The editorial "Preying hands" (The News, Saturday) erroneously blasted the payday-loan industry for practices involving Social Security and other government benefit recipients that not only do not happen but are also illegal. This response is an effort to explain the truth about payday lenders to The News and its readers.
The News claimed payday lenders "have (customers' Social Security or government) checks deposited in a friendly bank, which in turn will transfer the money to the payday-loan shops." This does not and cannot happen. It is against the laws that govern payday lending, and any cash-advance lender participating in such a program could have its license revoked and be subject to heavy fines under Alabama law and Alabama Banking Department regulations. Payday lenders make cash loans of up to $500 with the customer using a personal check as collateral. At the end of the 10- to 31-day loan, a cash-advance customer either returns to repay the loan or his personal check is cashed.
To back up the false claim, The News used a customer story pulled directly from another publication. That story deals with a store that is not a payday lender. The store mentioned is a consumer-finance lender, meaning it operates under a totally separate set of laws in Alabama than payday lenders. Because of this error, the entire premise of the editorial is off base, and the opinions are rooted in falsehood rather than fact.
The editorial also mentioned Borrow Smart Alabama, a program that brings together payday and title lenders in an effort to better educate the public about the important service they provide in the state and to educate the consumer on the wise use of these services. Members of Borrow Smart have agreed to a Code of Fair Lending to protect customers.
News Source:
http://www.al.com/
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment