A judge has derailed an industry effort to stop the development of a central database to track payday loans in Alabama.
The lawsuit argued that state banking officials are overstepping their powers not only by creating the database but also in placing a $500 ceiling on loan amounts and prohibiting borrowers from taking out multiple loans that exceed that cap. Moreover, Cash Mart, Rapid Cash, NetCash, and Cash Services Inc. complained that fees associated with the database would constitute an illegal tax. Montgomery County Circuit Court Judge Truman Hobbs disagreed and tossed the suit out.
"The ruling is a significant step toward ending the practice of predatory loan lending in Alabama," according to Gov. Robert Bentley, who said the database would help consumers "avoid the trap of predatory payday loans."