Controversial CU Payday Loan Operation Ceases
SALT LAKE CITY – A credit union-owned payday loan operation that raised the ire of consumer activists in recent months apparently has stopped making the high-interest loans, amid questions on the annual percentage rate charged borrowers.
Officials at CUonPayday, also marketed through dozens of credit unions as MyInstaCash, CUAccess and e-Access, did not answer numerous calls nor did officials at America First FCU, its part owner. But dozens of credit union links connected to the service said the payday loans no longer were being offered and sites operated by the company were blank yesterday.
The move comes as NCUA was looking into claims that the APR charged by more than 75 credit unions in a dozen states offering the product exceeded the agency’s 18% cap on interest. A study by the Boston-based consumer advocacy National Consumer Law Center earlier this year found that the charges connected to the loan, including a $59 per month fee and the 18% maximum allowable rate on a $300 loan amounted to an APR of 254%.
NCUA said yesterday it did not take supervisory action related to the Utah-based payday lender, only confirming that federally chartered credit unions are required to adhere to the agency’s 18% usury cap.
Linda Hilton, the director of the Utah-based Coalition of Religious Communities, a consumer group which staged June protests outside America First Credit Union, said she was notified by American First CEO Rick Craig that the credit union-owned company has stopped making the payday loans and they are no longer available at any of the participating credit unions. The company reportedly is working to develop another product for the targeted market.
“We’re very pleased,” Hilton told Credit Union Journal yesterday. “We are waiting to see what comes next.”