Protest Targets Payday Loans

HARRISONBURG — A dozen people protested against “ridiculous” interest rates on payday loans Friday afternoon in front of two short-term loan businesses in Harrisonburg.

From 4 to 5 p.m., members of the Virginia Organizing Project, an group based in Charlottesville, and JMU Progressive, a campus group, marched in front of Check Into Cash and Paynes Check Cashing near the corner of East Market and South Carlton streets.

The protesters handed out fliers and carried posters that read: “Check into cash = Check into debt”, “Payday Lending, It’s Not A Service, It’s A Trap” and “390% interest!?”

The often-high interest rates charged by payday loan institutions have been a hot topic lately in Virginia and across the nation, with many consumer groups and citizen activists urging legislators to rein in the industry.

Protesters on Friday said they want the state General Assembly to cap interest rates for such loans at 36 percent, said Larry Yates, a protest organizer who wore a red baseball cap with “36%” written on it. The General Assembly, which considered but did not pass several payday loan measures earlier this year, begins its 2008 session next month.

“These kinds of loans are ridiculous,” said Ashley Hogan, a 19-year-old James Madison University student.

Background

Although most lenders in Virginia are already limited to 36 percent APR, in 2002, the General Assembly created an exception for payday lenders, Yates explained.

The legislation, called the Virginia Payday Lending Act of 2002, allows lenders to charge $15 for every $100 loaned for two weeks. That’s an annual percentage rate of 390 percent.

In their 2007 session, state legislators introduced 16 bills to repeal the 2002 act, or reform the $1.2 billion industry. Lawmakers had considered creating a database to track loans from payday institutions and limit borrowers to three loans at a time. Those measures failed, however.

There are nine payday-lending businesses in Harrisonburg, according to the State Corporation Commission.

“[The upcoming] General Assembly session is pretty much a do or die situation,” Yates said.