Director of Consumer Based, Non Profit: Short-term loans offer needed help

A terrific Op-Ed printed in our neighbor state Missouri was written by Gerri Guzman who is Executive Director of the Consumer Rights Coalition, a non-profit, consumer based organization. In the Op-Ed, published by the Columbia Daily Tribune, Guzman writes of how a 36% cap would “would eliminate access to many forms of consumer credit at a time when it is becoming increasingly difficult to get a traditional bank loan.”

It continues: “Left without access to credit in today’s weak economy, what options will be left for Columbia consumers if they are unable to make ends meet between paychecks? They can bounce a check, overdraw their bank account, not pay bills on time or, worse, turn to an illegal loan shark or unregulated offshore lender — all more costly and credit-damaging options.”

Guzman urges citizens to consider the consumer side of the story. She cites the stories of: “Kathleen from Carl Junction, a mother of six who recently went through some tough financial times, says: “A short-term loan is what kept my utilities on.” LaWesha, a single mother of three from St. Louis who uses payday loans to keep her household bills and rent paid on time without paying late fees, says: “Without the payday loan option, my rent and bills would fall behind, and it would cause a hardship in my household.”

Guzman also makes a point about how short term, small dollar loans can be superior to other credit options: “Consumers choose short-term loans because they usually are the most cost-effective and least credit-damaging option available. Research shows the vast majority of short-term loan borrowers use the loans moderately and wisely as a short-term solution that enables them to avoid the more costly and punitive options of bouncing checks and incurring penalties for late bill payments. In fact, most borrowers repay the loans on time with no additional charges or fees.”

She also brings up important data about states that have capped payday loans at 36%: “We only need to look at other states with short-term credit bans, such as Georgia and North Carolina, to predict what will happen in Missouri. There, lending bans led to increases in bounced checks, personal bankruptcy filings and complaints about creditors and debt collectors. In states where consumers don’t have access to short-term loans, households pay an average of $200 more in overdraft protection and bounced-check fees than in states where short-term loans are available.”

It’s a great read and again, the whole Op-Ed can be found here.

Beware of This Over the Phone Payday Loan Scam

This is from a report filed by WIFR-TV in Rockford, IL:

“Someone keeps calling her, threatening to take legal action if she doesn’t immediately chip away at her payday loan. Schermerhorn knew it was a scam, since she never took out a payday loan. The Better Business Bureau Director Dennis Horton says it’s just one of many types of scams going on right now.

“There’s an uptick in the number and again it has a lot to do with the economy and the fact that their are a number of people out there that are behind on their bills and maybe sent to collection, and they are preying on their fears that they will be jailed for that… which is not going to happen,” Horton said.

The BBB says if we have not taken out a pay day loans and we get a phone call, the easiest thing to do is just hang up.”

CFPB Pursuit of Non-Banks

Since President Obama’s appointment of Richard Cordray to head up the CFPB earlier this week, there has been a lot of discussion on what he and the bureau will do now that their authority has been augumented as a result of the appointment.

Time Magazine’s article on Cordray’s plan to confront non-banks had an interesting line in it:

“Instead of relying on “after-the-fact” investigations of potential wrongdoing, the CFPB will be empowered to conduct examinations of businesses as it sees fit.”

This makes one wonder what happened to innocent until proven guilty. The whole time article can be read here.

“For small business owners, these loans help make the American dream a reality”

A debate over small loan credit down in Missouri has led to a letter to the editor in the Columbia (Missouri) Daily Tribune.

Derek Russell writes “Traditional installment loans help keep businesses open and thriving across the state. They give borrowers the chance to jump-start or sustain their small business. The loans are safely structured with fully amortized equal payments and transparent terms. The money borrowed with traditional installment loans energizes local economies and keeps thousands of Missourians employed. For small business owners, these loans help make the American dream a reality.”

The entire letter can be found here.

Important Dates for the 2012 Legislative Session

The start of the 2012 Legislative Session is just around the corner. Lawmakers are due to convene in Des Moines for the first day of session on January 9th.

While changes to the session calendar may always happen, the latest version is available here.

This link is a great resources for understanding the important dates that often make or break bills moving along the legislative process.

While a few of these dates may change, the deadlines listed in the link above will exist in one form or another – so it is important for us to keep up to date on the latest developments.

Looking for Caucus Information & Details?

Sure – we all know that the Caucuses are around the corner (15 days to be exact), but sometimes its easy to forget the details about how to participate, where to go, and what to do once Jan. 3rd rolls around.

In an attempt to bone up everyone’s voter education level, please see the links below. These links are the ones you’ll need to answer your questions and find information regarding the Caucuses.

If you are a member of the Republican Party:

The Iowa GOP has a website dedicated to information on the caucus process, locating your caucus location, and candidate information.

If you are a member of the Democratic Party:

The Iowa Democratic Caucus information can be found here. This page will help you find your caucus and help you to get involved.

Bank Fees Cause Account to go “from having $4.85 to owing more than $200″

The Chicago Tribune published an article by Jon Yates telling an amazing story of how an 18 year old’s savings account turned into a nightmare thanks to compounding bank fees.

“At first things went smoothly, but as the money in his account dwindled, he began to ignore it. By fall, Ganziano had just $4.85 left in the account — too little to withdraw from an ATM — so he let it sit.

He had all but forgotten about the account until he received a letter from TCF on Oct. 12 saying six days earlier, it had charged him a $9.95 “monthly maintenance fee” because his account had too little money in it.

The $9.95 charge made his account overdrawn by $5.10, which triggered another fee. At TCF, any account overdrawn by more than $5 is charged a $28-a-day overdraft fee. The net result: Ganziano was $33.10 in the hole.

By then, his nascent savings account was in a downward spiral. At $28 a day, the charges were adding up quickly.

When he and his mother went to the nearest branch that weekend to close the account, they were told they would first have to pay the accumulated fees, which totaled $229.10.”

Full story can be found here

Take Action! Vote in Online Poll on Payday Loans

An online poll from the San Leandro Patch in California is asking readers what they think of payday loans. Click here to read the article and vote in the poll.

The poll asks:

“Which of the following best describes your view of payday lenders:”

Protect the option of short term loans for consumers by voting for the first option: “The lending limit should be raised and market interest rate are reasonable given the risks.”

California State Senator Outlines Need for Payday Loans Among Consumers

California State Senator Ron Calderon wrote a column in the Sacramento Bee yesterday outlining the need for consumers to use a payday loan. Among the highlights:

Sandra Vazquez, a health care specialist and mother of three, said proponents of a ban should walk in her shoes. “They must have money,” she said.

Her family is middle class. But with a child in college the bills pile up. Payday loans help her avoid late-payment fees and dings to her credit. Eliminating payday loans “would jeopardize a lot of people,” she said, “and not just low-income people.”

Do-gooders ignore the fact that the vast majority of payday borrowers are satisfied, responsible customers like Vazquez. Furthermore, most borrowers aren’t low-income at all, making an average $55,000 annually. Teachers and nurses are the most frequent borrowers, according to industry data. But let’s not let the facts get in the way of a righteous story or editorial.

According to The Bee and Mercury News, infinite indebtedness comes by way of a 15 percent fee for each loan. In California, that’s $45 on a maximum $300 loan to be paid in two weeks. But the newspapers, instead, call it an interest rate that grows to 460 percent with repeated loans every other week or so. Huh?

When asked if payday lending leads to spiraling debt, Cesar Garcia, a 25-year-old water-district driver and satisfied customer, responded with uncommon common sense: “It all depends on how you manage your money.”

As for the $45 fee for a two-week loan, that’s hardly suffocating, said Vasquez. “That’s less than a dinner out.”

The whole column is available here.

Important Advice on Fight Scammers from the CFSA

The Community Financial Services Association of America (CFSA) has released a list of tips on protecting a company and its customers from financial scams. Some of the highlights include:

Has Your COMPANY Been the Target of a Scam?

Alert local law enforcement or your State Attorney General’s office to let them know about the scam. For a list of all of the States’ Attorneys General, please click here.

If the fraudulent behavior occurred online, you may want to submit a complaint to the Internet Crime Complaint Center, which is a partnership between the Federal Bureau of Investigation and National White Collar Crime Center. You can do that by clicking here.

If you are aware of the identity of the company, you may also wish to file a complaint with the Better Business Bureau.

If you wish to report receipt of unsolicited email offers or spam, you may send the messages to spam@uce.gov.

Have Your CUSTOMERS Been the Targets of a Scam?

Remind customers not to provide or confirm any personal information (bank account, credit card, etc.) on the phone to inbound callers.

Provide your customers with your company’s call-in or hotline number for when they suspect suspicious telephone calls or activities, such as a potential fraudulent debt collector trying to collect on a payday loan.

Suggest contacting the FTC to report suspicious calls, online activities, or scam complaints at by clicking here or call 1-877-FTC-HELP (1-877-382-4357).

Recommend customers alert local law enforcement or the State Attorney General’s office, which can be found by clicking here.

If the scam involves online activity, suggest customers file a complaint with the Internet Crime Complaint Center by clicking here.

If the customer is aware of the name of the company committing the fraudulent act, they may wish to file a complaint with the Better Business Bureau.

For additional information about scams and other fraudulent activity, check out the following:

“Common Fraud Schemes” provided by the FBI.

OnGuardOnline.gov managed by the FTC in cooperation with numerous other federal agencies.

FTC website or call 1-877-FTC-HELP (1-877-382-4357), TTY: 1-866-653-4261.