McDaniel demands termination of payday lending in Ark.

Attorney General Dustin McDaniel announced at a press conference this morning that he is sending letters to payday lenders in Arkansas asking them to stop the practice immediately. He defined “payday” lending as short term loans that charge interest in amounts exceeding the 17% usury limit imposed by the Arkansas Constitution. A failure to do so will likely result in the filing of a lawsuit by the Attorney General.

According to a 2005 study by the Center for Responsible Lending, it is estimated that payday lenders cost Arkansas consumers $25 million in fees and excessive interest each year. “It is my hope that they comply with my demand but, if they do not, I stand ready to take them to court,” McDaniel said.

I had someone come through the office about a month ago who handed me a payday loan agreement and asked if it was legal. It listed the terms along with a fee for the loan that, when translated to interest, put the repayment at over 600% of the original loan. Of course, the effect of shutting down payday lenders here locally will be that businesses like Mo' Money and the Cash Fairy simply do business only west of State Line Avenue, but that's life here on the border.