North Carolina CUs Claim Victory In FightWith Payday Lenders
DURHAM, N.C. - (03/06/06) -- Credit unions were applauding thenews last week that the last of major payday loan companies agreedto pull up stakes and leave the state. The actions by paydaylenders Check Into Cash, Check'n Go and First American Cash Advancefollows similar moves last year by Advance America Cash Centers andNationwide Budget Finance, all of which decided the state's toughpredatory loan rules make it difficult to operate in NorthCarolina. A representative for the Center for Responsible Lending,a subsidiary of Self Help CU, noted that it took five years ofcoordination by opponents of predatory lending to drive the paydaylenders out. That included new laws barring high-cost predatorylending practices, a 36% annual rate cap on payday loans, andenforcement by the state attorney general of the usury ceiling. "Ittook the leadership of a few lenders, such as State Employees CU,to offer an alternative product that actually meets the need foremergency credit without using that desperation as an excuse forabuse," said Mark Pearce, spokesman for the CRL. The CRL wascreated by Self Help CU President Martin Eakes to help in the fightagainst payday lenders and joined with other consumer groups tolobby state and federal lawmakers to enact additional consumerprotections. Under an agreement announced by the attorney general'soffice last week, the last three payday loan companies will stoplending immediately and halt all fees and interest accrued onexisting loans. The companies will also make payments totaling$700,000 to fund efforts to help consumers who may have beenaffected by the high-cost payday loans. Consumers will not accrueadditional interest, which is as high as 400% for some of theloans.