UPDATED: AG McDaniel Orders Payday Lenders to Cease Operations or Face Action

by George Waldon  on Tuesday, Mar. 18, 2008 9:49 am  

McDaniel pointed to two recent opinions by the Arkansas Supreme Court for his new aggressive stance toward the issue of usury and payday lending. Those state opinions described the practice of payday lending as "unconscionable and deceptive" and freed up the bonds posted by licensed payday lenders to pay court judgments.

"It's my job to enforce the law, and I look forward to the challenge," McDaniel said.

In a statement, the Arkansas Financial Services Association said, "Singling out one source of consumer credit, when other choices are actually more expensive, does not resolve the need or demand for the product in the marketplace."

Complete Statement from the AFSA

We respect the office and responsibilities held by the Attorney General of Arkansas. However, the demand for the payday advance industry exists because we offer our customers a product that is more transparent and less expensive than the alternatives. The hard reality is that many hard-working, well-informed Arkansans sometimes fall short of cash between paydays. Efforts to prohibit or limit the supply of products in this market hurt consumers.

Arkansans choose payday lending because it costs less than paying bank and merchant overdraft fees and late payment fees on credit cards and utilities, and is preferable to costs and fees or losing collateral to pawn shops. Across the country where consumer choice for payday advances has been limited, other fees have risen, bankruptcies have increased, competition in the marketplace has been reduced, and many consumers have been driven to the Internet or off-shore for higher priced payday advances. Singling out one source of consumer credit, when other choices are actually more expensive, does not resolve the need or demand for the product in the marketplace.

More

Arkansas Court: Customer Can Collect Bonds from Payday Lenders

Payday Lending Days Numbered (Rep. David Johnson Commentary)

House Bill Would Limit Payday Lending Rates

Study: Payday Lending Has Better Licensing, But Regulation Lacking

State Supreme Court Declines to Rule on Constitutionality of Payday Lending

 

 

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