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Calgary Council Cracks Down on City Payday Loan Operators

In the November 9th meeting of the Calgary City Council a report from the Calgary Planning Commission was presented on the subject of pawn shops and pay day loans in the Calgary area.

Of particular concern to the commission was the tendency for these businesses to coalesce

It reported that there were 82 payday lending […]

Editorial: Amarillo takes interest in payday loans | Amarillo Globe …

There’s a lot of “whereas” in a recent draft proposal to amend the Amarillo Municipal Code and regulate so-called payday and auto title loan businesses.

Since whereas is pretty much standard legal jargon, and whereas some form of regulation of this aforementioned industry is needed, amend away.

During Tuesday’s Amarillo City Council work session, council members were given a draft of an ordinance that would help curb the predatory practices of many of these businesses. We’ve said it before and we’ll say it again — some of these businesses make the Mafia look generous as far as interest rates.

The draft is just that — a draft that has not been voted on by the City Council, and is still up for discussion and review.

Since the state has done little to nothing to address the largely unregulated payday and auto title loan industry (the city council approved a resolution in February 2013 asking state lawmakers to take action, but with few results), cities have no other alternative but to approve or revamp their own laws.

According to the draft, the city will amend its municipal code with an article called the Credit Access Businesses Regulation.

“The purpose of this article is to protect the welfare of the citizens of the city of Amarillo by monitoring credit access businesses in an effort to reduce abusive and predatory lending practices. To this end, this article establishes a registration program for credit access businesses, imposes restrictions on extensions of consumer credit made by credit access businesses, and imposes recordkeeping requirements on credit access businesses,” the draft states.

While this amendment to the municipal code is far from finished, a registration program for payday and auto title loan businesses does not seem burdensome or intrusive. A nonrefundable application fee is included in the draft, but no specific fee amount is finalized. A financial penalty (offense) under this article is “punishable by a fine of not more than $500.”

The draft includes several examples of why the payday and auto title loan industry needs regulation. According to the Center for Responsible Lending, “loan rates for a car title are typically 20 to 30 times that of rates charged by credit card issuers,” and the average customer will pay back $650 over eight months on a $500 title loan.

We will see what the city comes up with, but at least it is addressing the issue of payday and auto title loans, and is considering taking steps to regulate an industry in need of some kind of governmental oversight.

This industry certainly would not be the first to face governmental regulations and standards.

[…]

Local payday loan store violates law

MORRIS – Payday loan providers owned by the company Cottonwood Financial Illinois have violated state law more than 90 times since March, and the Morris Cash Store was one of them.

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The Morris store racked up $7,000 in fines within three months for committing a handful of violations to the Consumer Installment Loan Act and Payday Loan Reform Act. These acts establish rules and regulations meant to protect borrowers from high interest rates that can create a cycle of debt.

The Cash Store, on Route 6, provides various cash loans for those who need to finance unexpected, emergency expenses.

The store was issued four separate violations: scheduling a monthly payment exceeding 50 percent of a borrower’s monthly income; failing to accurately determine if a borrower was eligible for a loan; issuing a payday loan exceeding 22.5 percent of a borrower’s monthly income; and failing to properly enter a loan into the database on the day it was made.

The infractions were issued by the Illinois Department of Financial and Professional Regulation and were listed in the department’s monthly disciplinary reports.

Managers of the Cash Store in Morris referred requests for comment to Cottonwood Financial Illinois headquarters, which did not return phone calls.

Sue Hofer, spokeswoman for IDFPR, said the department handles these violations on a case by case basis. Ultimately, they want to help a business correct its issues, not force owners to close the doors.

“Our goal is to get businesses into compliance, not shut them down,” Hofer said.

She said the flood of cash store violations comes after the CILA and PLRA were reinforced with tighter regulations.

The new rules are meant to further protect consumers from issues like unlimited loan rollovers, which involves taking out a new loan to cover expenses from a previous loan.

According to information from the Attorney General’s office, certain payday loans can legally reach an annual interest rate of 400 percent.

“What was happening is people would take out loans, then go back in and renegotiate to take out more money to pay back the first loan – and so all of the interest kept adding on and on and on,” Hofer said. “What we tried to do is rewrite [the acts], so there was a realistic opportunity for the loan to be repaid.”

But the laws don’t always protect consumers who are already trapped in a bad loan.

When places like the Cash Store and other payday loan services violate the law – issuing loans that are difficult to repay on time – the lender is fined, but the borrower “unfortunately has no recourse,” Hofer said.

Payday loan borrowers are eligible for an interest-free repayment program, upon request, but other cash installment loans are not eligible for the program, according to the Attorney General’s office.

Because of this, IDFPR encourages consumers to treat payday loans as an absolute last resort, after exhausting all other options.

Locally, nonprofits like We Care of Grundy County offer rent and food assistance to those with financial emergencies.

We Care Executive Director Denise Gaska said the organization has helped individuals who have become bogged down by payday loans, and typically encourage all of their clients to avoid the loans, even as a last resort.

“We always counsel people away from them, because they are really dangerous,” Gaska said.

However, in some instances, cash advance services can be useful for those with nowhere else to turn.

Gaska commended the Morris Cash Store for being the only place locally that will process electric and gas bills for clients in danger of having their utilities shut off.

“We recognize that emergencies happen,” Hofer said. “But before they take out a loan from a consumer installment store or payday lending store, they should try every other option.”

Tips for borrowing and dealing with debt

Before borrowing:

• Approach local churches, nonprofits and family members for financial aid before pursuing a payday loan

• Beware of installment loans and title loans which can have excessive hidden fees and high interest rates

• Research the lender through the Better Business Bureau and state disciplinary reports

• Know your rights as a borrower. Visit idfpr.com to learn more about what to ask and what to look for in your contract

Dealing with debt:

• Request to enroll interest-free repayment program to manage payday loan debts

• Visit idfpr.com or call the Department of Financial and Professional Regulation at 1-888-473-4858 to learn more about loan debt management.

Sources: Illinois Attorney General’s Office, Illinois Department of Financial and Professional Regulation

[…]

ICYMI: Context Florida: Drew J. Breakspear … – Capital Soup

ICYMI: Context Florida: Drew J. Breakspear: Common-sense regulation of payday loans helps FloridiansMar 12 • 77 Views • View Comments Published March 11, 2014If you follow financial news like I do, you have probably seen recent coverage about payday loans and the problems they pose for our state’s poorest residents.Payday loans are viewed negatively. More often than not, consumers pay high interest rates and some struggle to repay the loan. Several years ago, I had a brief conversation with a man who told me that he got into a pinch and took out a $300 payday loan. When I asked him how much interest he paid, he said “about $40.”We continued talking and I asked if he felt that $40 of charges on a $300 payday loan was too much. He looked at me and said, “It was the only way that I could feed my family the next week. I would have paid $100 to feed my family.”This story is not uncommon and Floridians are not the only ones affected by payday loans. According to The Pew Charitable Trusts, 12 million Americans use payday loans annually because they are often the only source of credit for many of our citizens.Often, those who would prohibit or curtail payday loans do not offer solutions that replace that source of credit. Are we protecting our citizens if we eliminate their only source of borrowing?As Commissioner of the Florida Office of Financial Regulation, I support the concept of payday loans and the protective measures put in place by the Legislature. Some critics of payday loans suggest that increasing access to payday lending services through the United States Postal Service is the solution.If the postal service offered payday loans in 50 states, ensuring the appropriate parameters and safety of these services would create a regulatory burden — not to mention a heavy cost for citizens.Throughout history, postal services around the world have done bank business, but the United States is different. Each state has its own laws and policies that govern their banking industry and financial markets.Should a government agency be in the business of making loans? Would the postal service abide by these state laws and policies? Would each state be responsible for regulating the postal service payday lending? Who would have jurisdiction to investigate complaints?Implementing such a program would undoubtedly require new laws and regulation at the state and federal levels. In Florida, it takes effort and diligence to make sure payday-lending services are following the law.The best option is to make certain that protections and safeguards are in place. Through placing a cap on the loan amount and loan fees, allowing only one loan at a time with a maximum 30-day loan period, and requiring a cooling off period between loans, we continue to make Florida’s financial marketplace a safe place to do business.New bills proposed by Sen. Garrett Richter and Rep. Kenneth Roberson (SB 590 and HB 623) will provide increased protection for consumers by rendering loan transactions uncollectable if made by unauthorized payday lenders.We promote efficient and effective regulation of Florida’s financial marketplace and protect Floridians and their money through common-sense financial practices.Drew J. Breakspear is Commissioner of the Florida Office of Financial Regulation. www.flofr.com Courtesy of Context Florida. […]

Drew J. Breakspear: Common-sense regulation of payday loans …

If you follow financial news like I do, you have probably seen recent coverage about payday loans and the problems they pose for our state’s poorest residents.

Payday loans are viewed negatively. More often than not, consumers pay high interest rates and some struggle to repay the loan. Several years ago, I had a brief conversation with a man who told me that he got into a pinch and took out a $300 payday loan. When I asked him how much interest he paid, he said “about $40.”

We continued talking and I asked if he felt that $40 of charges on a $300 payday loan was too much. He looked at me and said, “It was the only way that I could feed my family the next week. I would have paid $100 to feed my family.”

This story is not uncommon and Floridians are not the only ones affected by payday loans. According to The Pew Charitable Trusts, 12 million Americans use payday loans annually because they are often the only source of credit for many of our citizens.

Often, those who would prohibit or curtail payday loans do not offer solutions that replace that source of credit. Are we protecting our citizens if we eliminate their only source of borrowing?

As Commissioner of the Florida Office of Financial Regulation, I support the concept of payday loans and the protective measures put in place by the Legislature. Some critics of payday loans suggest that increasing access to payday lending services through the United States Postal Service is the solution.

If the postal service offered payday loans in 50 states, ensuring the appropriate parameters and safety of these services would create a regulatory burden — not to mention a heavy cost for citizens.

Throughout history, postal services around the world have done bank business, but the United States is different. Each state has its own laws and policies that govern their banking industry and financial markets.

Should a government agency be in the business of making loans? Would the postal service abide by these state laws and policies? Would each state be responsible for regulating the postal service payday lending? Who would have jurisdiction to investigate complaints?

Implementing such a program would undoubtedly require new laws and regulation at the state and federal levels. In Florida, it takes effort and diligence to make sure payday-lending services are following the law.

The best option is to make certain that protections and safeguards are in place. Through placing a cap on the loan amount and loan fees, allowing only one loan at a time with a maximum 30-day loan period, and requiring a cooling off period between loans, we continue to make Florida’s financial marketplace a safe place to do business.

New bills proposed by Sen. Garrett Richter and Rep. Kenneth Roberson (SB 590 and HB 623) will provide increased protection for consumers by rendering loan transactions uncollectable if made by unauthorized payday lenders.

We promote efficient and effective regulation of Florida’s financial marketplace and protect Floridians and their money through common-sense financial practices.

Drew J. Breakspear is Commissioner of the Florida Office of Financial Regulation. www.flofr.com Courtesy of Context Florida.

[…]

Ocala Star-Banner: Commissioner Drew J. Breakspear: Payday loans

Ocala Star-Banner: Commissioner Drew J. Breakspear: Payday loansMar 10 • 40 Views • View Comments Published March 8, 2014I thank the Ocala Star-Banner for its recent “Of letters and loans.” We need more coverage surrounding payday loans and the problems they pose to our state’s poorest. According to The Pew Charitable Trusts, 12 million Americans use payday loans annually, as payday loans are often the only source of credit for many of our citizens.As commissioner of the Florida Office of Financial Regulation, I support the concept of payday loans and the protective measures put in place by the Florida Legislature. However, I cannot agree that increasing access to payday lending services through the United States Postal Service (USPS) is the solution. If the USPS offered payday loans to customers in 50 states, ensuring the appropriate parameters and safety of these services would create a regulatory burden.Throughout history, postal services around the world have done bank business, but the United States is different. Each state operates under diverse laws and policies that govern their banking industry. Would each state be responsible for regulating the USPS payday lending services? Who would have jurisdiction to investigate complaints?Implementing such a large-scale program would undoubtedly require more than a “test run.” In Florida, it takes a great deal of effort and diligence to ensure payday lending services are following the law. Through placing a cap on the loan amount and loan fees, allowing only one loan at a time with a maximum 30-day loan period, and requiring a cooling off period between loans, we continue to make Florida’s financial marketplace safe to do business.New bills proposed by Sen. Garrett Richter and Rep. Kenneth Roberson (SB 590 and HB 623) will provide increased protection for consumers by rendering loan transactions uncollectable if made by unauthorized payday lenders.Drew J. Breakspear, Commissioner, Florida Office of Financial RegulationTallahassee […]

Bank overdraft costs 'can outdo payday loans' | The Times

Using an overdraft at a high street bank can cost more than taking out a payday loan, research has shown.

Which?, the consumer group which conducted the study, said that the mainstream credit industry was in as much need of regulation as the much-criticised fringe players.

The research shows authorised overdrafts with a leading bank can be as costly as a payday loan with companies such as Wonga. For example, borrowing £100 for 31 days will cost £30 with a Halifax authorised overdraft or £20 with some Santander accounts. Borrowing the same sum for the same time with a payday

[…]

Emergency Loan Helps Pay for Title Firm Audit

FARMINGTON — The state Financial Institutions Division took out a $458,000 emergency loan from another state agency to continue an audit of a failed Farmington title business that had thousand of dollars in cash and checks in various desk drawers.

The loan — the largest emergency loan ever received by a division of the New Mexico Regulation and Licensing Department — was approved June 21 by the state Board of Finance, which provides emergency funding to state government agencies.

The division got the loan because of a funding shortfall, and the Regulation and Licensing Department may request an appropriation from the Legislature during its next session to repay the loan.

Auditors are expected to turn over their report about the firm to law enforcement officials in November or December.

It has been more than five months since New Mexico Title closed abruptly Jan. 30, leading to revelations of missing funds and scrutiny from state regulators and law enforcement.

Darryl Millet, an Albuquerque attorney who is leading the audit, said auditors have recovered nearly $493,000 in funds linked to New Mexico Title Escrow. He reported auditors found $15,000 in cash in a file drawer at the business, and numerous undeposited checks in drawers and unopened mail.

State investigators arrived Feb. 3 to look into New Mexico Title in the wake of customer complaints. When investigators entered locked rooms in the business, they found an ornate wooden bar, a large pool table and refrigerated beer kegs.

Investigators later learned company funds paid for a $132,000 executive suite at the Denver Broncos’ football stadium.

They also found some accounts were filed using only the first names of account holders, making it next to impossible for investigators to track down account holders who are owed money. Investigators believe at least $1 million is missing.
— This article appeared on page B1 of the Albuquerque Journal

[…]