As we posted in yesterday’s News Stand, the Richmond Times-Dispatch reported that one of the largest payday lending groups, Check ‘n Go, is closing up shop and leaving Virginia. While we would normally frown on the loss of business in our Commonwealth, the predatory lending institutions like this bring no benefit to the citizens of Virginia, and we’re glad to see them go.
Last year we were proud to work along side a diverse coalition of organizations, including the U.S. Military and the Better Business Bureau, that sought to limit the interest rates payday lenders charge to the same rates, by law, other financial institutions, may charge, and level the playing field. The incredibly high interest rates payday lenders charged trapped Virginians into cycles of debt and put families at risk. Though we were unsuccessful in capping the rate, the General Assembly did approve several restrictions, such as the number of loans an individual can have and remedies for those caught in the debt trap.
While not thrilled with the outcome, it was an incremental step in the right direction. This year, the General Assembly further restricted these lenders after they sought to side-step last year’s law (The Family Foundation did not take a position on the issue this year.) Along with the declining economy, where joblessness continues to increase, few people are spending beyond their means. Combined with the new restrictions, payday lenders are finding fewer victims.
One comment from a payday lender in the T-D article was revealing. W. Allen Jones, founder and chairman of Check Into Cash, of Cleveland, Tenn., said, “People will not overspend; they’re not confident in their jobs.”
Note that, according to this quote, payday lenders were counting on people overspending. Payday lenders were created to take advantage of people’s irresponsibility or desperation. This is not a business model that the Commonwealth of Virginia should endorse. As bad as the recession is, at least the bright spot of a payday lender leaving Virginia, has come from it.