PAYDAY LOANS AND CASH ADVANCE WITH NO FAXING OR CREDIT CHECK

SAN FRANCISCO, March 21 /PRNewswire/ -- The California Reinvestment Coalition surveyed 253 payday lending establishments across the state and found that consumers are being misled or not given enough information about payday loans. CRC will release a summary of findings Wednesday, March 21, 2007 entitled Payday Lenders Evade Regulations, which exposes that several payday lending establishments are not in compliance with state laws.

Payday Lending has grown into a multi-billion dollar industry. CRC's surveys reveal that relaxed laws and a lack of regulation are allowing payday lenders to gouge California consumers who don't fully understand what they are getting into. Thus, it is no surprise that Californians spent more than $757 million in Payday Loan fees in 2004.

"After surveying 253 payday lending establishments in California, our results reveal that consumers are being misled about the interest rates and fees associated with payday loans, and they are not being informed about their rights and protections according to the law," said CRC Payday Campaign Organizer Charisse Ma Lebron.

Several of CRC's 247 nonprofit and public agency members surveyed payday lending establishments in San Francisco, Sacramento, Los Angeles, San Diego, Oakland, Oceanside, National City and the San Fernando Valley. CRC members and allies posed as potential first-time customers and recorded exactly what they were told by payday loan clerks and noted what was posted in the establishment. What they found was alarming:

-- 32 percent of the payday outlets did not post a complete Schedule of Fees, which is necessary in order for consumers to know how much the loan will cost. -- 70 percent of the payday lending representatives did not know what the APR of the loan was or provided an inaccurate APR associated with a two-week $255 loan. -- According to the tellers who knew the interest rates of their payday product, the lenders' interest rates for a Payday Loan varied from the average 460% to as high as 2147%. -- 68 percent of Payday Lenders did not allow their customers to extend the term of the loan from two weeks to one month in order for the customer to more affordably pay back the loan. -- Of the few lenders willing to extend the term of the loan from two weeks to one month, more than 25 percent charged an additional fee (According to the law, the extension of the term of the loan from two weeks to one month can be done at the discretion of the lender, but it is illegal for the lender to charge an additional fee to do so). -- 16 percent of lenders encouraged or suggested their customers get additional payday loans from other companies or the same company, while the consumer already has an outstanding loan.

Payday Lenders Evade Regulations reveals that a considerable number of payday lending establishments are not in compliance with the lax laws governing the payday industry in California. And lenders have not made any changes to the terms of their loans in order to accommodate consumers as their recent advertising campaign claimed. In February 2007, the payday loan industry's trade group Community Financial Services of America (CFSA) launched a $10 million advertising campaign in which they asserted their receptiveness to customer concerns. The industry said they will accommodate customers with appropriate postings in their establishments and provide additional time for consumers to repay their loans. CRC's findings illustrate that these alleged accommodations are not being made in California establishments.

"We have shared our concerns with the commissioner of the Department of Corporations, yet there has not been appropriate regulatory action taken to ensure compliance on the part of the payday lending industry," Lebron said. "Short of state legislation, only the Department of Corporations can most effectively protect consumers from predatory payday lenders, and it is not doing nearly enough."

The California Reinvestment Coalition advocates for the right of low- income communities and communities of color to have fair and equal access to banking and other financial services. CRC has a membership of more than 245 nonprofit organizations and public agencies across the State.

California Reinvestment Coalition