Promise from the lenders kills predatory loan bills

I wonder if they said they were sorry, said Jay Speer, executive director of the Virginia Poverty Law Center.

Its a great situation when the people of Virginia get to finance campaigns of Virginia politicians, said Ward Scull, a Newport News businessman who has been campaigning to tighten regulation of high interest rate loans for years.

He started after an employee asked for a $300 loan, and he learned she was trying to get out from under six payday loans, totaling $1,700, on which she was paying triple digit interest rates.

Payday, car title and other consumer loan companies are major donors to Virginia politicians giving $4.2 million in the past decade, including $230,000 to Saslaw.

I suffer no illusions, said state Sen. Mamie Locke, D-Hampton, as she stepped up to make her case for a 36 percent cap on loans after Saslaw reported the companies promise and the committee shot down a series of four similar bills.

Lockes bill was one of several lobbyists say the largest number seen in recent memory meant to rein in car title, payday and open end credit lenders.

This is the ninth time Ive introduced this bill these loans trap people in a cycle of debt, state Sen. John Miller, D-Newport News, said a few minutes after Locke spoke.

Both senators, along with state Sen. Scott Surovell, D-Mount Vernon, were tackling a problem buried in the fine print of loan paperwork and state law.

The old-fashioned kind of consumer loan, the kind that sets fixed monthly payments over its term, is subject to a 36 percent cap on interest rates for amounts below $2,500. Theres no cap on amounts greater than that, but rates are generally lower for larger loans. These lenders do credit and employment checks.

The rates on loans people borrow against their car titles are capped, too, at a maximum of 262 percent. They cant run for more than one year and bar the lender from suing for any difference between the value of a repossessed car and the amount outstanding on the loan.

Those protections vanish if a car title steers a borrower to an old fashioned consumer loan for more than $2,500.

The limits on payday loans a $500 limit on payday loans and caps on fees go away if a lender steers a borrower to an open end credit agreement. Those agreements are like credit cards, requiring a relative small minimum monthly payment, but the amount owed can balloon as interest piles up, especially since the interest rate routinely exceeds 300 percent.

Loans like that are simply beyond what the lower-income borrowers those lenders target can afford, Scull argues.

Its not just a social justice issue, its a workforce issue, he said.

Lobbyists for the lenders say they provide a service people want and are willing to pay for but one lenders cant afford to make if the state cracks down on rates.

When we talk about an APR (annual percentage rate) of 278 percent, you have to remember that the average term of these loans is 46 days, said lobbyist Reggie Jones.

Payday lenders arent going to make loans for 10 cents a day for $100, which is what theyd receive with a 36 percent rate cap and a ban on charging any other fees, he said.

Saslaw said hes worried that if payday and car title lenders are driven out of the state, that would simply open the door to loan sharks.

You know what street credit is? he said. You borrow $100 on Monday and pay back $200 on Friday, or else bad things happen thats what 36 percent would do.

Ress can be reached by phone at 757-247-4535.

CFPB’s ‘To Do’ List Grows as Election Looms

By Jeff Bater

Jan. 22 — The Consumer
Financial Protection Bureau (CFPB) is running out of time before
the 2016 election could bring a possible change in direction — or
an entirely new structure should Republicans take the White

Left unfinished in 2015 are a series of significant
rulemakings affecting debt collection, prepaid products, mandatory
arbitration clauses, and payday loans.

The CFPB needs to pick up the pace of its rulemaking
“if the agency intends to make a dent in its agenda before the end
of [Director Richard] Cordrays term or changes to the CFPBs
structure are imposed, whichever comes first,” Jonathan L. Pompan,
a partner at Venable LLC, told Bloomberg BNA in an e-mail.

In the meantime, Pompan predicted the “CFPB will
continue to make examination findings and bring enforcement actions
that are groundbreaking and test the boundaries of the agencys
authority, fair notice, and due process.”

Turkish carder scores record 332-year jail term

A 26 year-old Turkish carder has received a record 332-year prison sentence for defrauding 54 customers.

Onur Kopçak was charged after he stole and resold customer credit cards to other criminals.

Turkish media report the man received a 135-year sentence for stealing 11 credit cards handed down by the Mersin third Criminal Court.

Kopçak was handed 199 years and seven months in 2013 for stealing 43 credit cards using phishing bank sites, dished out by the Criminal Court of Appeals.

The media reports the man claims innocence but will not appeal the judgment, saying that Turkeys Court of Cassation (Supreme court) will not deliver justice on account of an unspecified chain-of-guilt ruling.

It is likely the largest sentence ever handed down for hacking.

Posted in Bank Cards | Tagged | Comments Off on Turkish carder scores record 332-year jail term

On history, loans and politics

Another item of local interest was a recent editorial in the Deseret News about payday loans. The article noted “too many Utahns don’t recognize how much trouble they can find themselves in if they don’t pay back their loans quickly.” While I was on the Logan Municipal Council, we discussed the problem of payday loans in our city. We found all we could do legally was cap the number we allowed to the number we had at the time of a new ordinance. The other day I saw a new payday loan business on Main Street, so I contacted the city. They said yes, it was indeed a new one, but it was still under cap limit, as one had closed elsewhere. I was glad to know that. The city staff is on the ball! My preference, of course, would be if there were none at all. A majority of states have passed legislation forbidding such businesses. But not our Utah Legislature! Even after all the ‘mess’ with our last attorney general and some other state officials. According a recent state report, over 45,000 loans were not repaid in full at the end of a 10-week period, and there were 7,927 lawsuits from payday lenders against delinquent clients in one year. The average payday loan carries an interest rate of 482 percent. Come on Utah legislators — bite the bullet and do something about this in the forthcoming session.

Money Matters: Dealing With Debt Collectors

Most people would do anything to avoid a call from a debt collector. Many people have called the 8 On Your Side hotline asking for help when it comes to dealing with debt collectors.

Some people feel the debts are not real. Others feel the the calls are a form of harassment. Regardless of your opinion of debt collectors there are ways to tell if the debt is legitimateand ways to determine if the caller is following the law.

First, the must provide written proof of the debt.

Second, they cant threaten you or use abusive language.

Third, if you ask them to stop calling, they must stop calling.

You have a lot of rights. 8 On Your Side Consumer Advocate Michelle Mortensen goes over them in tonights Money Matters report.

Report Debt Collectors to the FTC or to the State.

Copyright 2016 Nexstar Broadcasting, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Blog: Payday loans from one consumer’s perspective

If youre like me, youve probably heard the term predatory lender.

According to, predatory lending, in part, is any lending practice that imposes unfair or abusive loan terms on a borrower.

That covers the gamut of lending types, such as balloon mortgages, but Ive heard it most often used in connection to payday loan companies.

This week, Features Editor Emily Letterman wrote a story about payday lending for the first Banking and Finance section of the year.

CU Community Credit Union is presenting its customers an alternative to the high-interest, short-term loans with the help of a $2 million US Treasury grant. Instead of paying an annual interest typically upwards of 400 percent, account holders with the credit union for at least 90 days can pay around 27 percent interest on short-term loans through its initiative.

In the article, Letterman sought comment from several payday loan companies as well as title-loan firms but couldnt get anyone to call her back. There could be any number of reasons why the companies she contacted didnt want to talk for the story, but I suspect many in that line of business have adopted a defensive posture when it comes to the media. I suspect theyve adopted that attitude because predatory lender is a moniker with which they dont want to be associated.

The truth is, Letterman, who never used the term in the article, wanted to hear their side of the story, especially now that a new bill in Jefferson City sponsored by Rep. Don Gosen, R-Ballwin, would impose some restrictions on payday lenders. One key restriction is limiting the number of loan renewals customers could receive to two from six.

Im sure these two moves combined pose a threat to payday loan businesses, but for Lettermans story the voices of payday loan operators werent available.

Those who see payday lenders as predatory probably wouldnt care.

For what its worth, I thought Id briefly share my experiences as a consumer. Working as a reporter is no financial windfall, and I am not ashamed to say Ive used payday loans for years.

When I graduated from Missouri State University in 2008, I had three credit cards that were maxed out, and I vowed that I wasnt going to take another credit card until I paid off what I owed.

Several times since then, and even a few before 2008, Ive turned to payday loan companies for quick money to cover bills. From hospital bills to car repair to Christmas, things have popped up, and Ive appreciated having a short-term loan option.

As Lettermans story points out, the cost of the loans finance charges may range from $10 to $30 for every $100 borrowed, and generally, $500 is the cap.

I know if I needed an extra $500, I could write a check dated out two weeks for $590. I also know if I needed to renew that loan a few times, I could do that, too. Thats expensive, of course, and I almost never renewed the loans Ive taken out.

At around 400 percent annual interest rate, payday loans are a great Band-Aid, but a very expensive crutch.

While Im sure there are people who have gotten stuck in a detrimental cycle of renewals, it should be noted that consumers in a free country arent obligated to take out loans they dont want. To me, a $90 finance charge on a quick $500 is reasonable, which is why Ive turned to that option before.

From my perspective, payday loan companies serve people in need of money with small loans. There is a niche in that market because banks, which face their own fair share of regulation, arent typically offering $500 loans.

Dont get me wrong, Im proud to live in a country where people look out for others in bad financial situations. With its $2 million federal grant, CU Community Credit Union will be able to provide a valuable service to customers, and I dont blame it one bit for pursuing that path. However, Im curious to see if that negatively affects payday loan businesses. Ironically, if they are hurt, one natural remedy could be to raise rates on customers. That means those who arent CU Community customers could be adversely impacted.

Im just one consumer here, but amid an environment where payday loan operators might have reason to be defensive, I thought it was worth noting Ive never been a victim. Real people run these businesses, and the suggestion theyre preying on the public not only insults them, but it insults their customers who werent abused.

Perhaps, Im not a typical customer. But I know the free market is addressing a need and simply adding industry restrictions or introducing a competitive advantage to preferred lenders does little to address the root problem.

On balance, 0% credit card transfer deals are bad news

Have you ever been tempted by a 0 per cent balance transfer credit card deal? If you have debt, transferring it to a 0 per cent rate can seem like a great idea to ease your financial burden. But there are two key dangers that have always concerned me.

The first is the cost of transferring a balance. A typical charge is 3 per cent. So if you transferred £5,000 you’d have to pay £150. However most plastic cards will let you add that extra debt to the card.

And that brings me to my second fear. Because the deals now last for years, there’s no real encouragement to get on and pay off the debt and take advantage of the no-interest period. Psychologically, the longer you have to repay something, the less imperative there is to get on with actually clearing the debt.

So I find it extremely worrying that Halifax this week launched a 40-month long balance transfer deal . The Halifax isn’t to blame; the move is just the latest in an ongoing battle between plastic card companies to have the longest and, on the face of it, most attractive deal.

But giving someone three years and four months of no interest on their debt seems a little irresponsible. If it was linked to regular payments to encourage people to be debt clear by the end of the term, that would be good.

But it’s not. The deals seem designed to encourage people to not to worry about their debts rather than face up to them. If they do nothing they’ll eventually be switched to the credit card firm’s regular rate,  normally around 19 per cent, when interest will then mount up very quickly.

There are those who may be happy to pay £100 or so to simply switch their debt onto a new card every few years, but that’s simply delaying the inevitable time when eventually the debt will have to be paid. Being encouraged  to delay dealing with debt is no good for anyone. Credit cards should start being responsible with their deals and that means helping people clear their debt, not trying to persuade them to extend it.

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How Can Southwest Compete With Cheaper Low-Cost Carriers?

Southwest Airlines has always been able to compete with legacy carriers because it could offer low fares. Thanks to its no-frills service and savvy use of secondary airports, the Dallas-based airline has become one of the worlds most successful commercial carriers. It was able to fly high even when its competitors were dealing with debt, bailouts and bankruptcy.

Now, however, other airlines have taken the no-frills business model a step further. Compared to the likes of fee-happy airlines such as Spirit, Allegiant and Frontier, Southwest is often seen as the moreexpensive option. How can the established low-cost carrier compete with these cheaper upstarts and retain control of a market that it has dominated for so long?

According to CEO Gary Kelly, it will take a combination of things to keep Southwest at the top of the budget-flying heap.

READ MORE:Southwest Blasts Ancillary Fees With New Transfarency Campaign

Competing with ultra-budget carriers

Last week, Kelly was in Colorado to celebrate his airlines 10th anniversary at Denver International. While there, he spoke about being very wary of emerging competition in the budget air travel marketplace. He also talked about the need to make changes so that Southwest can remain competitive when it comes to price:

I dont think there is a really dramatic impact in the short term for that type of competition. But over the long term, we would be foolish to ignore any competition. We need to do everything we can to make sure our costs are not higher than theirshellip; And we still have to find a way to make sure that we are the low-cost provider. And theyre bringing really low cost and significant cost competition to us.

Cheaper overall cost

At leastfor the foreseeable future, Southwest will continue to be one of the only US carriers to not charge any fees for checked baggage on domestic routes. You might expect the airline to do away with this policy if it wants to develop another revenue stream so that it can lower its fares. That will not be the case for the time being, however. Southwests execsseemto be banking on the idea that customers will understand the difference between the price of an airline ticket and the overall cost of air travel. In the era of a la carte pricing, this is a very important distinction.

READ MORE:Southwest To Keep Free Bags Policy

Southwest has shown that it is quite savvy when it comes to marketing its no frills fares (Wanna get away?). It should be able to craft a message that will sell the idea that it is a more transparent low cost carrier, and that it is actually cheaper when it comes to the overall cost of travel (fare plus fees).

Every dollar counts

If it is not going to start charging for baggage, Southwest will need to find other ways to decrease operating costs and increase revenue so that it can compete with the ultra-budgets in the long term while keeping its current fee policies in place. Southwest recently updated its fleet, adding an extra row of seats to its planes so that they can now hold 143 passengers. Capacity used to be 137. The airline is also trying to further streamline its ground and gate operations so that its planes can have a quicker turn-around time and get back in the air faster.

Southwests image and business model are both dependent on it being able to offer low fares. That wont change. However, the airline, and other established low cost carriers who dont fall into the ultra-budget category, will need to convince fliers that they are the most customer-friendly option and the cheapest choice when it comes to the overall cost of a trip.

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‘We’ve helped footballers and doctors. Anyone can get into debt’: Charity boss reveals money problems can affect …

THE head of a debt charity says professional footballers and senior doctors are among those who have sought help for money problems.

Sharon Bell from StepChange in Scotland – which helped over 16000 Scots with money problems last year – said the range of calls the charity receives every year only goes to show people from all walks of life can end up in financial trouble.

She said: “We’ve recently had what we would class as a high-profile doctor couple, two very senior medical experts, who were in serious financial difficulty.

“Weve had professional footballers, to white collar workers right the way through to people on benefits.

“It can be a large cost like the car breaking down, or a tax bill that suddenly tips people over. Or some people are expecting a bonus and then the firm doesnt produce it but they’ve been relying on it to pay for something. We’re all human.

“More and more people nowadays don’t have savings – particularly with rates being so low – people spend their money and don’t have anything to fall back on when there is that bump in the road.”

At a time of year when many are facing paying off the debts run up over Christmas, weve again teamed up with Scotland’s Financial Health Service to bring you today’s (January 19) 16-page guide to getting out – and staying out – of the red in 2016.

The Scottish Government-backed service operates a helpline (0800 707 6696) and website ( directing Scots to the appropriate sources of help and information.

And, says Sharon, it is often the post-Christmas period when financial problems suddenly become all too real.

She said: “From the middle of January to the middle of March tends to be our busiest time of the year for a mixture of different things.

“There’s an element of Christmas debt, utility bills come in at this time of year, breakdowns with cars and boilers – these sort of things always seem to happen at the worst time.

“Also, people are thinking about holidays because they’re stressed and they want to get away from it but then realise they don’t have the money or can’t get the credit they thought they would.”

But, while the temptation for some may be to bury their heads in the sand and ignore the problem, those in debt are urged to seek help as soon as possible to minimise penalties and extra charges.

Sharon said: “A lot of people are put off seeking help by the thought of how they start to pay these bills.

“They think it can be complicated and make the situation even more stressful. What we try to do is take that stress away so they can address the issues.

“Don’t put it off. The longer you wait the more interest and charges can be applied, which can change what can be done to help. You can go from a position of being able to manage your debts and repay them in some form, to going into insolvency – and a lot of people don’t want to go down that route.

“For a lot of people it’s fear of the unknown, but it can happen to anyone.”

Fergus Ewing, Minister for Business, Energy and Tourism, said: “Many people will find their finances out of kilter following the festive period.

“While families manage their budgets carefully throughout the year, the cost of Christmas gifts and celebrations can be enough to tip some people into financial difficulty.

“If you find yourself in this situation, now is the right time to get yourself back on an even keel – and Scotland’s Financial Health Service is here to help.”

Sort your debt day

If you have money worries, or are simply looking for advice on managing your finances, this Thursday (January 21) will be your chance to find the answers.

We’ll have representatives from the StepChange Debt Charity and Citizens Advice as well as our own Money Doctor Fergus Muirhead and Sunday Mail columnist Elaine Colliar to answer your questions and help with any problems.

Follow us on Facebook to submit your questions from 1.30pm in our live blog or email if you want to contact us anonymously.

You can find information and links to organisations who can help with debt solutions, borrowing, managing your money, and financial education through the Scotland’s Financial Health Service website ( and free helpline on 0800 707 6696.

Plus Don’t miss our 16-page guide in today’s paper (Tuesday January 19) offering expert advice on dealing with debt, budgeting, saving and borrowing.

Posted in Dealing With Debt | Tagged | Comments Off on ‘We’ve helped footballers and doctors. Anyone can get into debt’: Charity boss reveals money problems can affect …

State audit notes problems in Lorain business loans

State audit notes problems in Lorain business loans