Dunn still focused on payday loan bill

Published 6:16 pm Friday, June 20, 2014

City Councilman Charlie Dunn has not given up on his plans to curb the number of payday loan businesses in Troy.

Dunn introduced the issue at a March City Council work session with mixed results.

Dunn asked for a moratorium that would prohibit any new payday loan businesses within city limits.

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“At this point, that’s pretty much all we can do,” Dunn said.

Councilman John Witherington had reservations about passing any ordinances regarding the matter.

“An ordinance is permanent in nature. If we’re going to do a moratorium on this, why not other businesses?” said Witherington during the session. “We don’t have a moratorium on insurance agents. We don’t have a moratorium on lounges. We don’t have a moratorium on banks. And banks aren’t going to loan these people money. They’ve got to have somewhere to get it.”

Dunn said he received several complaints from constituents concerned that low-income families were being taken advantage of by companies that offered high-interest loans. “These loans are thriving on poor people,” said Dunn.

He learned more about the problem from the Alliance for Responsible Lending in Alabama, a statewide coalition of advocates and stakeholders seeking to reform Alabama’s laws and educate the public about lending.

The council tabled the moratorium, saying it would revisit the suggestion after watching what Alabama House Bill 145 would do.

The bill passed in the House 93 to 1 on March 13. However, the Senate adjourned the bill indefinitely.

One of the biggest changes in the bill was the creation of a statewide database that would prevent people from taking out more than one loan at a time. The bill also made it illegal for payday loan companies to knowingly loan money to anyone with an outstanding deferred loan of more than $500.

Payday loan companies often allow borrowers to pay the interest fees and rollover the principle for additional weeks. This bill would have prevented more than one rollover.

Businesses would also have to provide customers with a detailed explanation of fees and due dates, written in understandable language.

According to the proposed bill, businesses would not be allowed to “engage in unfair or deceptive acts, practices, or advertising in the conduct of the licensed business” and cannot ask the customer to provide security for the transaction or require the customer to provide a guaranty from another person.

With the bill on the backburner, Dunn hopes to bring his moratorium front and center. “I’m going to talk to the mayor about it again,” he said.

Mayor Jason Reeves said he was not sure what the city would do to address the problem. “I think we’ll probably do something, but we haven’t discussed it as a body yet,” he said.

Councilman Marcus Paramore said he could see both sides of the argument. “I’m undecided,” he said. “However, I feel that something needs to be done that would caution individuals not to be taken advantage of in an unfair manner.”