Payday lenders in Alabama face major change - WTVM.com-Columbus, GA News Weather & Sports

Payday lenders in Alabama face major change

(Source: WSFA 12 News) (Source: WSFA 12 News)
MONTGOMERY, AL (WSFA) -

Payday loans such as Great American on the Southern Boulevard in Montgomery must change how they do business with borrowers.

Shay Farley is an attorney for the Southern Poverty Law Center. The SPLC says it's been warning state lawmakers and federal officials something had to change in the payday loan industry. This has been five years in the making.

"The agency came and did a field study in B'ham in 2012 and since that time has been investigating payday loans," said Farley.

Five years later, the Consumer Financial Protection Bureau ordered all payday lenders in Alabama such as Great American to do what's known as a repay analysis. This has nothing to do with the high interest rates often attached to these loans.

"It only says if you're going to give a loan to a borrower that is less than 45 days you have to do an ability repay analysis so both the loans will be governed by protection. It gives Attorneys General across the country the power to enforce the new rule change," Farley said.

Great American referred all questions to corporate in Tennessee but we never heard from the company, and the head of the advocacy group that supports payday lenders in Alabama was said to be out of town Friday. Farley, meantime, says this is a good step in protecting consumers.

"Only 240,000 Alabamians borrowed yet paid over $160 million in fees, not to repay the loan but keep flipping it," she said.

The new rule is effective immediately.

The new rule did not make clear what the consequences would be if a payday lender violated the new rule.

Copyright 2017 WSFA 12 News. All rights reserved. 

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