ABINGDON, Va. – About 15 people gathered Friday afternoon in front of Abingdon Shopping Center to protest payday lending practices in Virginia.
None of the demonstrators said they had been personally victimized by a payday lender, but they said the interest rates that are charged by the industry take advantage of the poor.
"I can’t imagine taking money from people who are in need," said Emory resident Nancy Garretson. "There used to be usury laws that you weren’t supposed to charge excessive interest. And now they’re charging 390 percent – that’s absurd."
Brian Johns, of the Virginia Organizing Project, said similar demonstrations are being staged around the states to encourage legislators to regulate the payday lending industry.
Annual percentage rates posted at the Advance America Cash Advance store in the shopping center were listed as 391.07 percent for a 14-day loan term and 782.14 percent for a seven-day loan term.
For example, the store charges $15 to borrow $100 for two weeks.
The clerk in the store referred all questions to his company’s corporate office in Spartanburg, S.C.
Company spokesman Jamie Fulmer said customers aren’t so concerned about the annual percentage rate because with short-term loans, they don’t expect to be paying interest for a year.
"This is the first I’ve heard of it, so I don’t have any comments," Fulmer said of the statewide demonstrations. "I think our customers take affront to the fact that those who are protesting don’t think they are smart enough to make their own decisions."
Fulmer said the average payday loan borrower makes $41,000 per year, and 90 percent of borrowers have high school diplomas. He said half have college experience and own homes.
The demonstrators favor passage of a state law that would cap the annual percentage rate for payday lenders at 36 percent, limiting borrowers to one loan at a time, limiting the number of loans to five in a 12-month period and extending loan terms to two pay cycles.
Johns says the bill is a compromise between reformers who want strict regulations on the lending industry and people who don’t see the need for major reforms.
He said the 2002 law allowing payday lenders to operate in Virginia "basically undid almost 300 years worth of usury laws."
Dozens of localities in Virginia – including Bristol, Abingdon, Washington County, Scott County, Lee County, Duffield and St. Paul – have approved resolutions asking the General Assembly to cap the interest rates that can be charged by payday lenders.
Fulmer said consumers should have the opportunity to choose short-term loans over bank fees. He said a 36 percent annual interest cap would limit charges to $1.38 for a two-week loan – "an effective ban of the product."
dmccown@bristolnews.com | (276) 791-0701
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