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AARP Arkansas, June 10, 2010
Recently, NCLC (National Consumer Law Center), CU (National Consumer Law Center) and CFA (Consumer Federation of America) issued the updated State Scorecard that grades states on whether their payday loan, car title loan, small installment loan and criminal usury laws protect consumers from high-cost small loans.
Based on a review of state laws governing the four loan products, the report’s findings showed that Arkansas’s consumers are benefitting from the advocacy work of AARP Arkansas and other organizations. In 2004, an AARP volunteer leader named Hank Klein founded Arkansans Against Abusive Payday Lending (AAAPL), a coalition of 40 community, consumer, civic, military and faith based organizations which was a leading force in stopping the abuses to consumers by payday lenders in Arkansas. On July 31, 2009, Arkansas formally became the 15th state without payday lenders.
The Scorecard found, among other things, that:
In early 2006, at the peak of Arkansas’s payday lending industry, payday lenders operated 275 stores across the state, ensnaring borrowers into triple-digit interest rate debt. There were more than twice as many payday lenders in Arkansas as McDonald’s restaurants. Reports indicated that Arkansas borrowers incurred more than $25 million annually in interest on payday loans.
Pointing out that the state Constitution set an interest rate limit of 17 percent a year on consumer loans, AAAPL called for comprehensive regulation of all payday lenders pending resolution of challenges to the industry’s legal authority to operate in Arkansas at all. Such resolution came in 2008 amid decisive actions by Arkansas Attorney General Dustin McDaniel and a series of decisions by the Arkansas Supreme Court that ultimately invalidated the Check-cashers Act.
Klein is ever vigilant on behalf of consumers. In April 2010 news interviews, Klein spoke to about 30,000 radio listeners in the Fayetteville and El Dorado areas in support of national financial regulatory reform. He says consumers need a strong, independent financial regulatory agency at the national level. “Nine out of 20 of the worst businesses for customer service are banks,” Klein said.
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