by Leah Nelson, researcher and Dana Sweeney, organizer

Payday industry supporters have often claimed that “neither the general public nor the so called ‘poor’ [are] clamoring” for payday lending reform in Alabama.

Actual borrowers might beg to differ.

Between October 2016 and September 2017, the State Banking Department reported that nearly 215,000 Alabamians took out 1.8 million payday loans – more than eight loans per customer, on average. Each of those loans represents an untold story of struggle where borrowers were forced to weigh the urgent need for cash against the prospect of repaying predatory lenders who charge interest rates as high as 456 percent APR and can demand full repayment within as few as 10 days.

Publicly available comments made by Alabama borrowers to the Consumer Financial Protection Bureau (CFPB) show that for some, payday loans turn out to be a far greater financial burden than what drove them to payday lenders in the first place. These self-reported stories offer a small but representative window into the horrors of predatory lending for many Alabamians.

Writing in March 2015, an individual who borrowed $300 from a payday lender said they were receiving harassing phone calls every day from a lender who was automatically deducting money from their bank account, leading to hundreds of dollars in overdraft fees and forcing them to close their account. “I paid out a lot of money to the Bank for these transactions, money they could have had if they would not have kept trying to debit my account. I am so tired of this and I don’t know nothing else to do except not answer the phone,” the borrower wrote.

In May 2016, a borrower wrote that their payday lender was threatening to track them down at work. “They call me all day every day and if I fail to answer them they will call my sister, aunt, mom and harass them too.”

“I ‘m having to pay over $1000.00 for a $400.00 loan that I was told was paid for and that my balance was $0.00,” a borrower who had paid off their loan in full, only to have their bank account garnished in connection with unpaid fees, wrote in February 2017. “This is absolutely insane. How is this not illegal?”

“I was making payments until I lost my job and I contacted agency to see if I could postpone my payments until I began working again they refused my attempt and I haven’t heard from them since until today I received an email threatening to arrest me,” wrote an individual in May 2017.

“Been paying this company 2 payments every 2 weeks. They was only surposed to get 1 payment a month but taking out 2 every 2 weeks,” wrote another in May 2017. “I can’t pay my regarler bills because of this.”

“Though I do work full time I am struggling to pay off debt,” a single mother who was working with a debt consolidation program to pay off her various creditors, wrote in July 2017. The payday lender, she wrote, “has called my phone, my job, friends and family relentlessly!!   They harass me on a daily basis!! I told them about me going through the debt consolidation place and they got very very nasty, saying they aren’t participating in this program, and demanding Money NOW!!”

The CFPB did what it could to follow up with lenders and help customers resolve, or at least gain clarity, about what was happening to them. A handful of cases were “closed with monetary relief.” But the majority were “closed with explanation” – that is, the only relief the borrower received was an understanding of why the lender was allowed to do what it was doing.

For desperate people seeking help with unmanageable debt, that’s no relief at all.

In Alabama, borrowers continue to find themselves crushed by rapidly ballooning debt traps and loans continue to be issued with triple-digit APRs. Many other states have passed successful reforms, including our Southern, business-minded neighbors in Georgia, Arkansas, and North Carolina, which eliminated payday lenders entirely without significantly impacting borrowers’ access to cash. But our legislature failed again this year by refusing to pass the simple 30 Days to Pay bill, even though the status quo harms thousands of Alabamians and other states have demonstrated that responsible reform is possible. That’s why predatory lending reform is supported by a diverse coalition including Alabama Appleseed, the State Baptist Convention, the United Methodists, the Episcopal Diocese of Alabama, the Huntsville Chamber of Commerce, the Southern Poverty Law Center, and the Birmingham Business Alliance. Here in Alabama, that’s about as broad-based as it gets.

And we need our state leaders to listen now more than ever. At the national level, new leadership at the CFPB has steered the agency away from its mission of protecting consumers from abuse by large banks and corporations. Recent months have seen the CFPB refusing to enforce the federal judge-ordered punishment of a payday lender caught stealing millions of dollars from its customers, musing about eliminating basic guardrails meant to keep payday lenders from scamming borrowers, and even proposing that public comments made to the CFPB by consumers—like those featured in this article—be hidden from the public. Alabama lawmakers can no longer wait or depend on the CFPB to fix an issue that was created by the Alabama State Legislature. Lawmakers’ earliest opportunity to address this issue will be the upcoming 2019 Legislative Session, and after failing Alabamians again and again, they should finally take it.

Until then, though, Alabama borrowers will have to wait yet another year for relief – and payday lenders will get another year to line their pockets by fleecing our communities. Let’s make sure that they won’t be made to wait again.

by Dana Sweeney, Organizer

There are more payday lenders and title loan stores in Alabama than hospitals, high schools, movie theaters, and county courthouses combined. Payday lending by itself is a massive industry that harms hundreds of thousands of Alabama borrowers and their families each year.  

Each year, the payday lending industry leeches more than $100 million from the pockets of low- and middle-income Alabama borrowers. Lenders make their biggest profits by snaring borrowers in devastating debt traps. While payday lenders advertise quick and easy access to cash, the fine print on their loan products include APR interest rates up to 456%. With astronomical rates like that, small-dollar, short-term loans frequently become expensive, multi-year burdens for Alabamians. To make matters worse, most of the money that payday lenders make by trapping Alabamians in rapidly ballooning debt—an estimated $1 billion each decade—flows out of our communities and into the pockets of companies headquartered out-of-state. When these vampiric lenders sap our neighbors’ household budgets and drain money from our local economies, we all lose.  

This year, Alabama Appleseed joined with other predatory lending reform advocates to advance the 30 Days to Pay bill (SB 138, sponsored by Senator Arthur Orr, R-3). Under current law, payday loans can be issued with full repayment due in as few as 10 days. The 30 Days to Pay bill would have required payday lenders to issue loans on a 30 day repayment schedule, as is standard for virtually all other household bills. It would have significantly reduced the risk of borrowers falling into long-term debt traps by granting them more time and flexibility to repay loans, and it would have effectively cut the APR interest rate experienced by most borrowers in half (which, while remaining a deeply troubling triple-digit interest rate, would nevertheless be a substantial improvement over the current 456%).

A broad coalition of organizations joined Alabama Appleseed in advocating for the passage of SB 138, including business partners like the Birmingham Business Alliance, the Huntsville Chamber of Commerce, and the Alabama Credit Union Association, and faith partners like the State Baptist Convention, the Episcopal Diocese of Alabama, and Greater Birmingham Ministries.

Unfortunately, despite broad popular support for payday reform, the legislature failed to pass SB 138. After inching through the Senate Banking & Insurance committee over the course of several months, SB 138 ended up passing the Senate on March 8, 2018, with a 20-4 vote. It then moved to the House, where Speaker Mac McCutcheon assigned it to the Financial Services committee. Even though many committee members expressed a desire to vote on the bill, Chairman Rep. Ken Johnson (R-7) refused to bring the bill up for a vote. The 30 Days to Pay bill died right where many other payday reform bills have died before it: in the House Financial Services committee.

The end of the 2018 legislative session marked yet another year in which our state lawmakers failed to protect Alabama borrowers while payday lenders lined their own pockets with cash. While most legislators have said that they support predatory lending reform, friends of the payday industry again blocked a limited reform.

The legislature’s failure to pass SB 138 was deeply disappointing, but Alabama Appleseed will continue to fight for predatory lending reform alongside impacted borrowers. Predatory lending reform remains one of the most bipartisan, popular issues in the state, and we will continue to press our officials to do what their constituents have been asking them to do for many years. We will continue to advocate for reforms like 30 Days to Pay, and we remain committed to seeing Alabama move to the gold standard of a 36% APR maximum for all small loans that is seen in many other states.

by Dana Sweeney, Organizer

For years, there has been widespread, bipartisan agreement that we must reel in predatory payday lenders in Alabama. According to data collected by the State Banking Department, about 215,000 Alabamians took out 1.8 million payday loans between October 2016 and September 2017, averaging more than eight loans per customer. Even though payday borrowers must be able to show that they have a source of income before being issued a loan, 87% of payday borrowers in Alabama still had to take out multiple, small-dollar loans during the year to get by — almost always to meet necessary living expenses like rent, utilities, and grocery bills, or to account for emergencies like unexpected medical costs or car repairs.

As too many Alabamians know, those small-dollar loans often balloon into large-dollar debts due to high interest rates. Alabama’s payday borrowers pay over $100 million every year on average in loan fees charged to initiate loans and to “roll them over” when full repayment is not possible. There is wide-ranging public agreement that the status quo for payday lending must change, especially when that status quo means that predatory lenders issue loans with interest rates as high as 456% APR and can demand full loan repayment within as few as 10 days.  

This year, Alabama Appleseed has been working with a broad coalition of churches, community foundations, local organizations, credit unions, direct social service providers, and individuals that spans the state and the political spectrum. We are supporting the 30 Days to Pay Bill (SB 138), a simple, modest reform that would set payday loans on the same 30 day repayment schedule as all other household bills. It would start to curb runaway interest rates and prevent many of the debt traps that currently ensnare thousands upon thousands of Alabamians every year. It enjoys bipartisan support in the legislature, and it is an opportunity for the legislature to finally take a step forward on predatory lending reform after years of failing to deliver. All we need now is the chance for senators to vote on it.

The bill has been slowly inching its way through the Senate, but it has not yet been put on the calendar to be debated and voted on. If this bill doesn’t start picking up steam soon, we may run out of time — again — to protect Alabama’s payday borrowers. Alabama deserves a vote. Alabama’s borrowers deserve a vote. We urge you to contact your senator and ask them to do everything in their power to propel this bill forward.

SAMPLE CALL SCRIPT

“Hello, my name is _________________, and I am one of Senator ____________’s constituents from ______[town]_______. I’m calling today because I would like to urge Senator ___________ to do everything in [his/her/their] power to ensure that SB 138, the 30 Days to Pay Bill, passes through the Senate. So many of us have been patient and persistent all session while waiting for this bill to advance through the Senate, just as we have been waiting for years for the legislature to deliver on predatory lending reform. We have waited long enough, and so have Alabama’s borrowers, who continue to suffer because of the legislature’s failure to address this issue. Please let Senator ________ know that SB 138 is a top priority for me as a voter, and that I want to see [him/her/them] doing everything in [his/her/their] power to support and advance this bill. It is bipartisan. It is simple. It is overwhelmingly supported by the public. We deserve a vote, and Alabama’s borrowers deserve relief. Thank you.”

SAMPLE EMAIL SCRIPT

“Dear Senator ____________,

I am writing you to urge you to do everything in your power to pass SB 138, the 30 Days to Pay Bill, through the Senate. As someone who lives in _____[town]______, I know how damaging predatory lending practices are to our community, and as a voter, one of my top priorities is seeing SB 138 passed. So many of us have been writing and calling during this legislative session, and there has been bipartisan agreement that we need predatory lending reform for years. It’s past time that something is done, and it’s past time for the Senate to vote on SB 138. Please work with your colleagues to pass this bill as soon as possible, as we are running out of time — again — to pass reform that protects Alabama’s borrowers from predatory lenders. This bill is simple and overwhelmingly supported by the public. We deserve a vote, and Alabama’s borrowers deserve relief. I will be looking for your leadership on this. Thank you.

Sincerely,

_______________”

Make your voice heard! It can make the difference. 

My name is Dana Sweeney, and I am the newest addition to the Alabama Appleseed team. Continuing the efforts of many Appleseed advocates before me, I will be working as a statewide organizer to put an end to predatory lending practices in Alabama. I will be driving near and far to connect with Alabamians on this important issue, to build coalitions of active citizens that support fair lending practices, and to hold payday lenders accountable for cynically churning profits out of poverty.

My path to this work (and to this state) has been winding, but fortifying. I did not grow up in Alabama: I grew up in the salt marshes of southeastern Georgia reading books and dreaming of the wide world beyond the small town South. For many years, I imagined travelling to faraway places and living in huge metropolises—New York! Los Angeles! London! Beijing! It seemed to me at the time that those were the places where all the excitement was, but fortunately, my visions of extravagant elsewheres were eventually replaced by a deep sense of rootedness in the Southern spaces where I am from.

When (with the generous support of several scholarship programs) I had the opportunity to attend college, I initially hoped to attend school someplace far from home. I got far, but not that far: in August of 2013, I packed my bags and drove about 400 miles west to a new, unexpected, sweet home: The University of Alabama in Tuscaloosa.

While there, I studied English in the classroom, but the most important lessons of my college career came when learning about, from, and with the communities that I was beginning to call home. I began to see how our communities are haunted by the unconfronted ghosts of our past. I began to see how fear and uncertainty have the potential to steal away the best of ourselves, and to steal us away from each other, too. I began to see how injustice has, in so many ways, calcified into complacent normalcy in Alabama and across the South. But I also began to see something else: that no place changes without people committed to changing it. I began to see that no transformation is possible here but by the hard, patient, loving work of people who refuse to give up on the possibility of a more just Alabama that we can all share in together. I began to see that inequities can only persist when we cease to believe that we have the power to change them.

Putting these realizations into practice, I started working however I could to build supportive communities, to spark needed conversations, and to address issues that I saw around me. My journey has taken me in many different directions over the last several years: I have fought for (and won) student voting rights as a Vote Everywhere Ambassador for the Andrew Goodman Foundation, I have grown a literacy-focused creative writing and poetry performance program serving students across western-central Alabama, I have provided free tax preparation services to low-income communities through Impact Alabama, and I have marched on foot from Selma to Montgomery alongside young civic leaders and Civil Rights Movement veterans alike. My experiences have been varied, but they have a few consistent threads: they are all rooted in my conviction that Alabama can do and be better, all driven by my belief that we are capable of making change and being changed together, and all made possible by working in community with others across generations and difference. These are values and commonalities that I will carry forward into my work with Alabama Appleseed.

I am so excited to listen to, learn from, and be with communities across Alabama as we build a coalition to address the predatory lending crisis in our state. These days, I no longer dream of moving to shining cities far away like I did when I was a kid. Instead, I dream of staying put, of rolling up my sleeves and scrubbing the dirt off the small Southern towns that made me, of revitalizing our communities and building a shared, just, prosperous future right here. That future begins with each of us, but it is up to all of us, and I will be working every day at Appleseed to move us closer toward it together.