More than 20 states have laws or regulations governing a "deferred payment transaction" -- or, in plain English, a "payday loan" service that allows people to get a short-term, small amount of cash borrowed against their next paycheck.
Such a quick loan service, of course, is great if a Georgian is in desperate need of groceries, or has to pay a utility before a cut-off, and doesn't want to bounce checks and pay the high bank penalties.
On the other hand, as Sen. Don Cheeks, D-Augusta, and others point out, there have been outrageous ripoffs via unregulated interest rates and hidden fees that drive a customer deep into debt.
Rather than banning these pay advances, though, state Rep. Robert Reichert, D-Macon, seeks to tightly regulate the practice. He proposes that:
Transaction fees be capped at 15 percent.
Agreements for deferred presentment must be in writing and signed by the customer.
Advertising must be truthful, and not mislead.
No check be held more than 31 days.
A maximum of $500 outstanding allowed to any one customer.
No more than four checks may be held concurrently from any customer.
The regulation would come from the Georgia Department of Banking and Finance, with the fitness of the applicant to be determined by the banking commissioner. And there would be a host of civil and criminal penalties for violators.
A recent survey by the Atlanta Business Chronicle revealed that 72 percent of those polled either used or knew someone who used a payday loan company.
It's obvious there's a consumer demand; Georgia just needs to better regulate this service. That's why Reichert's pro-consumer H.B. 515 merits debate and passage.
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