Lawsuit Filed to Try and Block Payday Loan Database

September 23, 2013
AL.com 
payday lending news

Payday lenders that include Cash Mart and Rapid Cash have filed a lawsuit in a bid to derail a new database to track short-term borrowing in Alabama. The action, filed in Montgomery Circuit Court, claims the state banking department is exceeding its reach by creating the database through regulation. The lawsuit also claims the database would place anti-competitive requirements on payday lenders, since other lenders are not covered by the same mandate.

Lawyers for payday businesses say legislators chose not to create a single state database with the Deferred Presentment Services Act in 2003 and that officials are now trying to change that outcome. Under state law, payday lenders in Alabama cannot issue loans to customers with more than $500 in existing payday loan debt; but because there has been no centralized database to track the loans, consumer advocates say the cap often goes unenforced. Shay Farley, legal director at the nonprofit Alabama Appleseed, said the lenders' lawsuit "grossly misrepresents the underlying facts."










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