Clovis News Journal: Serving Eastern New Mexico and West Texas

Payday loans draw state’s interest
By Andy Jackson: CNJ staff writer

The attorney general’s office is concerned about the lending
practices of payday loan companies and is proposing stricter
regulations.

Payday loan advocates said the companies provide a valuable service
and are already regulated.

The attorney general’s office hosted a meeting Wednesday at the
Clovis-Carver Public Library to discuss proposed regulations, which
include eliminating 14- or 30-day loans, a cap on interest (at 54
percent) and service fees.

Assistant Attorney General Joel Cruz-Esparza said the state’s
Consumer Protection Division found small loan companies are engaged
in unfair business practices. The attorney general believes many
small loan companies do not consider the borrower’s credit history
and ability to pay back a high-interest loan within two weeks to one
month.

“It’s currently difficult for people to repay small loans,”
Cruz-Esparza said. “Small loans will become repayable under these
regulations.”

Steve Solomon, vice president of administration and general counsel
for Fast Bucks Holding Corp., said the industry receives few
complaints annually with high levels of customer satisfaction.

Solomon also represents Consumer Lending Advocates, which consists
of 13 small loans franchise corporations throughout the state.

“We have had one complaint per 30,000 transactions,” Solomon said.

Small loans companies said the proposed regulations will put them
out of business.

“These regulations would be a horrible job killer,” Solomon said.
“They’ll put us out of business.”

Representatives from Attorney General Patricia Madrid’s camp
disagrees.

Pawnbrokers in this state are regulated to the same degree that’s
proposed for small loans companies, and “the pawn brokerage industry
is alive and well,” Cruz-Esparza said.
According to Madrid’s office, there are 24 licensed small loans
companies in Curry County.

Solomon said Madrid’s office spent $145,000 on a television ad
campaign aimed at eliciting complaint from the public consumer.

“This is an outrage,” Solomon said. “Madrid’s office received only
46 complaints against my industry, at $3,152 per complaint.”

Solomon suggested the Attorney General’s Office spend advertising
funds to educate the public on personal financial literacy.

Small Loans company representatives say customers are satisfied and
franchisers are profiting.

According to Fast Bucks’ Web site the average annual profit of a
franchise is more than 50 percent.

The Consumer Lending Advocates claim “Customers overwhelmingly
appreciate payday advance, 92 perecent believe it’s a useful
service.”

The Attorney General’s office has legal authority to adopt these
rules and regulations under the Unfair Practices Act.