Regions Bank Assailed for 'Payday' Loan
Charlotte Observer (North Carolina)
September 19, 2012
Consumer advocacy groups and state officials have complained that Regions Bank is sidestepping state law by offering what they say is essentially a payday loan. Its Ready Advance product charges a 10 percent fee, amounting to $10 for every $100 borrowed. The annual percentage rate adds up to between 120 percent and 365 percent, depending on how long it takes to repay the loan, according to the Center for Responsible Lending. The last payday lenders in North Carolina agreed to shut down in March 2006, and Chris Kukla of the Center for Responsible Lending says Regions is “basically thumbing their nose at the people of North Carolina who clearly don’t want this product in their borders.” State Attorney General Roy Cooper says the Alabama-based bank's out-of-state charter, plus the fact that it is only offering the Ready Advance loans online, could present legal hurdles to efforts in North Carolina to halt the loans. The bank claims Ready Advance is different from a payday loan in several ways, such as consumers being prohibited from rolling the loan over and taking out another loan to pay back an existing loan. However, Al Ripley of the N.C. Justice Center, says, "I think consumer advocates would agree, A, this is a payday loan and, B, payday loans are bad for people. All you are going to do by offering this product is put people further and further into debt that they can't afford." He worries that other out-of-state banks that have been considering offering payday loans in North Carolina will be encouraged by Regions. "Other banks might look at it and say if Regions has taken the reputational hit for offering a predatory product in North Carolina, then if we go and do the same thing we don't look quite as bad."
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