Consumer groups still leary of payday advance legislation
By JEFF HARRINGTON
Published August 10, 2003
Florida legislators reined in the payday advance industry two years ago by capping interest rates that operators such as Amscot of Tampa could charge for the short-term loans.
The lawmakers also created a statewide database to prevent those in dire financial straits from using one payday loan to pay off another.
Don Saxon, director of the state's Office of Financial Institutions and Securities Regulation, calls the database a success in making certain borrowers didn't put themselves in "harm's way financially" by building a pyramid of payday loans.
Saxon agrees with the payday industry that it serves a purpose for some of those who live from paycheck to paycheck - the worker who needs to get his or her car out of the shop to drive to work on Monday; the apartment dweller who has to pay rent before payday. "No one is forcing" customers to go there, he said.
But consumer groups are still leary.
"The legislation was a step in the right direction," said Mark Ferrulo of the Florida Public Interest Research Group, "but the profiteering on the backs of the poor with outrageously high interest rates continues."
The new state law allows payday lenders to charge up to 10 percent interest, or $50 on a $500 maximum advance. That means the annual percentage interest rate (APR) on a two-week loan could be close to 300 percent.
Many lenders (though not Amscot) charge a $5 verification fee in addition to interest.
Payday payouts
A larger percentage of the state's payday loans and other "deferred presentment transactions" occur in the Tampa Bay area than in any other region:
Tampa region/25 percent
Orlando region/18.1 percent
Jacksonville region/14.3 percent
Fort Lauderdale region/10.2 percent
Miami region/9.6 percent
Pensacola region/9.5 percent
West Palm Beach region/7.2 percent
Fort Myers region/6.2 percent
- Source: Florida Department of Banking and Finance
