The Mississippi Department of Banking and Finance has initiated a "cease and desist" order to All American Check Cashing after the payday lender refused to let department examiners review its records for evidence of illegal lending.
The examiners suspected All American of having a companywide policy of illegally renewing short-term payday loans. Formal policy at the firm required borrowers to pay only the fees assessed on the original loans, which the regulator said subsequently triggered a new set of fees when the loan extension expired. Mississippi law forbids rollover of loans, which essentially means that a consumer cannot pay off one loan with the proceeds of a second.
While the department investigates whether All American violated the Mississippi Check Cashers Act and the Mississippi Title Pledge Act, the company can continue to make payday loans and conduct other financial retail activities; but it cannot take further action on the loans taken out by borrowers who registered the complaints against the company. All American also must stop all lending under its “Monthly Lending Program" that directs employees to accept only the fee on a delayed-deposit check.
The Center for Responsible Lending (CRL) designates Mississippi as a state that lacks "meaningful regulation" of payday lenders. The organization estimates that residents there pay $261 million a year in fees to the state’s slightly more than 1,000 payday lenders. “Over two-thirds of that is due to churning borrowers every two weeks,” said Diane Standaert, CRL's legislative counsel. In Mississippi and elsewhere in the United States, 75 percent of payday loan fees come from borrowers who take out more than 10 loans a year, she added.