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Alberta payday loan regulations has lenders starting to feel pinch

The garish yellow storefronts promising quick and easy cash are starting to dwindle in Alberta as the payday loan industry says provincial regulations put in place last year have made its signature product unsustainable.

The number of payday stores has dropped to about 195 from some 220 this time last year, according to Service Alberta.

Cash Money says it's reduced the number of loans it issues from around 30,000 a month a year ago to a range of 1,500 to 1,800 as it denies all but the least risky borrowers.

"The situation in Alberta is unfortunate," said Cash Money spokesperson Melissa Soper. "Without profit we can't risk losses, so we have to deny those with riskier credit scores."

Alberta's regulations require a payday loan cost no more than $15 per $100 borrowed and have a term of at least 42 days. They are part of a wider crackdown on an industry that gave nearly 4.5 million short-term, high-interest loans totalling $2.2 billion across Canada in 2014.

Other provinces implement regulations

At the start of this year, British Columbia and Ontario both implemented lower borrowing costs and are exploring alternative lending options. Newfoundland and Labrador has committed to having its first regulations on the industry by the end of the year.

But it's Alberta that has seen the most dramatic change recently, with the combined effect of the lower cost and longer borrowing time dropping the annual percentage rate from 600 per cent to 202 per cent for weekly payments over the 42-day period.

"Alberta is the most extreme," said Tony Irwin, president of the Canadian Consumer Finance Association, which represents the payday loan industry. more...

Lawmakers Involvement Leads to Suit Brouhaha

Frustrated consumers in South Carolina have filed suit against cash advance lenders who allegedly extend unconscionable personal loan products to vulnerable borrowers. They may feel that legal action is their only option, given the fact that the state Legislature failed completely in efforts to regulate or restrict the payday loans this year. Now, news that some state lawmakers have signed on to represent these consumers has sent shockwaves through the fast cash loan industry and its lenders. Because these are the same legislators that will reconsider prohibiting these personal loans when the General Assembly reconvenes in January, some have accused the thirteen lawmakers of a conflict of interest.

Lisa Johnson of Andrews and Gilbert Herbert of Clinton have filed suit against Advance America Cash Advance, the nation's largest payday loan provider, which is based in Spartanburg, seeking unspecified financial damages. The Andrews/Herbert suit joins a handful of existing cases open against fast cash loan dealers in South Carolina. There has been an ongoing effort to consolidate some of these cases into one or more class action suits. The two plaintiffs are represented by Former U.S. Attorney Pete Strom, who announced that he planned to file at least three more suits in coming weeks. Strom denies that his involvement in the suit constitutes a conflict of interest, because democracy is a slow process, and wronged borrowers need justice in a timely manner.

Advance America spokesman Jaimie Fulmer insisted that the company runs a legal and regulated business in South Carolina. Fulmer questioned whether Strom's involvement with the payday loan suit was in any way appropriate, given his legislative connections.