Check 'n Go Online Videos

Check 'n Go has a new video out about the perils of overdrawing your bank account w/ your debit card. There is also an interesting case study video titled "The Truth About Payday Loan Caps." It compares Oregon and Washington. Oregon has imposed a $10/$100 rate cap on payday loans.

I think they're well done and professional. You can view the videos here.

British Columbia new payday rules

The new rules are effective Nov. 1st in British Columbia. Compliance and enforcement will be administered by Consumer Protection BC, a not-for-profit organization that operates at arm’s length from government.

Here are the rules in a nutshell:

• Practices that unreasonably increase the borrower’s debt load, including rollovers that require borrowers to pay significant extra fees for extending the time to pay a loan.
• Requesting an assignment of wages, or collecting from a borrower’s employer.
• Charging more than 23 per cent of the amount borrowed in interest and fees.
• Lending more than 50 per cent of a borrower’s take-home pay or requiring repayment before the borrower’s next payday.
• Operating unless licensed by Consumer Protection B.C.

You can read more at the Canadian government website.

Advance America reports a profitable third quarter

Advance America reported a 48.8% or $12.6M jump in net income from the previous year third quarter. This is despite closing stores in Arkansas, New Mexico, New Hampshire and Ohio. These difficult states did result in lower revenues of 5.4 percent to $474.4 million so far this year, compared to $501.5 million during the same period last year.

You can read more about their third quarter in the Sparatansburg Herald Journal.

Nevada Federal is Out Of Payday Loan Business

Nevada Federal had been offering a loan called AdvancePay, which charged an application fee up front.

After receiving this letter from the National Credit Union Administration (NCUA) chairman, Michael Fryzel; Nevada Federal decided to stop offering their payday alternative product, even though they believed the product was cheaper than other alternatives.

What I think happened is that the NCUA considers the application fee part of the finance charge. This makes their loan product above the 18% max APR ceiling allowable by an Federal Credit Union Act (FCUA).

So why does the NCUA think that an application fee that is charged, regardless, of whether or not a loan is provided considered part of a finance charge?

Advance America's Jamie Fulmer speaks out

The payday loan industry is very misunderstood. Most people just take knee jerk reaction to the industry.

Jamie Fulmer speaks out against and article that distorts some fines placed on the company.

"...the editorial inaccurately described many of these violations and failed to acknowledge that they were documented during store audits conducted by BFI before the new short-term lending law took effect in January 2009.

The editorial pointed to 38 instances of taking "a borrower's property" to secure a loan, for example. This citation had nothing to do with property, but instead amounted to checks not properly made payable to Advance America."

You can read the full letter here.

Where do payday lenders get financed?

At IowaPolitics.com, we know that Wells Fargo does business with 9 substantially large lenders including: including Advance America, Ace Cash Express and Mister Money.

Capital is a rarely discussed subject among lenders, although it's probably the most important component of the business. You can't get big without financing, whether it's bank money or investor money.

Some negative PR in Wisconsin

Patricia Nelson of Waukesha was borrowed $550 and paid $2,700 over the next 22 months. This is what we call, in the business, a good payer.

The problem is that it does not look good for the payday loan industry when this happens, especially when she introduces President Obama the day he wins the Nobel Peach Prize.

What people do not realize is that Patricia was paying for all the people that did not pay back their loan. That's how risk pools work. I don't know the answer.

You can read more in the Milwaukee Journal Sentinel blog.