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After the new year, when consumers go in for a payday loan, they won't have to squint to see the 340 annual percentage rate they'll be hit with when they take out the loan.
Starting Jan. 1, all payday lenders associated with the Community Financial Services Association of America will display their fees on poster-size displays.
All CFSA-member lenders will be required to prominently display the fees and annual percentage rates for at least five different loan increments on posters that are at least 18-by 22-inches in size in all stores. The industry is also putting out a multi-million dollar print and television campaign promoting the new requirement.
“Consumers have a right to know all of the fees associated with a financial product so they can make informed financial decisions,” said CFSA President Darrin Andersen. “CFSA's new policy ensures that customers know, in simple terms, exactly what the fees are before they enter into any transaction.”
CFSA represents about 60 percent of all payday lenders in the United States and 178 in Colorado. The poster requirements will only pertain to CFSA members.
“The steps taken by CFSA will help achieve one simple, but critically important goal—to make sure that every customer who enters a (store) or visit its Web site will have access to all the fee information they need to make an informed choice before they begin the transaction process,” Anderson said.
This latest requirement is part of the “Best Practices” enhancements that CFSA has been implementing over the year. The poster decision was unanimously adopted by the CFSA Board of Directors.
Earlier this month, Fort Collins Now reported on new regulations concerning payday lenders. Those new regulations include requiring payday lenders to offer extended payment plans for consumers who take out consecutive loans without additional fees and a federal law capping the interest of payday loans to members of the military at 38 percent.
The move by the industry is not enough for George Metcalf, a fierce opponent of payday lenders.
Metcalf attended the summer state legislative sessions that resulted in the payment plans requirements. He called the meetings a waste of time, and said payday lenders no better than loan sharks.
“I think payday lenders are just horrible,” he said, adding that he thinks their practices are “insane” and “immoral.”
During those meetings, Metcalf claims industry lawyers argued that these payday lenders make slim profits and deal with a high percentage of people who default on their loans.
Metcalf said he calls their bluff.
“Who the hell needs 300 percent to stay in business?” he said. “These bigger companies are making millions. They wouldn't be able to open a store on every street corner if it wasn't so lucrative.”
Metcalf, who owns Sean's A Plus, a used car dealership in Denver, said often his customers are victims of payday lending.
He said he helped one woman who had five payday loans and was paying $900 in monthly fees.
“These are wonderful people who don't make a lot of money and live paycheck to paycheck and these people take advantage of them with the rates they charge,” he said.
But the industry argues that the more choices consumers have when it comes to small, short-term loans the better.
“If those choices are abusive, it's wrong,” Metcalf said. “State and local government isn't doing enough.”
He said lawmakers should cap how many loans one person can take out and how many times that loan can be rolled over.
In Colorado, other payday lending regulations include: a 20 percent maximum fee on the first $300 of a loan, 7.5 percent above $300, only one rollover per loan is allowed, the maximum amount that can be loaned is $500, the maximum term of a loan is 40 days and lenders cannot pursue criminal prosecution for unpaid loans under most circumstances.
Starting Jan. 1, all payday lenders associated with the Community Financial Services Association of America will display their fees on poster-size displays.
All CFSA-member lenders will be required to prominently display the fees and annual percentage rates for at least five different loan increments on posters that are at least 18-by 22-inches in size in all stores. The industry is also putting out a multi-million dollar print and television campaign promoting the new requirement.
“Consumers have a right to know all of the fees associated with a financial product so they can make informed financial decisions,” said CFSA President Darrin Andersen. “CFSA's new policy ensures that customers know, in simple terms, exactly what the fees are before they enter into any transaction.”
CFSA represents about 60 percent of all payday lenders in the United States and 178 in Colorado. The poster requirements will only pertain to CFSA members.
“The steps taken by CFSA will help achieve one simple, but critically important goal—to make sure that every customer who enters a (store) or visit its Web site will have access to all the fee information they need to make an informed choice before they begin the transaction process,” Anderson said.
This latest requirement is part of the “Best Practices” enhancements that CFSA has been implementing over the year. The poster decision was unanimously adopted by the CFSA Board of Directors.
Earlier this month, Fort Collins Now reported on new regulations concerning payday lenders. Those new regulations include requiring payday lenders to offer extended payment plans for consumers who take out consecutive loans without additional fees and a federal law capping the interest of payday loans to members of the military at 38 percent.
The move by the industry is not enough for George Metcalf, a fierce opponent of payday lenders.
Metcalf attended the summer state legislative sessions that resulted in the payment plans requirements. He called the meetings a waste of time, and said payday lenders no better than loan sharks.
“I think payday lenders are just horrible,” he said, adding that he thinks their practices are “insane” and “immoral.”
During those meetings, Metcalf claims industry lawyers argued that these payday lenders make slim profits and deal with a high percentage of people who default on their loans.
Metcalf said he calls their bluff.
“Who the hell needs 300 percent to stay in business?” he said. “These bigger companies are making millions. They wouldn't be able to open a store on every street corner if it wasn't so lucrative.”
Metcalf, who owns Sean's A Plus, a used car dealership in Denver, said often his customers are victims of payday lending.
He said he helped one woman who had five payday loans and was paying $900 in monthly fees.
“These are wonderful people who don't make a lot of money and live paycheck to paycheck and these people take advantage of them with the rates they charge,” he said.
But the industry argues that the more choices consumers have when it comes to small, short-term loans the better.
“If those choices are abusive, it's wrong,” Metcalf said. “State and local government isn't doing enough.”
He said lawmakers should cap how many loans one person can take out and how many times that loan can be rolled over.
In Colorado, other payday lending regulations include: a 20 percent maximum fee on the first $300 of a loan, 7.5 percent above $300, only one rollover per loan is allowed, the maximum amount that can be loaned is $500, the maximum term of a loan is 40 days and lenders cannot pursue criminal prosecution for unpaid loans under most circumstances.
