The issue of money and fair lending regulations brought about a heated discussion Saturday afternoon.

The Sunflower Community Action group held a meeting to discuss the need for regulations of payday loan-type stores in the area.

“Sunflower believes in teaching people how to organize issues,” said Monty Shaw, president of the Northeast chapter of SCA. One of those issues they are focusing on is payday lending.

“We’ve been working on this issue over two years,” said Rickie Coleman, local SCA president.

Their concern was that payday lending interest rates can range from 360 to 800 percent and the businesses are unregulated.

She said a person can borrow from $100 to $500, with between $15 interest on $100 up to $75 interest on $500.

“So in two weeks they pay the $75 and it goes on until they can pay it all in one sum,” Coleman explained. “That’s the problem we have with these.”

She said they wanted these businesses to allow people to make payments.
Another concern was the number of loans a person can get.

Although state law says a person can only get two loans from one facility at a time, there is no database, so a person can go to as many lenders as they want to get loans.

The SCA felt there should be a database and it should be the businesses’ responsibility to keep track of what other loans a person has, rather than simply taking a person’s word for it.

Coleman also said a business can send the check, which a person leaves for the amount he or she has borrowed, to that person’s account as many times as they want and run up overdraft charges if it is not paid back. She felt a stop should be put to this.

“If you use it right, it’s a great system,” Coleman said.

But her concern is the people who are not using it right.

“Obviously, they’re making money,” she said of payday loans.

So far, Coleman said, 14 states have gotten payday loan businesses closed.

That has been done by having the legislature put a cap on interest rates.

The SCA is proposing a 36 percent interest rate cap. They acknowledged there is a need for the businesses, so they shifted their focus in the past of shutting them down, to now putting on the cap.

“The answer is we have to get a cap on it,” Coleman demanded. “Even capping at 100 percent is better than 800 percent.”

But Mike Strong, owner of Mike’s Payday Loans, spoke up from the audience and told Coleman that was misleading.

That cap, in dollars, allows for a $1.38 interest payment on $100 because the rate is an annual interest rate being applied to a two-week or four-week loan.

“Thirty-six percent will put them out of business,” Strong said. “That’s not reasonable.”
Several members demanded to know who Strong was after he began speaking up, not letting up until he told them what business he owned.

Strong also pointed out there are three pages of regulations for payday loan businesses, despite the group’s claims that it is unregulated, which he pointed out that they promoted on their flyer for the meeting.

“Well, I don’t know about it, and I’m not going to go look it up,” Coleman shot back at Strong, adding that she had talked to the banking commissioner about the situation.

Strong told her the banking commissioner wouldn’t tell her they were unregulated because it wasn’t true, but Coleman maintained that was the case.

Strong went on to explain the regulations they do face, despite the SCA’s claims. They have a maximum of $15 they can charge per $100. People also are required to pay back the loan in full in two weeks or four weeks, depending on the length of the loan agreed upon. He also said a person can pay it back the next day without a fee if they come back and feel they made a mistake taking out the loan. The businesses also have to stamp a check saying they will not pursue criminal prosecution.

“Why do you want to mislead the public?” Strong asked Coleman.

Strong went on to say that people have to make a conscious effort to get a new loan every two or four weeks.

“The point of what we’re trying to do is help the people,” Shaw said.

“At what point do they harm themselves?” Strong wanted to know.

He also pointed out it is against the law for a person to lie on the application they fill out if they have other loans, but mark that they do not.

“We’re following regulations made by the state legislature,” Strong added.

When that was pointed out, Coleman said they weren’t good enough regulations and went on to voice another concern – how many legislators who own payday loans created the current regulations, thus making the law to benefit their businesses?

Strong contended that those legislators who own payday loans couldn’t pass the current regulations on their own. Shaw disagreed, saying those legislators could get a law passed.

“We now have more payday loans than we do McDonald’s in America,” Coleman said, adding that there are McDonald’s everywhere. “We need to educate the public and contact legislators.

“This is a cycle of debt. It was designed to get you in and not let you out.”

Rep. John Grange also was invited to the meeting.

“We do hear both sides of the story,” he said. “We hear frequently people can’t go to the bank or their family [for money].”

Although initially agreeing there should be a cap, later he said from the discussion he has seen there is a cap.

“First of all it’s not mandatory you go to payday loans,” Grange said.

He suggested that maybe it would be better to address financial institutions to set up a plan to allow two-week $500 loans.

He said the group had raised some questions he will look into.

On Tuesday, the group is going to Topeka. They are taking 10 busses open to anyone who wants to go and will organize a rally.

Grange said he didn’t know of any legislation currently being moved forward to address this issue, adding that such bills move in cycles.