in fact, Geneva Roth, she quickly said no.

“This is MacFarlane Group,” she replied.

Nevada records list Curry as secretary and treasurer of the MacFarlane Group. On its website, the company describes itself as being “dedicated to helping businesses succeed” and lists information technology and analytics among its services.

In an e-mail, Peter Habein, the Montana attorney who represented Curry and Geneva Roth in the Kelker case, said Geneva Roth is no longer in business.

Tracking the whereabouts of Curry himself can also be difficult.

In business filings with the state of Kansas, Curry lists a Puerto Rico address. He also has ties to Nevada, hosting a party there in 2012 for a local charity that featured a Monopoly theme and scantily clad women dressed as police officers, according to media reports.

And in multiple attempts to have Curry served with the lawsuit in Montana, Heenan was unsuccessful.

But while tracking down online lenders can often feel like chasing a ghost for everyday citizens and their lawyers, regulatory agencies, at least, seem to be catching up.

“We have the tools to trace where the money is going, so we have a pretty good handle of who’s operating,” said Singhvi of the FTC.

“Even if consumers are left in the dark.”

[…]

Gov. Nixon vetoes payday loans bill, saying it won't protect …

KANSAS CITY, Mo. – Missouri Governor Jay Nixon vetoed Senate Bill 694 on Thursday, saying it was false hope for true reform of payday loan company policies.

The bill would, in some cases, cap the interest rate at 35 percent for borrowers. However, on short-term loans the interest rate would skyrocket.

On a 14-day loan, the interest rate would be allowed to increase to more than 900 percent if it’s stretched out over one year. The bill would also allow borrowers to get multiple loans from multiple companies at once.

For those reasons, Gov. Nixon called the bill a sham effort and said it won’t protect Missourians from the downward spiral into debt.

Metro man Elliott Clark, who lost his home after taking out payday loans, applauds the governor’s decision, while the bill sponsor says this bill was at least a step in the right direction.

Smoking ribs and getting ready for a family reunion, Clark is totally in his element. For him, taking care of his family is priority number one.

“My pride would not let me let my family do without. Nobody in their right mind does,” he said.

Clark has children he sent to college, he’s a Marine, a Vietnam-era veteran, and he was happy with his simple but good life.

“We were doing okay until my wife fell and broke her ankle in three places,” he explained.

Thirty-five thousand dollars in medical bills forced him into seeking about $2,500 in payday loans.

“Over the course of five years, that’s how long I had these loans, I wound up paying $30,000 in interest,” he said.

Clark spoke out against current payday loan policies, and he supports Gov. Nixon’s veto of Senate Bill 694.

The bill would prohibit payday lenders from giving multiple loans to the same person, unless that person went to several different companies. The governor said that would only prolong the cycle of debt.

Senator Mike Cunningham, a Republican from the Springfield area, sponsored the bill. He says it capped most interest rates at 35 percent, as reform advocates wanted. Senator Cunningham says the bill also would have allowed borrowers to have an extended payment plan for their first loan from a company, which he believes would have helped.

But Clark says the bill wasn’t strong enough to protect people like him, just trying to do the best he can.

[…]