Governor Mark Sanford has vetoed the payday lending bill. The final version of the bill would protect consumers by preventing anyone from taking out more than one loan at a time, and would create a waiting period of 24 hours before a borrower is allowed to take out another loan after paying one off.
Officials with the payday lending trade association, Community Financial Services Association of America in the nation’s capital, is critical of the governor’s action, saying that veto would eliminate a compromise which they welcome. The Association’s Board Chair Lynn DeVault says while the bill is one of the strictest in the country, that the South Carolina restrictions would stabilize the lending environment and allow more lenders to continue serving borrowers who need that credit option.
One of the Financial Services Association’s founding members is Advance America, a publicly traded company on the New York Stock Exchange, with national headquarters in Spartanburg. It has 2,850 offices nationwide and 500 employees in South Carolina, 225 of which are in downtown Spartanburg.
Advance America Public Affairs Director Jamie Fulmer says regulated payday lenders serve those whose need short-term loans. “Millions of Americans use this service across the country each year. They see this as a rational, cost-competitive alternative to their other options when they find themselves in need of short-term options, so we believe it’s important to preserve their ability to access this protect.”
Some states have shut down payday lending, but Fulmer points out that those laws have only affected the lenders who abide by regulations. “Quite frankly there are a host of unregulated providers offering unregulated loans, particularly in North Carolina and Georgia. And I think there’s academic research that suggests that taking away a regulated product in states where they’ve done it is not necessarily a good thing. For instance, it drives consumers to higher cost options.”
The Federal Reserve Bank conducted a study indicating that, after the regulated industry left North Carolina and Georgia, borrowers looking for short-term loans had to pay higher bounced check fees and complained more to the Federal Trade Commission.