The number of payday lenders in Kentucky has declined over the last three years, from 750 stores to 539, due to increased state and federal scrutiny. As of August, the Kentucky Department of Financial Institutions had issued 68 fines to payday lenders, compared to 70 for all of 2013 and just 50 in 2012.
A payday lender in the state can charge no more than $15 per $100 loaned; and borrowers cannot take out more than two loans at a time, or a cumulative $500. The limits had little impact until 2010, when state lawmakers passed a bill to create a database to track the transactions. The system records each loan through personal information such as a Social Security number or driver’s license. "It's been a tremendous tool for us," according to Charles Vice, commissioner of the state banking agency. "That is why our fines are increasing." The 2010 law also placed a 10-year moratorium on new licenses for payday lenders, meaning no new stores are opening as existing licenses expire or are surrendered to the state.
Kentucky payday borrowers in 2012 took out an average of 10 loans and were in debt for an average 202 days, according to the Kentucky Coalition for Responsible Lending. The average borrower in the state paid $563 in fees that year.