Taking a Closer Look at Payday Loan Abuses

Rep. Mary Still (D-Columbia) is hosting a "district hearing" at the Columbia Public Library tonight for public and expert input on the abuses of payday loan companies.  Still sponsored legislation this year to restrict interest rates on payday loans, but Speaker Ron Richard refused to assign the bill to a committee until the last day of the session, effectively killing the bill before it could even be considered.

Also speaking tonight will be Rep. John Burnett (D-Kansas City), UMKC economics and law professor Bill Black and representatives from the AARP and Better Business Bureau.

In preparation for the event, organizers distributed the following facts about payday loans in the Show-Me State:

• The latest Missouri Division of Finance report documents that payday lenders in Missouri charge an average interest rate of 430.68%.
• Missouri's law allows interest rates of up to 1,980%.

• Last year alone, there were 1,315 licensed lenders in Missouri -- an increase of 44% since 2003.
• Unlike surrounding states, Missouri allows six loan renewals. Fees are charged for each renewal resulting in financially unsophisticated workers falling into spiral of debt, which often results in the repossession of cars and other belongings.
• The states surrounding Missouri: Arkansas, Kansas, Iowa, Tennessee, Kentucky, Nebraska, Illinois, and Oklahoma, forbid renewals.
• According to the Missouri Better Business Bureau, more than 90 Missouri nursing homes have payday loan operations inside of the nursing homes allowing the lender to deduct the loan, interest and fees straight from the paychecks of nursing home workers.     
• The Associated Press reports that the Community Financial Services Association, a national trade association for the payday loan industry, says they know of  no other states with similar arrangements between the nursing homes and payday lenders.

Details about tonight's event are in The Missourian.