Predatory Lending and the Alabama Legislature

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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.

Victory for Tenants’ Rights

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By Phillip Ensler, Policy Counsel

Low-income tenants throughout Alabama will enjoy greater access to justice due to the Alabama Court of Civil Appeal’s ruling last week in Morrow v. Pake.

In a decision that will affect thousands of tenants, the court reversed the Tuscaloosa Circuit Court, and ruled that tenants who are evicted have a right under state law to later file a lawsuit for a landlord’s illegal actions while they were a resident of the property.

The tenant in the case, Bridgette Morrow, was evicted after the landlord failed to repair the unsafe living conditions she repeatedly reported about the house she rented. The law firm Winston & Straw, LLP and the Civil Legal Clinic at the University of Alabama School of Law recognized the injustice faced by Ms. Morrow endured and represented her for free to ensure she received quality legal representation. They also took on this case to protect the rights of individuals like Ms. Morrow throughout Alabama.

Alabama Appleseed, along with Legal Services Alabama (LSA) filed an amici curiae brief in support of Ms. Morrow and individuals like her in our state. We felt compelled to speak up for the rights of tenants like Ms. Morrow, who too often face eviction proceedings without any legal representation. 

The main question in the case was whether a tenant who is facing eviction is legally required to raise any claims he or she has against the landlord during the eviction proceedings, during which they are likely distracted by the prospect of imminent homelessness, or if they can bring those claims at a later date.

Preserving the right to bring a claim at a later date is essential to ensuring tenants are able to receive justice in situations where a landlord subjected them to substandard living conditions and failed to provide basic services as prescribed in the terms of the lease.

The court unequivocally agreed with Ms. Morrow’s argument that under the Alabama Uniform Residential Landlord and Tenant Act (URLTA) a tenant’s right to challenge their landlord’s illegal actions does not end with their eviction.  

The court underscored the point made in the appeal and in Alabama Appleseed and LSA’s brief that if the Alabama Legislature wanted to require such claims, they would have done so in the URLTA.

The court also agreed with our analysis that the purpose of an eviction proceeding is to focus on the issue of possession of the property, and not necessarily address the conditions and other wrongs the tenant encountered while living there.

As a result of upholding this right, tenants will have more time to find a lawyer and challenge the illegal acts of their landlord, instead of being forced to do so under the stressful and time-constrained conditions of an eviction proceedings.

While Alabama Appleseed is pleased with the court’s ruling, there is still much work to be done to create a level playing field our courtrooms. A vast majority of tenants enter the courtroom without legal representation, while the vast majority of landlords have ready access to quality counsel. As a result, the deck is already stacked against low-income tenants.

To create a more fair justice system, the State of Alabama must provide more and adequate resources for civil legal aid programs—including the Volunteers Lawyers Programs, Legal Services Alabama, and the other clinics and service providers—who provide low-income Alabamians, including many tenants, with vital access to legal representation. Only with such access to counsel will tenants and other low-income Alabamians be more likely to receive access to fair justice in the courts.

2018 Alabama Regular Session – Post-Session Report

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The 2018 Alabama Regular Session began on January 9 and concluded on March 29. Below is a summary of key human rights legislation considered during the 2018 session.

 

Fair Schools, Safe Communities Campaign Legislation

Our communities are safer and our schools fairer when laws and policies are grounded in evidence. It’s time for Alabama’s laws to reflect this common-sense approach.

End Civil Asset Forfeiture

Bill Number(s): SB 213 (Sen. Orr) and HB 287 (Rep. Mooney)

Bill Summary: SB 213 and HB 287 would have ended civil asset forfeiture (replacing it with the criminal forfeiture process in all instances), required transparency in the criminal asset forfeiture process, and prohibited Alabama law enforcement from receiving proceeds from the federal civil asset forfeiture programs.

Why we Supported: Civil asset forfeiture:

  • Disproportionately harms Alabama’s most vulnerable;
  • Incentivizes the pursuit of profit over the fair administration of justice;
  • Turns the presumption of innocence on its head by forcing property owners to defend their property’s “innocence.”

Bill Outcome: SB 213 passed the Senate, but the House failed to take action on the bill. HB 287 did not receive a committee hearing in the House.

Reclassify Marijuana Possession

Bill Number(s): SB 251 (Sen. Brewbaker) & HB 272 (Rep. Todd)

Bill Summary: SB 251 and HB 272 would have reclassified possession of one ounce or less of marijuana as a fine-only offense.

Why we Supported: Alabama’s current marijuana laws:

  • Turn otherwise law-abiding people into felons for merely possessing small quantities of marijuana;
  • Waste taxpayer money and misdirect law enforcement resources;
  • Disproportionately harm African Americans;
  • Needlessly ensnare Alabamians in the criminal justice system.

Bill Outcome: SB 251 received a favorable report from the Senate Judiciary Committee, but the full Senate failed to take action. HB 272 failed in the House Judiciary Committee.

Ban the Box

Bill Number(s): SB 198 (Sen. Singleton) & HB 257 (Rep. Givan)

Bill Summary: SB 198 (Sen. Singleton) & HB 257 would have prohibited a state or local government employer from asking an applicant about their criminal history until a conditional offer of employment is made. Under this law, the government employer would be permitted to withdraw the job offer if the applicant’s criminal conviction was directly related to the job.

Why we Supported: Banning the box would:

  • Help make our communities safer;
  • Better ensure a second chance for Alabamians who have already paid their debt to society;
  • Protect Alabama from having to hire individuals whose criminal convictions are directly related to the job;
  • Help protect state employers from claims of discrimination.

Bill Outcome: SB 198 passed the Senate, but the House failed to take action on the bill. HB 257 did not receive a committee hearing in the House.

Establish Infectious Disease Elimination Pilot Programs

Bill Number(s): SB 169 (Sen. Singleton) & HB 37 (Rep. JD Williams)

Bill Summary: SB 169 and HB 37 would have allowed for syringe services programs in counties where there is a high risk of an outbreak of blood-borne diseases or where an outbreak or epidemic already exists.

Why we Supported: Syringe services programs would:

  • Create a data-driven approach to reducing the harms associated with drug use;
  • Improve public safety by  reducing the number of contaminated needles on streets, on playgrounds, and in trash receptacles, thereby protecting children, law enforcement personnel, and other emergency responders, sanitation workers, and others from needle sticks;
  • Decrease rates of HIV/AIDS and hepatitis C transmission by reducing syringe sharing among injection drug users.

Bill Outcome: SB 169 received a favorable report from the Senate Health and Human Services Committee, but the full Senate failed to take action. HB 37 received a favorable report from the House Committee, but the full House failed to take action.

Prison Expansion

Bill Number(s): None filed

Bill Summary: Legislation to authorize the construction of new prisons was not filed in 2018.

Why we Opposed: This approach fails to address the underlying problems that fuel Alabama’s high incarceration rate. Any solution to Alabama’s prison overcrowding must focus on the root issues:

  • Ending the war on drugs;
  • Prioritizing substance and mental health treatment programs;
  • Removing hurdles to reentry;
  • Expanding alternatives to incarceration.

Bill Outcome: No legislation filed

 

Access to Justice Campaign Legislation

Equal justice under law requires a justice system that provides a level playing field for all Alabamians, regardless of one’s ability to pay. In order to achieve this, the state must ensure access to civil legal services, and protect the the fundamental right to counsel in criminal court.

Remove obstacles facing low-income Alabamians seeking access to the courts

Bill Numbers: SB 36 (Ward)

Bill Summary: SB 36 would have improved indigent parties’ opportunity to have filing fees waived in civil cases due to financial hardship.  The legislation specified that the pleading accompanying the statement of substantial hardship would be considered filed on the date the statement of substantial hardship was filed with the court, and that if the court were to find that no hardship exists, the party would have 30 days to submit payment.

Why we Supported: Waiving filing fees in civil cases due to financial hardship would:

  • Protects the rights of Alabamians;
  • Ensures greater access to the courts;
  • Create more clarity and uniformity throughout the civil justice system.

Bill Outcome: SB 36 received a favorable report from the Senate Judiciary Committee, but the full Senate failed to take action.

Protecting the Constitutional Rights of Indigent Defendants

Bill Numbers: HB 379 (England)

Bill Summary: HB 379 would have created a waiver process for the fee caps on how much appointed lawyers can be paid by the State for their representation of indigent defendants. This legislation would have allowed the trial court judge and the Office of Indigent Defense Services—which oversees and administers funding and payments for indigent defense services—to grant a waiver when the lawyer has shown “good cause” based on objective criteria that demonstrates they have provided the defendant with a level of representation that merits more compensation than the cap allows. The waiver would have allowed for no more than double the amount of the current caps.

Why we Supported: A waiver process for the fee caps would:

  • Helps protect the constitutional rights of Alabamians;
  • Expands access to effective legal representation;
  • Increases access to fair justice.

Bill Outcome: HB 379 passed the House, but the full Senate failed to take action.

 

Additional Priority Legislation

Reform Predatory Lending

Bill Number(s): SB 138 (Sen. Orr)

Bill Summary: SB 138 would have required that payday loans be issued on 30 day repayment schedules, amending current law allowing them to be issued on repayment schedules between 10 to 31 days.

Why we Supported: 30 days to pay would:

  • Effectively cut APR’s in half for many of Alabama’s payday borrowers, which currently runs as high as 456% APR;
  • Reduce the likelihood of borrowers falling into debt traps that lead them to even more dire financial straits (30 percent of payday loan borrowers took out 12 payday loans or more according to the most recent annual data);
  • Reduce the amount of fees low-income borrowers would be required to pay (payday borrowers paid payday lenders more than $107 million in fees in the most recent year alone).

Bill Outcome: SB 138 passed the Senate, but the House failed to take action on the bill.

Challenge Expansion of Alabama’s Broken Death Penalty System

Bill Numbers: HB 161 (Sells)

Bill Summary: HB 161 would have expanded the list of death penalty-eligible crimes to make the murder of a first responder a capital offense, and added to the list of aggravating circumstances four types of victims: law enforcement officers, prison or jail guards, first responders, and children under 14.

Why we Opposed: Alabama Appleseed recognizes that Alabama’s capital punishment system is broken beyond repair, and thus legislation to expand its use cannot be justified. We should all agree that if we have a death penalty then the process should be fair and accurate. Yet, over 10 years ago the American Bar Association found problems throughout Alabama’s death penalty process – from interactions with law enforcement at the beginning to the post-conviction process at the end. In fact, the concerns were so serious that the ABA assessment team recommended a temporary moratorium on executions until the recommendations were implemented. The vast majority of those recommendations have still not been implemented. Alabama legislators should be focused on ensuring Alabama has a fair and accurate death penalty process, not expanding the class of people who can be executed under this broken system.

Bill Outcome: HB 161 passed the House, but failed on the Senate floor.

Alabama Appleseed Commends Senate Vote to Ban the Box on State Employment Applications

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Alabama Appleseed today applauded the Alabama Senate’s vote to “ban the box” (SB198) on state employment applications. Banning the box would lead to greater opportunities for people with a criminal history as they re-enter their communities and the workforce.

“Banning the box better ensures that Alabamians seeking state employment are judged on their merit, not their mistakes,” said Frank Knaack, executive director of Alabama Appleseed. “Denying a person’s application without considering their qualifications or rehabilitation prevents people who’ve completed their sentence from getting a fair chance at a fresh start.”

According to the U.S. Department of Justice (DOJ), more than 650,000 individuals are released from prison every year. The DOJ has identified three key elements to successful re-entry into our communities, one of which is finding and keeping a job.

“This legislation would help make our communities safer,” said Knaack. “As the Department of Justice found, recidivism rates are reduced when individuals are able to successfully re-enter their communities. And a key element of successful re-entry is helping individuals find and keep a job. By removing the criminal background box from state employment applications, individuals seeking state employment have an honest shot at securing a job. It’s a win-win – it provides people with a second chance to make an honest living and makes our communities safer.”

SB198 now moves to the House.

For additional information regarding SB198, please read Alabama Appleseed’s fact sheet.

 

Support SB 198 (Sen. Singleton) & HB 257 (Rep. Givan)

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Enhance Public Safety, Strengthen our Economy, & Give People a Second Chance to Make an Honest Living

SB 198 & HB 257 ensure that the State of Alabama, its agencies, and its political subdivisions cannot ask a prospective employee if that person has been arrested for or convicted of any crime, with certain exceptions. A state employer may ask a prospective employee about his or her criminal background, but only after a conditional offer of employment is made. A state employer may withdraw the offer of employment after learning of the prospective employee’s criminal conviction background if the prospective employee has a conviction that is directly related to the job. SB198 also establishes clear criteria for state agencies to consider during the screening process when evaluating a person’s prior criminal history.

Improves the public sector’s ability to recruit the best and brightest. Many of America’s largest companies, including Wal-Mart, Target, Home Depot, Starbucks, Koch Industries,and Facebook, recognize that banning the box is good for business. As Koch Industries General Counsel Mark Holden wrote last year, “For employers seeking the best talent, it makes sense for a company to consider all factors, including any prior criminal record, in the context of an applicant’s other life experiences. We are in a global competition for the best talent period; not the best talent with or without a record.” Our state and local government employers should view their hiring practices in the same light.

Strengthens Alabama’s economy. As the National Employment Law Project notes, when an individual with a criminal record has a job, her or she will contribute more to the tax base, purchase more goods, and is less likely to commit a new crime, thus reducing the amount of money that state and local governments must spend on their criminal justice systems. It is estimated that our nation’s economy loses $78 to $87 billion each year because of lost output caused by criminal record-related barriers. To strengthen our economy, Alabama lawmakers should support this bill.

Helps make our communities safer. Alabama has approximately 21,000 people in its prisons and another 11,000 in its jails. The vast majority of those individuals will be released and return to their communities. To reduce the recidivism rate, the Department of Justice has identified three key elements to successful re-entry into our communities. One of these key elements is helping these individuals find and keep a job. This legislation is a first step toward realizing a key element to reducing recidivism and making our communities safer.

Better ensures a second chance for Alabamians who have already paid their debt to society. Under current law, an otherwise fully qualified applicant can be denied employment long after that applicant has completed his or her sentence. This practice places counterproductive hurdles in front of individuals seeking to rebuild their lives and provide for their families. Denying a person’s application without considering his or her qualifications or rehabilitation prevents people who’ve completed their sentence from getting a fair chance at a fresh start.

Reduces disproportionate impact on people of color.  Because African Americans are disproportionately caught up in our criminal justice system, they are disproportionately affected when seeking employment. For example, while African Americans and whites use marijuana at roughly equal rates, in 2016 African Americans were over 4.5 times more likely to be arrested for marijuana possession in Alabama.  Thus, those individuals will be disproportionately impacted when filling out a job application that includes a criminal history box. This bill offers an opportunity to begin to address the long-term consequences of a criminal justice system that disproportionately affects African Americans.

Protects Alabama from having to hire an individual whose criminal conviction is directly related to the job. Under this legislation a state employer would be permitted to withdraw the offer of employment after learning of the prospective employee’s criminal conviction background if the prospective employee has a conviction that “is directly related to the position of employment sought.” For example, this provision protects a state employer from being forced to hire a convicted embezzler to keep its books.

Helps protect state employers from claims of discrimination. Title VII of the Civil Rights Act of 1964 prohibits employment discrimination based on race, color, religion, sex, or national origin. The U.S. Equal Employment Opportunity Commission (EEOC) issued a guidance document for entities covered by Title VII, including state and local governments, to help eliminate unlawful discrimination in the employment hiring process. As outlined in the guidance document, an employer must show that the selection criteria use or selection procedures are “job related and consistent with business necessity.” Specifically related to an applicant’s criminal record, the guidance says that the individualized screening process should consider “at least the nature of the crime, the time elapsed, and the nature of the job” or otherwise comply with the EEOC Uniform Guidelines on Employee Selection Procedures. SB 198 & HB 257 establishes clear criteria for state agencies to consider during the screening process when evaluating a person’s prior criminal record, which will better protect state agencies from claims of discrimination under Title VII.

SB198 & HB 257 are win-wins. They better ensures that Alabamians are judged on their merit, not their mistakes and protects state employers.

Alabama Deserves a Vote on Predatory Lending Reform

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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. 

Alabama Appleseed Applauds Vote to End Civil Asset Forfeiture

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Today the Alabama Senate Judiciary Committee voted to advance SB 213 (Senator Orr), which would end civil asset forfeiture in Alabama.

“Civil asset forfeiture allows the government to take and keep your cash, your car, or your house – even if you are never charged with a crime,” said Frank Knaack, executive director of Alabama Appleseed. “It turns the fundamental American principle of innocent until proven guilty on its head and has no place in Alabama.”

Under Alabama law, law enforcement keeps up to 100% of the proceeds from forfeited property. Under the federal program, Alabama law enforcement can keep up to 80% of the proceeds. Between state and federal programs, Alabama law enforcement received over $5 million in 2015 alone, and none of that required an indictment, much less a criminal conviction.

“Originally sold to the public as a tool for taking the ill-gotten gains of drug kingpins, civil asset forfeiture has strayed far from its alleged purpose,” Knaack said. “In 2015 alone, local and state government entities kept at least $670,000 from property owners who were never even charged with a crime.”

Under current law, the government is not required to report what they have taken to a centralized database. In order for Alabama Appleseed and the Southern Poverty Law Center to gather data for the report, Forfeiting Your Rights, the groups had to write a computer program, purchase thousands of dollars worth of court records, and spend hundreds of hours reviewing them one by one. In addition, of the 138 agencies that were sent open records requests, only one responded with information about expenditures from its forfeiture account. Most agencies didn’t respond at all.

“Our democracy cannot exist without a transparent and accountable government,” said Knaack. “Yet, to gather just a snippet of the abuses happening under the program we had to spend thousands of dollars for court records and spend hundreds of hours analyzing those records. That is the opposite of a transparent and accountable government.”

SB 213 would:

  • Require that the forfeiture process occur within the criminal case.

  • Protect innocent property owners.

  • Bring transparency to the forfeiture process.

  • Restrict the ability to abuse the federal forfeiture programs.

“This legislation is a win-win,” Knaack said. “Criminal forfeiture leaves in place the tools law enforcement needs to hold those who commit crimes accountable and places the burden back where it belongs – on the state.”

SB 213 now moves to the Senate floor.

The Alabama Appleseed and the Southern Poverty Law Center report on civil asset forfeiture can be found here: www.alabamaappleseed.org/report-forfeiting-your-rights/.

 

Challenging Alabama’s Racial Wealth Divide

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by Frank Knaack, Executive Director

The staggering racial disparities in Alabama’s criminal justice system mean people of color are more likely to incur criminal justice debt and face counterproductive hurdles to reentry. People of color are also far more likely to encounter predatory lenders, whose loan products can legally reach 456% APR. Together, these systems help drive Alabama’s racial wealth divide.

With support from the Annie E. Casey Foundation, Alabama Appleseed has launched a collaborative project with Greater Birmingham Ministries, Legal Services Alabama, and the University of Alabama at Birmingham’s Treatment Alternatives for Safer Communities (TASC) to:

  • Document how court-imposed debt and collateral consequences push individuals to seek high interest loans from payday and title loan lenders.
  • Reduce the burden of these debts by educating Alabamians about alternative loan products that would minimize debt burdens.
  • Develop and execute a long-range plan to remedy these three drivers of Alabama’s racial wealth divide.

How will we do this?

Focusing on people of color in Birmingham, Dothan, Huntsville, Mobile, Montgomery, Tuscaloosa, Lowndes County, Bessemer, and Tarrant, we will:

  • Survey Alabamians impacted by court-imposed debt and/or collateral consequences to understand their role in pushing people to predatory lenders.
  • Seek insight from individuals who know this system, including social workers, law enforcement, indigent defense and civil legal aid attorneys, bank and credit union workers, predatory lenders, academics, social service providers, state and local government workers, and faith and community leaders.
  • Partner with credit unions and other non-predatory loan providers to host public educational forums about reasonable alternative loan products.
  • Develop a broad, ideologically diverse coalition of advocates to address these drivers of Alabama’s racial wealth divide.

Here’s what we know so far:

Court fees are no longer just about funding the operations of the judiciary – they have become funding stream for basic government services. Of the over $165 million in fees collected by Alabama’s courts in 2011, more than 40 percent went to supplement government budgets outside of the judiciary, including county general funds, employee pay raises, and museums. And, fees collected by Alabama’s criminal courts made up over 66% of the total collected. These fees further ensnare low-income people of color in a hard-to-escape cycles of debt.

Alabama continues to erect counterproductive barriers in front of former offenders returning to their communities, such as arbitrary limitations on employment and housing – two key factors to reducing recidivism. According to The Council of State Governments, Alabama maintains 842 collateral consequences to a criminal conviction.

In addition to those statutorily created hurdles, because of the criminal history checkbox on many employers’ initial employment applications, individuals with criminal records often have their job application tossed out before they ever have an opportunity to present their qualifications or rehabilitation. 

Alabama has more predatory lenders than McDonalds restaurants. In 2015, 246,824 unique Alabama borrowers took out more than two million payday loans. The average predatory loan rate is 300% APR and can legally reach 456% APR. Despite being sold to lawmakers as a way for individuals to obtain emergency credit, the average borrower took out eight loans in 2015. In reality, these predatory loan products are used to pay for basic needs and, as a 2014 survey conducted by TASC found, to cover court costs, fines, and fees.  

By reducing criminal fees, removing unnecessary hurdles to reentry, and reining in predatory lenders, this project will help remove three drivers of household debt in Alabama’s communities of color.

It’s Time for Civil Asset Forfeiture to Go

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by Frank Knaack, Executive Director

Under both Alabama and federal law, the government can take and keep your cash, your car, or your house – even if you are never charged with a crime. This program, known as civil asset forfeiture, turns the fundamental American principle of innocent until proven guilty on its head and has no place in Alabama.

Thanks to legislation introduced by Senator Orr (SB 213) and Representative Mooney (HB 287), this abusive practice may soon end here in Alabama.

Originally sold to the public as a tool for taking the ill-gotten gains of drug kingpins, civil asset forfeiture has strayed far from its alleged purpose. In practice, drug kingpins are rarely the target: as our report with the Southern Poverty Law Center found, in half of the cases the amount of cash forfeited was $1,372 or less. The average amount of $1,372 is often less than the typical cost of hiring an attorney to challenge the seizure in court.

That’s not the most troubling finding. In 25% of the civil forfeiture cases we reviewed, there was not a corresponding criminal charge. Think about that – one in every four civil asset forfeiture cases involved the government taking and keeping a person’s property who was never even charged with a crime. In fact, in  2015 alone, local and state government entities kept at least $670,000 from property owners who were never changed with a crime.

It took some digging to learn all of this. Under current law, the government is not required to report what they have taken to a centralized database, so in order to gather data for our report, we had to write a computer program, purchase thousands of dollars worth of court records, and spend hundreds of hours reviewing them one by one. What they did with that money remains a mystery, because of the 138 agencies that were sent open records requests, only one responded with information about expenditures from its forfeiture account. Most agencies didn’t respond at all.

How did we get into this mess? It’s all about incentives.

Under Alabama law, law enforcement keeps up to 100% of the proceeds from forfeited property.

Under the federal program, Alabama law enforcement can keep up to 80% of the proceeds. Between 2000 and 2013, Alabama law enforcement agencies kept over $75 million in property, and, as is the case with the Alabama programs, none of that required a warrant or indictment, much less a criminal conviction.

Between state and federal programs, Alabama law enforcement raked in over $5 million in 2015 alone.  

Law enforcement should not be put in a position where they appear to value funding their budget over the protection of individual rights.

Thanks to Senator Orr and Representative Mooney, we have a very simple solution. Their legislation would:

  • Require that the forfeiture process occur within the criminal case. This legislation would ensure the government proves that the individual whose property was taken was actually convicted of a crime, and that the property seized was the product of, or that it facilitated, that crime. This places the burden back where it belongs – on the state
  • Protect innocent property owners. This legislation would create a process in which property owners can promptly challenge a seizure and/or assert that they did not know or consent to the use of their property in an alleged crime.
  • Bring transparency to the forfeiture process. This legislation would require annual, centralized reporting of all seizures and forfeitures and what law enforcement agencies spend forfeiture proceeds on.
  • Restricts the ability to abuse the federal forfeiture programs. This legislation would prohibit Alabama law enforcement from receiving proceeds from federal forfeiture actions.

This legislation is a win-win. Criminal forfeiture protects innocent Alabama property owners and leaves in place the tools law enforcement needs to hold those who commit crimes accountable.