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North Carolina Declares Victory In War On Payday Lending

March 9, 2006

Payday Lenders • States Step Up Pressure On Internet Payday Lenders • Congress Moving Toward National Cap On Payday Loans • West Virginia Sues Online Payday Lenders • Senate Bill Would Rein in Payday Lenders • Virginia Considers Measure Aimed At Payday Lenders • Cash Today Hit with FTC Complaint • Payday Loans Can Lead to Bankruptcy • Pennsylvania to Require Licenses For Internet Payday Lenders • Bill Would Set National Limits on Predatory Lending • Payday Loan Lead Generators Settle FTC Charges • Tiny Virginia Town Stands Up To Payday Lenders • Payday Lenders Targeting Seniors • Payday Lenders Trumpet False Claims, Critics Charge • Pentagon's Predatory Lending Rules Faulted • Last Payday Lender Leaves West Virginia • Pennsylvania Class Action Challenges Payday Lender • Payday Lenders Fight Back in State Legislatures • Payday Lenders Fleece Consumers for $4.2 Billion A Year • Soldiers Pinned Down by Predatory Payday Loans • California Sues Payday Loan Business • North Carolina Declares Victory In War On Payday Lending • H&R Block To Settle More Payday Loan Suits • DOD: Payday Loans Affecting Military Readiness • States Want FDIC Crackdown on Payday Lenders • No Payday for Payday Lenders in Texas, New York • Payday Lenders Prey on African-American Neighborhoods • Payday Loan Report: Reform Needed • Illinois Warns of Payday Loans • Fast Cash Loans Charged with Illegal Practices • Cashback Payday Loans Banned in NY --- • Video: What is a Payday Loan? • Consumer Complaints

North Carolina has extracted agreements from three additional lenders to stop making payday loans, which are illegal in the state. State Attorney General Roy Cooper said the agreements mean that payday lending practices by all major companies operating in the state have now ended.

"We've fought payday lending at every turn and we're putting this industry out of business here in North Carolina," Cooper said.

"These payday lenders thought that they had found a way around North Carolina law. Now we're showing them the way out of our state," he said.

So-called "payday" loans are targeted at low income consumers, often struggling to make ends meet. Cooper says the lenders took advantage of their desperate circumstances to saddle them with outrageous terms.

For example, consumers who took out a typical payday loan of $300 from one of the three companies were required to repay the loan within two weeks, plus around $60 in interest. That amounts to an annual percentage rate of 400 percent.

Consumers who couldn't repay the loan at the end of two weeks were required to take out another payday loan to repay the first.

Under the consent agreements, Check Into Cash, Check ‘n Go and First American Cash Advance will stop making payday and other unauthorized loans in North Carolina.

Cooper said the companies will not only stop collecting interest and other fees on existing loans, but will pay a total of $700,000 to find efforts to help consumers adversely impacted by payday loans.

The money will go to several non-profit groups that provide credit counseling and financial literacy training.

Cooper said two of the firms plan to close down operations in North Carolina and leave the state, while the third will try to get a license as a consumer finance lender that operates under state rules.

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