City Council seeks to limit payday loan shops

Wed

Dec 10 2014

08:45 am

By: R. Neal

Knoxville's City Council passed a resolution asking MPC to recommend zoning regulations that would require a 1/4 mile separation between payday loan shops.

The resolution, requested by Vice Mayor Pavlis and Council members Palmer, Saunders, Wallace, Della Volpe and Campen, states "Presently there is a clustering of alternative financial service establishments on many of the commercial corridors of Knoxville. There is a concern that there may be a significant negative effect on economic redevelopment and a possible detrimental effect on local property values. The purpose of this Resolution is to respectfully request MPC to study and consider the possible future actions this Council may take to attempt to avoid the proliferation and clustering of these establishments."

According to a WBIR report, there is a one mile stretch of Chapman Highway with seven payday loan shops.

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A few thoughts

Submitted by reform4 on Wed, 2014/12/10 - 8:57am.

I salute the idea of regulating these so-called businesses in any way. I have seen the destruction they have caused people personally.

That being said- a separation ordinance won't help much, I think. It might make it more difficult for people to comparison shop and inhibit what little competition there is.

Personally, it would be nice if the city could stiffly regulate their business practices, but that's really not in the power of the city for the most part (the state), other than health and safety regulations. If there was a way to use what power the city has to rope in their more egregious practices, that would be great.

Could the city mandate that they provide budget counseling services to their customers, with the content approved by the city (eg, "heres how you get out of the position of needing payday loans" at a minimum?

*

Submitted by Tamara Shepherd on Wed, 2014/12/10 - 11:23am.
(in reply to reform4)

I agree that separating them is little help, but it's some help--so for God's sake do it.

When my young friend's mom passed away with (operable) cancer some year and a half back, we sat down at his kitchen table to open the stacks of tied-closed Walmart bags that had become his mom's filing system for unpaid bills--that she couldn't pay.

There were tens of thousands in medical bills, of course (she had no health insurance), but there were also dunning letters from 14 individual "payday advance" businesses at which she had borrowed $20 at a time.

She had borrowed a grand total of $280 this way, but they wanted many thousands back.

Every one of these businesses was on or just off Broadway.

I broke down and cried for having failed to realize what was going on in the last couple of years of her life...

Every one of these businesses

Submitted by michael kaplan on Wed, 2014/12/10 - 1:50pm.
(in reply to Tamara Shepherd)

Every one of these businesses was on or just off Broadway.

Highway 441 - north and south of the river - may set the world's record for number of payday loan stores per linear mile.

Regarding budget counseling,

Submitted by jbr on Thu, 2014/12/11 - 9:57am.
(in reply to reform4)

Regarding budget counseling, is there anything like that regularly offered in community schools and/or libraries? Those seem like good places to offer that sort of thing.

Compassion Coalition has a

Submitted by Pam Strickland on Thu, 2014/12/11 - 12:26pm.
(in reply to jbr)

Compassion Coalition has a couple of different budget classes that are offered through different churches and organizations through out the community. I don't remember the details exactly, but it seems that one is a one-session very basic outline and another is a 10-week program.

i think the owners of these

Submitted by michael kaplan on Thu, 2014/12/11 - 12:29pm.
(in reply to Pam Strickland)

i think the owners of these companies need the Compassion Coalition more than the borrowers :)

I think you misunderstand the

Submitted by Pam Strickland on Thu, 2014/12/11 - 6:50pm.
(in reply to michael kaplan)

I think you misunderstand the purpose of the Compassion Coalition.

Maybe financial counselors

Submitted by jbr on Thu, 2014/12/11 - 2:38pm.
(in reply to Pam Strickland)

Maybe financial counselors from CAC, or whomever, could set up close to payday loan businesses, particularly close to clusters of them like on Chapman Highway.

Instead of people having to hunt them out. Sort of like the blood mobile, etc goes out in the community.

*

Submitted by Tamara Shepherd on Thu, 2014/12/11 - 3:02pm.
(in reply to jbr)

We need more of that "mobile" strategy generally to better serve the poor.

I'm still lamenting the loss of the public library's "bookmobile," which in my youth was a service every kid on my block enjoyed--and my neighborhood wasn't even poor.

Also, through the years I volunteered with PTA (and served on the Knox County Council PTA board), I was always encouraging them to take their clothing center on the road. Seemed like every Title I school was then trying to operate its own on-site clothing center, due to the volume of school families lacking transportation to reach PTA's amply stocked clothing center in Fourth & Gill. (Disclaimer: Dunno whether maybe PTA eventually heeded my suggestion?)

I really like your idea to offer financial counseling to parents through our community schools. Or do they do that already?

I honestly don't know if CAC

Submitted by Pam Strickland on Thu, 2014/12/11 - 6:54pm.
(in reply to jbr)

I honestly don't know if CAC does budget counseling or budget classes or not. It would be a good idea given some of the other services they offer. But then again, many of their clients probably could budget fine if they had more money. It's having enough money to stretch out that makes a difference.

But then again, many of their

Submitted by bizgrrl on Fri, 2014/12/12 - 7:14am.
(in reply to Pam Strickland)

But then again, many of their clients probably could budget fine if they had more money. It's having enough money to stretch out that makes a difference.

Thanks for saying this.

I do think the consulting should be mobile, flexible to meet at/near the community centers, e.g. schools.

The state should crack down

Submitted by R. Neal on Wed, 2014/12/10 - 9:14am.

The state should crack down on all these predatory lenders. Unfortunately, I get the impression they have a powerful lobby/campaign contribution influence.

I also like your idea of counseling and/or maybe social services referrals to go along with the loans.

"select" few

Submitted by Average Guy on Wed, 2014/12/10 - 11:38am.
(in reply to R. Neal)

Unfortunately, I get the impression they have a powerful lobby/campaign contribution influence.

This resolution makes me think some more than others.

If I remember correctly Tim

Submitted by xmd on Wed, 2014/12/10 - 10:17am.

If I remember correctly Tim Burchett was a player in getting Payday loans approve on the state level.

Bingo.

Submitted by Pam Strickland on Wed, 2014/12/10 - 11:27am.
(in reply to xmd)

Bingo.

Executives from one

Submitted by michael kaplan on Wed, 2014/12/10 - 2:02pm.
(in reply to xmd)

Executives from one Tennessee-based firm, Jones Management Services LLC of Cleveland, and its companies have given at least $31,000 to Corker's campaigns since 2001, when he was running for mayor of Chattanooga, according to the Times.

(link...)

Executives from one

Submitted by Factchecker on Wed, 2014/12/10 - 8:40pm.
(in reply to michael kaplan)

That kind of politician will always insist on what an obviously valuable "service" such businesses provide to citizens. How did they grow to be so big?, they will say. Look what they do to drive the economy of our state, they will say (not to mention what they do for UT athletics).

And the rich get richer, much richer. That's how the game is played.

Local HS promo as condition of donation:

Submitted by zoomfactor on Thu, 2014/12/11 - 3:05pm.
(in reply to michael kaplan)

*

Submitted by Tamara Shepherd on Fri, 2014/12/12 - 12:03am.
(in reply to zoomfactor)

This apparent KCS-Check Into Cash relationship is outrageous (with no offense intended to the young athletes being honored).

If enough parents agree, they can end it (and encourage a more appropriate sponsor).

When Charles Lindsey was super, he at one point had Cartoon Network subsidizing/advertising on the weekly paper printout of the KCS cafeteria menu that came home with elementary students every Friday.

However, enough parents objected to the propriety of Cartoon Network programming for young children that the administration severed the relationship.

My children's elementary principal said administration took that step only after they received a deluge of phone calls coming in from school communities countywide.

I can't find this kid

Submitted by Pam Strickland on Fri, 2014/12/12 - 3:00am.
(in reply to zoomfactor)

I can't find this kid locally. Are you sure this is a Knox County high school?

The closest I found was a Hunter Chastain who is a junior on the Bryan College basketball team who hails from Cleveland, Tenn.

*

Submitted by Tamara Shepherd on Fri, 2014/12/12 - 6:29am.
(in reply to Pam Strickland)

Don't know how you're searching for the student's name, Pam, but agree that it's important to confirm that the pic is representative of a relationship between KCS and Check Into Cash.

I can't read the text on the plaque the student is holding, either. Zoomfactor? Anybody?

Cleveland

Submitted by zoomfactor on Fri, 2014/12/12 - 9:31am.
(in reply to Pam Strickland)

This student is from the Cleveland, TN high school, which at one time (2003) had the Check Into Cash logo emblazoned on the basketball court floor. Don't know if it is still there. If you go to the CIC Facebook page, most of the posts are about Cleveland HS sports:
(link...)

Seems like I recall seeing

Submitted by jbr on Wed, 2014/12/10 - 2:56pm.
(in reply to xmd)

Seems like I recall seeing that in an older version of the state online campaign finance database. Until someone modified the interface to the point it seemed unusable to me. Maybe the current version is better ...

tenessee online campaign database

And dont forget...

Submitted by stalwartdem on Wed, 2014/12/10 - 12:35pm.

UT's aquatic center is named after one of these shysters

Nearly One in Five Americans Say They'll Be in Debt Forever

Submitted by jbr on Wed, 2014/12/10 - 1:14pm.

From NBC News …

Older respondents are more likely to believe their debt will be with them forever. Some 31 percent of those over age 65 expect to be lifelong debtors, compared to 22 percent of those aged 50 to 64 and just 6 percent of millennials aged 18 to 29.

Nearly One in Five Americans Say They'll Be in Debt Forever

Meet the Man Who Made a

Submitted by SnM on Wed, 2014/12/10 - 1:24pm.

Meet the Man Who Made a Fortune Exploiting the Poor With Payday Loans
(link...)

How Payday Lenders Prey Upon the Poor

Submitted by jbr on Wed, 2014/12/10 - 1:30pm.

From the NY Times …

Payday loans are often advertised as a short-term lift that helps keep the lights on or allows you to stay in school. But borrowers often become trapped in a debt spiral. According to a new report from the Consumer Financial Protection Bureau, the government’s financial watchdog, about 50 percent of initial payday loans play out into a string of 10 or more. “One could readily conclude that the business model of the payday industry depends on people becoming stuck in these loans for the long term,” the C.F.P.B.’s report said.

How Payday Lenders Prey Upon the Poor — and the Courts Don’t Help

From the Consumer Financial

Submitted by jbr on Wed, 2014/12/10 - 1:35pm.

From the Consumer Financial Protection Bureau (Thanks Elizabeth Warren) …

The cost of the loan (finance charge) may range from $10 to $30 for every $100 borrowed. A typical two-week payday loan with a $15 per $100 fee equates to an annual percentage rate (APR) of almost 400%. By comparison, APRs on credit cards can range from about 12 percent to 30 percent.

What is a payday loan?

Consumer finance Protection Bureau

If people had some real jobs they wouldn't need

Submitted by Roscoe Persimmon (not verified) on Wed, 2014/12/10 - 2:10pm.

"pay day" loans and advances. The clustering of these shops is merely a symptom of the overall inability of Mike Edwards and the SuperChamber to recruit and relocate for profit businesses to Knoxville and Knox County. Yes, it's nice to regulate these people and their exorbitant interest rates, it's the same way with liquor stores, adult establishments, beer sales, and taverns, but he best thing that the city could do to eliminate the eyesore of pay day loan/advance stores would be to get rid of the dead wood and goobers at the SuperChamber and put real leadership and people who can recruit business and industry to Knoxville and Knox County.

Previously: Tennessee at the

Submitted by R. Neal on Wed, 2014/12/10 - 2:19pm.

Previously:

Tennessee at the epicenter of payday lending

Payday lender to sponsor Maryville College football and basketball

Predatory lending under attack

A Predatory Lender's Paradise

We ALL KNOW how much they suck.

Submitted by reform4 on Wed, 2014/12/10 - 3:44pm.

Preaching to the choir.

What can local government do to put any thorn in their side? If health and safety regulation means we require them to test their penholders for MRSA every day, then let's do it.

Realistically, is there something clever we can get City Council to do?

Controlling Payday Lending thru Local Ordinances and Resolutions

Submitted by jbr on Wed, 2014/12/10 - 4:09pm.
(in reply to reform4)

I am not familiar with this group but they seem ok from what I have seen so far.

from Consumer Federation of America ...

Controlling the Growth of Payday Lending Through Local Ordinances and Resolutions

Great report, good

Submitted by R. Neal on Wed, 2014/12/10 - 4:35pm.
(in reply to jbr)

Great report, good find.

Haven't read it all, skipped down to local ordinance examples, most are zoning/distance/density related similar to Knoxville's proposal, others even more strict up to and including outright bans.

Quick Skim:

Submitted by reform4 on Wed, 2014/12/10 - 6:42pm.
(in reply to R. Neal)

1. Distance limitations may be effective because they only want to be in the poor neighborhoods, and limiting the density = limiting the number of offices. So we should support this.

2. Specialized zoning / conditional permits - I'm guessing it's MPC that would have to create a new zoning classification. That could be a harder route.

Also:

Get a temporary moratorium in place immediately!
Once you get a sponsor, ask him/her to pass a measure imposing a six-month to two-year
moratorium on new payday lenders at the next possible council meeting. Often, when payday lenders
learn that you are working on a more restrictive ordinance there is a rush to open outlets before they lose
the chance or the application process becomes more difficult

I liked this special permit provision, which makes sense:

Special Permit, must not be closer than 1000ft. from another check casher/payday lender; must be at least 500ft. away from: 1) community education civic activities (schools) 2) state or
federally chartered banks, savings associations, credit unions, or industrial loan companies 3) community assembly civic activities (churches) 4) liquor stores (excluding full service restaurants or
liquor stores with 25 or more full time employees)

That should limit their footprint.

Another one required full-time security (rentacop), which drives up their costs.

Billions of dollars in

Submitted by michael kaplan on Wed, 2014/12/10 - 4:53pm.
(in reply to jbr)

Billions of dollars in usurious interest flows out of communities to the national chain lenders

.. who, in some cases, are in Tennessee.

Coming to a Post Office Near You: Loans You Can Trust?

Submitted by jbr on Wed, 2014/12/10 - 4:12pm.

From Elizabeth Warren via Huffington Post …

Coming to a Post Office Near You: Loans You Can Trust?

*

Submitted by Tamara Shepherd on Wed, 2014/12/10 - 6:45pm.
(in reply to jbr)

LOVE the idea of providing the poor access to legitimate banking services via post offices.

In a tangential matter, I've recently been advised by our bank, ORNL Federal Credit Union, how my young friend (or any young person) may go about responsibly establishing a credit record while still a student.

Staff there have advised him that the next time he needs to purchase something for $200 or more, rather than pay cash he should instead use either his part-time job earnings or his excess student financial aid to deposit that amount into his savings account, then borrow it back "from himself."

The interest rate on such a "share secured" loan is infinitesimally low (like under five bucks on a $200 loan, even if he ran it a year), he can choose to pay it back in 60 or 90 days or to run it over a longer term, and the credit union will still report to all three major credit bureaus even a loan this small and even one paid back this quickly.

We intend to do this a time or two in the coming months, with an eye toward his having a credit record adequate to enable him to finance a used car upon graduation.

I didn't know this trick in time to advise my older child to employ it. She bought her first home over the summer, at age 22, and had to jump through some hoops due to the skimpiness of her credit record.

Anyway, pass this tip on to young people you know.

Pay Day Loan information

Submitted by jbr on Wed, 2014/12/10 - 4:55pm.

for Tennessee …

Tennessee State Information

Rollovers

Submitted by reform4 on Wed, 2014/12/10 - 7:12pm.
(in reply to jbr)

Rollovers Permitted: None (cannot renew or otherwise consolidate)

Yeah, I doubt they observe that requirement. I'm sure they call it something else.

States with caps on payday interest rates at 36% or lower

Submitted by jbr on Wed, 2014/12/10 - 6:42pm.

One time Arkansas can be proud of themselves. Allow max APR of 17%

From what I have seen online it looks like Tennessee allows APR of 459%

Small wonder we are inundated with those places.

Someone correct me if it is wrong.

From University of Washington report …

Scroll down to "Figure 1. States with caps on payday interest rates at 36% APR or lower" …
EFFECTS OF STATE PAYDAY LOAN PRICE CAPS & REGULATION

Arkansas's cap is a state

Submitted by Pam Strickland on Wed, 2014/12/10 - 9:52pm.
(in reply to jbr)

Arkansas's cap is a state constitutional mandate. It also applies to credit card rates.

John Oliver on Payday Lenders

Submitted by Somebody on Wed, 2014/12/10 - 6:38pm.

(link...)

great

Submitted by michael kaplan on Wed, 2014/12/10 - 7:44pm.
(in reply to Somebody)

great

I think I noticed a pay day

Submitted by jbr on Wed, 2014/12/10 - 7:16pm.

I think I noticed a pay day loan business in the same building as an employment office for laborers at Middlebrook Pike/North 21st Street intersection.

With our fabulous free market

Submitted by oldnorthknoxhippy on Wed, 2014/12/10 - 11:29pm.

With our fabulous free market capitalist system in place what's to stop a competitor from opening some payday loan offices and charging 1/2 of the interest that these vultures are charging?

They'll break your knee caps

Submitted by DowntownMan (not verified) on Thu, 2014/12/11 - 8:38am.
(in reply to oldnorthknoxhippy)

If you try to compete with them.

Banks Making Payday Loans

Submitted by Joe328 on Thu, 2014/12/11 - 11:22am.

Banks are entering the payday loan business. If you add all the fees and how how they clear checks, many banks are charging more interest than payday loan companies.

I can't find the link referring to TN banks, but I did find a related link at NPR.
(link...)

Fox News Business: Payday

Submitted by R. Neal on Fri, 2014/12/12 - 4:14pm.

Fox News Business:

Payday Lending is a Much-Needed Service

Sigh.

Typical Fox

Submitted by fischbobber on Fri, 2014/12/12 - 6:19pm.
(in reply to R. Neal)

Demand is not need.

Ba-boom!

Submitted by Factchecker on Fri, 2014/12/12 - 8:17pm.
(in reply to R. Neal)

Nailed it.

...attacking a legal business...

Priceless. Some of the rhetoric that parallels the stages of defense the right uses to defend torture.

By the way, I was on Kingston

Submitted by Pam Strickland on Fri, 2014/12/12 - 9:36pm.

By the way, I was on Kingston Pike today and saw two of these businesses in the Bearden Hill area. Don't remember the names, but both clearly adverstised "Title Loans" which is never a good sign.

Not surprising. Bearden also

Submitted by michael kaplan on Fri, 2014/12/12 - 11:49pm.
(in reply to Pam Strickland)

Not surprising. Bearden also has low-income families. I actually see these shops all over town. My biggest disappointment, though, was to find my favorite Baskin-Robbins (on Chapman Highway) become a payday loan shop.

I wanted to be sure and point

Submitted by Pam Strickland on Fri, 2014/12/12 - 10:31pm.

I wanted to be sure and point it out because everyone has been talking about Broadway and Chapman Highway. I live off Sutherland in KCDC housing, so I know that low-income families live in the Bearden area and there are plenty of other examples of low-income families in the area. That doesn't mean that these vampires should invade the entire city.

*

Submitted by Tamara Shepherd on Mon, 2014/12/15 - 11:32am.
(in reply to Pam Strickland)

Oh, they're out here in NW Knox County, too, Pam. Clinton Highway is littered with them.

Of course, there are three Section 8 housing complexes, oodles of trailer parks, and those motel rooms/RVs by the week within a two or three mile radius of me, too.

I kinda suspect that the only part of the county they haven't infiltrated is deep west, where more people are apt to have the financial ability and/or acumen to avoid them--although I travel to those parts so seldom, I wouldn't necessarily know.

Google PayDay Loans Farragut

Submitted by Joe328 on Mon, 2014/12/15 - 1:50pm.
(in reply to Tamara Shepherd)

Kingston Pike / Farragut has their fair share of payday loans. Many of the large homes are owned by over financed homeowners.

Over-financed homeowners.

Submitted by Tamara Shepherd on Mon, 2014/12/15 - 2:08pm.
(in reply to Joe328)

Yeah, I shoulda thunk it.

After all, us 99%-ers are scattered all over the county...

Chattanooga proposing a

Submitted by R. Neal on Mon, 2015/01/12 - 12:16pm.

Chattanooga proposing a similar plan:

Chattanoogan: Mayor, Council Members Send Plan To Curb "Predatory Lending" To Planning Commission

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