Today is another great day for Arizona!

The House Commerce Committee refused to hear HB2550, because high-cost lenders are not welcome in this state.

Committee Chairman Jim Weiers, the bill’s author, held the bill from consideration because of the clear lack of support. The committee meeting just adjourned.

This is a great victory, and it’s because of YOU! The committee members reported they received floods of emails and phone calls asking them to vote NO. This bill had no chance of passing today because of your civic engagement.  THANK YOU.

Here are some of the organizations and individuals that registered their opposition to HB2550 in the hearing today:

AARP Arizona, Arizona Consumers Council, Southwest Center for Economic Integrity, Society of St. Vincent de Paul, William E Morris Institute for Justice, SEIU Arizona, Arizona Coalition Against Domestic Violence, Children’s Action Alliance, Christina Plante, Virginia Brant, and Mary Murphy, state president of the All Arizona School Retirees Association (AASRA).

Additionally, many of you wrote your legislators directly. One constituent put it very clearly:

“As a conservative voter (and registered Republican), these types of businesses that target lower income people really irk me… Triple digit interest is loan sharking, plain and simple…

[And] now the people have spoken, and let the payday loans clause expire.  This is really the issue: will you go against what the people of Arizona have clearly stated they want?”

Thank you all for speaking up!

This victory would not have been possible without you. And, we couldn’t have done it without the legislators who know that Arizonans deserve better.

We thank those members of the House Commerce Committee who were prepared to vote ‘No’ on this predatory lending bill today.

While we’ve won the day, we don’t believe we have heard the last of this bill, so stay tuned for updates, and thanks for staying involved!

All our best,

Arizonans for Responsible Lending

Your calls to Legislators against HB2550 are working!  Keep them up!

We are hearing great reports from the field and have gotten a couple of commitments from Commerce Committee members to vote NO!

The bill, HB2550: “Small Installment Loans,” will be heard in the House Commerce Committee TOMORROW MORNING, February 16th. (Mtg starts at 9:00am)

Please focus your calls this afternoon on the 5 members of the committee that need to hear from you most! (see below)

It will take you only about 5 minutes to make the five calls. But those five minutes could be huge for our ability to stop this predatory lending bill now. Please pick up the phone.

Thank you for taking action today!

David
Arizonans for Responsible Lending

~~~

Here’s why we should stop HB 2550:

• HB 2550 will legalize triple-digit APR interest rates to Arizona consumers for small consumer installment loans, exempting a new industry from the state’s 36% usury cap on consumer loans.

• HB 2550 ignores the voters’ mandate. When Arizona voters went to the polls in November 2008, they clearly said No, by a 60%-40% margin, to triple digit interest rates, special deals under the state’s usury caps, and fake “reforms” in the industry-sponsored Proposition 200.   HB 2550 ignores the voters’ mandate by legalizing another form of high cost consumer lending that will inevitably lead to long-term debt.

• Arizona has rejected these schemes for years! HB 2550 is the same fee structure as bills that were rejected in 2009 and 2008. Voters and the legislature repeatedly rejected triple-digit interest loans that generate piles of fees for the lender and long-term debt for the borrower.

• Arizona consumers cannot afford to replace one predatory loan product with another.  We fought for 10 years to finally rid the state of payday loans.  The voters don’t want new triple-digit loan products on the market. Our state already has consumer lenders offering small installment loans in AZ at the current 36% rate cap or less.

• NO MORE EXCEPTIONS TO THE CONSUMER LOAN ACT!

Contact these members of the

House Commerce Committee TODAY!

Tell them to Vote NO on HB2550!

Tell committee members to respect the voters’ will and reject triple-digit interest rate lending in Arizona.

Language of HB 2550: Click here

Commerce Committee Updates, including live video feed of the hearing on 2/16: Click here

Please vote NO on HB2550 on your agenda tomorrow, for the reasons below.

Thank you,

Kelly Griffith

Southwest Center for Economic Integrity
(520) 250-4416
www.economicintegrity.org

Just like payday loans, HB 2550 would create a special carve-out for high-cost loans:

• Just like payday, the proposed fee structure incentivizes long-term, triple-digit interest rate debt. These loans are no different than payday loans, particularly when you consider the massive loan flipping.  Records from companies making these loans in other states show that 85% to 90% of profits for these loans come from refinancing loans to existing customers!

• HB 2550 hinders a sustainable financial market: Once in the market, just like payday lenders, all of these lenders charge the exact same rate – the highest allowable. In the words of Andrew Morrison, CEO of Sun Loans/Brundage Management, “The ceilings in fact become floors and everyone charges the exact same rates.”

HB 2550 would replace one predatory product with another:

• HB 2550 would legalize triple-digit APR interest rates to Arizona consumers for small consumer installment loans, exempting a new industry from the state’s 36% usury cap on consumer loans (A.R.S. 6-632 – Finance charges).

• HB 2550 ignores the voters’ mandate. When Arizona voters went to the polls in November 2008, they clearly said NO, by a 60%-40% margin, to triple-digit interest rates, special exemptions from the state’s usury cap, and fake “reforms” in the industry-sponsored Proposition 200.  HB 2550 would ignore the voters’ mandate by legalizing another form of high-cost consumer lending – under another exemption from the Consumer Loan Act – that inevitably would lead to long-term debt for borrowers.

• Arizona consumers cannot afford to replace one predatory loan product with another.  Our state – and others – already has consumer lenders serving this market, offering small installment loans at the current 36% rate cap or less. In addition, charity and relief societies, friends and families, existing AZ financial institutions and credit unions that offer small unsecured loans under the terms of the existing rate cap already exist in Arizona.

Voters don’t want triple-digit interest rates allowed in Arizona:

• Voters clearly stated that the 36% cap should apply to all lenders. No more special deals!  The carve-out in HB 2550 would allow certain lenders to play by their own rules, giving them a government-regulated, government-endorsed, competitive advantage over other consumer lenders in the market.

• HB 2550’s schemes have been rejected many times: HB 2550 is the same fee structure as HB 2061 and HB 2071, both of which never even made it out of committee in 2009.  It’s the same as HB 2672 from 2008, which also was rejected.  Just as they did with payday loans, voters and the legislature repeatedly rejected triple-digit interest loans that generate piles of fees for the lender and long-term debt for the borrower.

Prop 200, the Payday Loan Reform Act (2008):

• Prop 200, placed on the ballot and financed with nearly $15 million by the payday loan industry in 2008, would have continued triple-digit interest loans in Arizona by extending the industry’s exemption from the Consumer Loan Act. In 29 of 30 legislative districts, every congressional district, and every county across the state, their proposal was rejected.
  

Voters agreed: No more special deals for predatory lenders!



Prop 200 Results by Legislative District (2008):

How the Fees Work in HB 2550:

HB 2550 would authorize acquisition fees and monthly handling fees using a complicated pricing structure.  The acquisition fee, 10% of the loan up to $75 dollars, is paid off within the first 90 days of the loan, but can be charged up front each time the loan is renewed.

HB 2550 would allow lenders to renew, or flip, loans up to three times per year.  There is no limit on the number of total renewals per loan. The lender does not have to wait until the end of the loan term to renew the loan and the lender may chose to renew the loan for an amount higher than the original loan.

We must marshal all resources to come out strongly against a predatory consumer lending bill, HB2550, right now.

The bill, called “Small Installment Loans,” will be heard in the House Commerce Committee this Wednesday, February 16th, at 9:00AM.

Here’s why we should stop HB 2550–NOW:

• HB 2550 will legalize triple-digit APR interest rates to Arizona consumers for small consumer installment loans, exempting a new industry from the state’s 36% usury cap on consumer loans.

• HB 2550 ignores the voters’ mandate. When Arizona voters went to the polls in November 2008, they clearly said No, by a 60%-40% margin, to triple digit interest rates, special deals under the state’s usury caps, and fake “reforms” in the industry-sponsored Proposition 200.   HB 2550 ignores the voters’ mandate by legalizing another form of high cost consumer lending that will inevitably lead to long-term debt.

• Arizona has rejected these schemes for years! HB 2550 is the same fee structure as bills that were rejected in 2009 and 2008. Voters and the legislature repeatedly rejected triple-digit interest loans that generate piles of fees for the lender and long-term debt for the borrower.

• Arizona consumers cannot afford to replace one predatory loan product with another.  We fought for 10 years to finally rid the state of payday loans.  The voters don’t want new triple-digit loan products on the market. Our state already has consumer lenders offering small installment loans in AZ at the current 36% rate cap or less.

• NO MORE EXCEPTIONS TO THE CONSUMER LOAN ACT!

Contact the members of the

House Commerce Committee TODAY!

Tell them to Vote NO on HB2550!

Tell committee members to respect the voters’ will and reject triple-digit interest rate lending in Arizona.

Language of HB 2550: Click here

Commerce Committee Updates, including video: Click here

Thank you for taking action,

Arizonans for Responsible Lending

Capitol Media Services reports:

Saying the demise of payday lending left a gap, a veteran legislator is proposing a new kind of consumer loan, one with higher interest rates than now allowed.

Rep. Jim Weiers, R-Phoenix, said the 2008 decision by voters to kill payday lending in Arizona left a “huge void” in the market, particularly for people whose credit history does not give them access to more traditional sources of borrowing. What’s left, he said, is pawning items and turning to unregulated and illegal loan sharks.

What Weiers proposes in House Bill 2550 is new rules for loans of $200 to $3,000. Interest rates would be on a sliding scale, from 4 percent a month for the first $750 up to 1 percent for anything between $2,250 and $3,000.

On top of that, lenders could charge an acquisition fee of up to 10 percent of the loan or $75, whichever was less.

Rep. Debbie McCune Davis, D-Phoenix, said Weirs’ proposal is little better than the high-interest, short-term loans that voters rejected.

“The bill is just one more form of predatory lending,” she said. “The sponsor of the bill seems to have missed the election in 2008 when the voters said ‘no’ to triple-digit interest rates.”

Arizona law generally caps interest on loans at an annual rate of 36 percent.

In 2000, though, legislators agreed to create an exception for “deferred presentment transactions.”

A borrower would write out a check that the lender would agree not to cash for up to two weeks in exchange for a fee of $17.85 for each $100 borrowed.

That translated out to an annual percentage rate of more than 400 percent.

That 2000 law, however, provided for only a 10-year experiment. Lawmakers refused to extend the law, and a heavily financed initiative by the payday-lending industry also fell short.

The lenders shuttered last June 30.

Weiers said that left a gap.

“If you have a car that needs $600 in repairs and you don’t have the $600, then you go down and get a rental car for $19 a day,” he said.

“At the end of the day . . . you still don’t have a car, and you still have to get the car fixed.”

Weiers said banks aren’t providing those small loans because they are not secured by collateral.

At the same time, he said, it’s harder to get credit cards. And those who have cards are finding their borrowing limits reduced.

Under Weiers’ proposal, the loans could be renewed up to three times. And companies that gave these loans could not provide more than one loan at a time to any borrower.

Weiers said those kind of limits should preclude the kind of abuse and financial problems created by payday lending, in which individuals got stuck in a cycle of debt, taking out one loan to pay off another.

McCune Davis is not convinced.

“These companies train their people to roll the loans over before they’re paid off,” she said. “They literally move the balance forward into a new loan so the consumers pay that interest over and over again. That’s part of the problem.”

She also rejected Weiers’ contention that people who don’t have bank accounts, good credit or credit cards need options like this. McCune Davis said there already is one: joining a credit union, which has to abide by the current interest rate caps.

“If you have a relationship with a credit union and you need a short-term loan, your odds of getting it are better that you would get a loan you can actually pay off and end up in a financially secure position rather than wind up deeper in debt,” she said.

The legislation likely will get a hearing because it’s assigned to the House Commerce Committee, which Weiers chairs.

To add your comments: http://www.azcentral.com/business/abg/articles/2011/02/10/20110210abg-loans0210.html#ixzz1Dbm8xWIP

PHOENIX (AP) — Arizona’s attorney general says the decision by another payday lending company to leave the state shows the expiration of a law that allowed the high interest loans is working.

South Carolina-based Advance America Cash Advance Centers Inc. announced Thursday that it will be closing all 47 of its locations in Arizona. A decade-old law allowing the high-interest loans expired June 30.

Attorney General Terry Goddard announced a program last month to pursue payday companies that continued operating as usual after the law changed. Goddard says Advance America made millions by “preying on vulnerable borrowers.”

Cincinnati-based Check ‘n Go announced last month that it was closing all of its 34 locations in Arizona.

SPARTANBURG, S.C., July 8, 2010 /PRNewswire –

Advance America, Cash Advance Centers, Inc. (NYSE: AEA), announced today its intention to cease operations in its 47 centers in Arizona. The decision to cease operations comes after the existing law permitting cash advances in Arizona expired on June 30, 2010 and the Company concluded that an economically viable alternative product or service does not currently exist.

Commenting on today’s announcement, the Company’s President and Chief Executive Officer Ken Compton said, “We are disappointed that we will be unable to continue serving consumers in Arizona. Our customers have consistently told us that they are highly satisfied with our services. Advance America strongly believes that a regulated, competitive and transparent financial environment benefits consumers. We believe that consumers are best served when they can choose the financial service that best suits their needs, and in many cases, that may be a cash advance. We regret that we can no longer serve the interests of many Arizonans.”

For the three months ended March 31, 2010, total revenues and center gross profit generated from the Company’s operations in Arizona was approximately $3.7 million, and $1.5 million respectively.

In a separate decision, the Company has decided to close approximately 75 additional centers, approximately 55 of which are located in Washington and Colorado which have had recent law changes. The operations of majority of these centers will be consolidated with those of nearby centers.

The Company estimates that the costs associated with the cessation of operations in Arizona and the closing of the additional centers will be between $2.8 and $5.0 million, with approximately $1.0 million to be incurred during the second quarter of 2010 and the remainder to be incurred during the third and fourth quarters of 2010.

About Advance America Cash Advance

Founded in 1997, Advance America, Cash Advance Centers, Inc. (NYSE: AEA) is the country’s leading provider of non-bank cash advance services, with approximately 2,500 centers and 72 limited licensees in 32 states, the United Kingdom, and Canada. The Company offers convenient, less-costly credit options to consumers whose needs are not met by traditional financial institutions. The Company is a founding member of the Community Financial Services Association of America (CFSA), whose mission is to promote laws that provide substantive consumer protections and to encourage responsible industry practices…

Forward-Looking Statements and Information:

Certain statements contained in this release may constitute “forward-looking statements” within the meaning of federal securities laws. All statements in this release other than those relating to our historical information or current condition are forward-looking statements. For example, any statements regarding our future financial performance (including estimated costs associated with the cessation of operations), our business strategy, and expected developments in our industry are forward-looking statements. Although we believe that the current views and expectations reflected in these forward-looking statements are reasonable, those views and expectations and the related statements are inherently subject to risks, uncertainties, and other factors, many of which are not under our control and may not even be predictable. Therefore, actual results could differ materially from our expectations as of today and any future results, performance, or achievements expressed directly or impliedly by the forward-looking statements. For a more detailed discussion of some of the factors that may cause our actual results to differ from our current expectations, please refer to the “Risk Factors” section of our Annual Report on Form 10-K for the fiscal year ended December 31, 2009 and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2010, copies of which is available from the Securities and Exchange Commission, upon request from us, or by going to our website: www.advanceamerica.net

SOURCE Advance America, Cash Advance Centers, Inc.

Copyright (C) 2010 PR Newswire. All rights reserved

PHOENIX – Payday loans with interest rates topping 400 percent become illegal in Arizona at midnight Wednesday, after voters rejected a 2008 ballot measure to extend the industry’s 10-year authorization to operate.

State Senator Debbie McCune-Davis of Phoenix helped defeat last-ditch efforts to reverse the election results in the legislature.

“Voters were given the opportunity to make a decision about whether payday lenders continue to operate at outrageously high interest rates or change their practices to come under the 36 percent usury law. The voters were very clear about it, and now it’s happening.”

McCune-Davis calls ending payday loans “a victory for the people of Arizona.” Payday lenders say they can’t cover operating costs with a 36 percent rate cap, and several payday loan stores have already closed.

Lenders say they were providing a necessary service, but McCune-Davis says people have other options for small, short-term loans.

“We would recommend credit unions. We would recommend charities. We would recommend short-term borrowing from a family member who will not gouge you.”

She says many credit unions offer low-dollar loans at interest rates of 12 to 18 percent.

McCune-Davis says most of the business for payday lenders involves making new loans to pay off old loans, with fees added for each transaction.

“When payday lenders aren’t on street corners with neon lights and open 24 hours a day, people will go to legitimate lending institutions or to people who can help them. And they will get solutions to their financial problems that don’t leave them deeper in debt.”

At the peak of payday lending business, there were 715 loan stores in Arizona.

Doug Ramsey, Public News Service – AZ

Some stores will offer different services

KINGMAN – The clock is ticking for payday loan businesses in Kingman. With less than 48 hours to go before the law allowing them to do business expires, payday loan stores, both big and small, are preparing for a seismic shift in their business models.

The stores have been facing their demise all year, following failed attempts to woo voters and state lawmakers into extending the 2000 law that allowed them to charge upwards of 390-percent interest on small monetary loans. The law expires July 1, giving payday customers until Wednesday to either settle their accounts or face collection agencies.

For most major payday loan chains, such as the 1 Stop Check Cashing Payday and Title Loans at 3505 Stockton Hill Road, the loss of payday loans will not necessarily mean the end of business. 1 Stop is among several chains that plan to simply phase payday loans out of their model and turn to other services such as auto title loans, money orders and vehicle registrations.

But that hasn’t been the case for one major chain. Check ‘n Go stopped offering payday loans last month and has since announced the closure of all 34 of its Arizona locations by the end of summer. According to one employee, the local Check ‘n Go at 1949 Beverly Ave. is scheduled to close as early as the end of this week, following at least a dozen other locations around the state that have already closed this month alone.

In an interview with the Arizona Republic earlier this month, Check ‘n Go spokesman John Rabenold said the 36-percent interest rate cap imposed by the law’s expiration would simply make it impossible for payday stores to continue offering their product and still expect to survive financially. The same also goes for smaller, independently-owned payday stores, which are now considering other options, including following Check ‘n Go out of the state.

Dick Stephens of B-4 Payday is one of those independent owners. Stephens said he already closed his Kingman store at 3880 Stockton Hill Road on June 5, and plans to shutter his Bullhead City location after Wednesday. He said he plans to reopen his store by the end of next month in Laughlin, where Arizona’s new payday lending restrictions won’t apply. But he anticipated the move would not come without a cost, with the driving distance alienating a large percentage of his customer base.

“I’m assuming I’ll lose probably 60 percent of my business from Kingman,” Stephens said.

Stephens estimated he has serviced about 1,000 customers between Kingman and Bullhead City, the majority of them senior citizens on fixed incomes and lower-wage families trying to make ends meet.

“Most of our clientele is either retired seniors or working people who go week to week,” he said, adding that most of those clients have been scrambling to pay off their outstanding loans before the Arizona law expires. “It hasn’t been too bad. We’ve had a few problems, probably 5 percent of our clients have had trouble paying us off. But Terry Goddard’s been treating us like criminals, sending out warning letters threatening us with $20,000 fines if we do a loan past July 1.”

Attorney General Goddard has been among the state’s most vocal champions in favor of abolishing the payday loan industry, arguing that its sky-high interest rates and appeals to those already in precarious financial straits have done more harm than good to Arizona’s most vulnerable citizens over the past decade. As the payday law’s sunset date draws closer, Goddard, himself a Democratic candidate for governor, has launched a high-profile enforcement campaign dubbed “Operation Sunset” aimed at ensuring remaining lenders adhere to the ban on consumer loans that exceed the state’s annual percentage rate limit.

“I will use every tool at my disposal to enforce the end of exorbitant payday loans in Arizona and seek fines and penalties against those who try to continue this abusive practice,” Goddard said in a statement June 9. “I encourage citizens to report violations to our office. Our enforcement will be swift and aggressive.”

Goddard has named auto loans, prepaid debit cards and online accounts as among the alternatives payday lenders have used to skirt the laws in other states that have outlawed the stores. One part of “Operation Sunset,” he said, will be to ensure these same practices don’t take hold in Arizona.

That’s been the experience for at least one local payday employee who preferred not to be named for this story. According to the employee, the lender she works at assured its customers they would be able to set up online accounts following the law’s sunset, only to receive a letter from Goddard’s office demanding they cease the practice. According to Goddard, as of Thursday, no business will be able to make payday loans over the Internet to Arizona customers, regardless of where that business itself is located.

At the same time, however, the payday employee said many customers are still seemingly unaware that the law is about to expire. In fact, customers are still coming in to attempt to renew their loans, and new customers are even coming in to seek first-time loans, not realizing the practice has all but ceased here.

But for all the short-term pain and confusion the sunset is likely to cause regular payday customers, advocates in favor of their abolition argue that the move will ultimately help pave the way for more traditional lending institutions to bridge the gap.

“I’m a believer that the market does address supply and demand pretty well on its own,” said David Higuera, political director for Arizonans for Responsible Lending, a 527 political action committee devoted to ending the payday practice. “The playing field right now is so uneven, it might as well be a wall, because payday lenders are operating under a completely different statute that only applies to them. It’s an attack on the free market, different rules for different lenders.”

With paydays gone, however, Higuera said traditional lenders are more likely to be willing to work with smaller, shorter-term loans, even though they may never be quite as flexible as the unsecured payday loans could afford to be. But even that may not necessarily be a bad thing.

“Payday lenders will always say they’re filling a need for short-term loans,” Higuera said.

“Research that’s been done nationally shows that 76 percent of payday loan volume nationally is based on churned loans to repeat borrowers. What that says to me is there is not the demand they want you to believe – the ‘demand’ is there because people are already beholden to them.”

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