Payday loan companies close - WALB.com, Albany News, Weather, Sports

Payday loan companies close

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December 21, 2005

Bainbridge-- Payday lending companies "Money Now" and "First Cash Title Pawn" are on trial for violating a loan law adopted last year. If they're found guilty, they could have to shut down permanently.

Five payday loan companies have voluntarily shut down in Bainbridge, and two are in court fighting to keep from being closed. "The customer or consumer would go in there and take a loan out for $100 and end up paying four or five hundred dollars on that $100 dollar loan," said District Attorney Joe Mulholland.

The D. A. is prosecuting the two companies. He says the interest "rollover" violates the payday lending act. "The point the legislators wanted to make was that they're going to protect the individuals in the lower income households, the people who were in dire need of these loans."

Established in July 2004, the law says: It is illegal to charge more than 16 percent interest annually for any loan under three thousand dollars.

Mulholland says the two companies on trial, Money Now, and First Cash Title Pawn, tried getting around that by using sham considerations. "They'll say they're giving a rebate, or an option, or they're giving a gift certificate, when, in fact, there's no gift to be got."

A last ditch effort by the companies while they argue their side in court. "The main crux of the argument seems to be the constitutionality of the statute."

A decision the judge is expected to make by March. Authorities had also investigated the First American Cash Advance branch in Bainbridge, but it was found to be in compliance with the law.

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