Consumers Abused by Payday Lenders Tell Their Stories
By: Source: AARP.org Date Posted: 2006-06-21 12:05:00-04:00
Arkansans Against Abusive Payday Lending (AAAPL) released a study titled "Payday Lenders in Arkansas: The Regulated and the Unregulated" that shows payday lenders in Arkansas routinely make triple digit annual interest rate loans—with little or no repercussions from the state agency responsible for regulating and licensing payday lenders.
Payday loans are small loans, usually $100 to $500, made for an average of 14 days. The Arkansas Constitution limits interest rates on consumer loans to 17% annually. Still, individuals who borrow money from payday lenders typically pay fees equivalent to an annual percentage interest rate of more than 400%. The average payday borrower pays $800 to borrow $325.
Research conducted for the study shows, of 275 payday lenders operating in Arkansas as of February 2006:
- 66 (24%) are licensed and regulated by the ASBCA.
- 70 (25%) of the rest are licensed by the ASBCA, but make unregulated payday loans due to the agency ' s interpretation of state law; and
- 139 (51%) are neither licensed nor regulated by the ASBCA.
Testimonials appears below from brave consumers who have been abused by payday lenders.
My name is Glenda. My husband's salary was cut by more than half when he retired on disability because of an injury. I borrowed $500 from a payday lender to help make ends meet. Instead of solving my problem, it was the beginning of a nightmare. When I was unable to pay this back on time, I went to another payday lender to pay the first payday lender back and this in turn started the cycle of debt, harassment and humiliation. Payday lenders call you and your boss at your job, call and send letters to your home. The payday lender issued a credit card to me without my knowledge or consent. A check I gave them to get the loan, was repeatedly submitted for causing $30 bank overdraft charges each time plus the payday lender's $25 insufficient check charge. I would like lawmakers to protect vulnerable consumers like me by enforcing the state constitution's limit of 17%.
My name is Hazel. At the time I got involved with payday lenders, I had been temporarily laid off my part-time job. I wrote a check to the payday lender for $300 to pay expenses for two major events I needed to attend. When I didn't get back to work as scheduled, they began harassing my brother, my 84-year-old mother and me by phone threatening to put me in jail. They terrorized me by visiting my home and my neighbor. I was in this vicious cycle of trying to pay them and then remake the loan in order to keep my expenses paid. They kept re-depositing the check causing astronomical bank fees. They sent me credit card applications so they could charge the check amount to the credit card. I pray that lawmakers keep these predators from preying on the citizens of Arkansas with their unfair practices.
Read the full report, Payday Lenders in Arkansas: The Regulated and the Unregulated, in PDF format
preview