In February, the Arkansas state Supreme Court declared that payday lending fees are indeed interest, and are thus subject to the state interest rate limit of 17%. Now Attorney General Dustin McDaniel is ready to enforce it.
On March 18, Attorney General McDaniel ordered all payday lenders operating in Arkansas to cease and desist all payday lending practices that violated the state’s interest rate limit of 17%. Additionally, he declared that if any payday lenders defied his demand, that he stands “ready to take them to court.”
Arkansas joins a number of other states that previously allowed payday lending but have shut down storefront operations. Most of the working poor will be protected from such predatory lending practices.
Some payday lenders will likely continue to violate Attorney General McDaniel’s order. In 2006, Attorney General Roy Cooper booted payday lenders from North Carolina.
Since then, internet providers of payday loans, such as CashCall, have continued to provide payday loans to North Carolina residents. CashCall’s interest rate of 99.25% APR is nearly triple the state usury limit. A representative from the NC Attorney General’s office confirmed that they have been unable to effectively extend the ban to out-of-state companies that use the internet to reach residents.
Still, the move is an important one that will help protect the most vulnerable consumers from the worst kind of loans. California, Colorado and Ohio are next in line to consider bans on payday lending practices.
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