Group to protest payday loans
June 2, 2006 - Wichita, Kansas
Worried about people falling into a cycle of payday loans, Sunflower Community Action plans to protest Saturday against some lenders and their collection practices.
The group says too many Wichitans are becoming trapped by the easy-to-get loans. It also has organized a June 10 community meeting about the issue.
J.J. Selmon, community organizer for the northeast chapter of the grassroots group, said he knows of people who are thousands of dollars in debt because of payday loans.
"It's not just a low-income problem. It's affecting people who have pretty good incomes. But it's the only place they could go to get a loan, and they're getting caught up in the fees," Selmon said.
Payday loans are marketed as short-term loans to people who may not qualify for other forms of credit. The businesses allow consumers to write a personal check for immediate cash as long as they have a job and a checking account. The lender agrees to hold the customer's check until his or her next payday, usually two weeks.
The problem, Sunflower and other consumer advocates say, is that people are going from one payday lender to another, finding themselves unable to ever get the loans paid off.
As of Thursday, Wichita had 64 licensed payday lenders, according to the state bank commissioner's office.
Selmon said people who would like to join the protest should meet at 12:45 p.m. Saturday at Calvary Presbyterian Church, 106 E. 17th St.
A habitual situation
Jeff Witherspoon, executive director of Consumer Credit Counseling Service in Wichita and Salina, said more and more clients at the nonprofit group are showing up with payday loan problems.
When one loan becomes due, the consumer goes to another lender for another loan.
The norm is two to four loans among clients with payday loans, Witherspoon said. But his group has seen clients with more than a dozen loans, including a teacher who had 18, he said.
"It's a habitual situation," Witherspoon said. "We've definitely seen people with multiple loans."
But Whitney Damron, lobbyist for the Kansas Payday Loan Association, said payday lenders merely are filling a need.
"These sources of credit are ones that our customers have asked for," Damron said. "Our customers have been turned away by traditional lenders like banks and credit unions. Where do these people go to get loans?"
It's easy, Damron said, for groups such as Sunflower to blame the lenders.
But the lenders, he said, aren't forcing anyone to borrow money.
Selmon said some of Sunflower's constituents have complained about collection practices.
Payday lenders have shown up at customer's homes and jobs. In some cases, the lenders have left notices on the doors of customers' neighbors saying that they owe money.
"That certainly would not be anything that businesses that I have been associated with would do," Damron said.
Witherspoon said his group wishes lenders would allow customers to put payday loan debts on debt management programs. Consumer Credit Counseling offers such plans to people who have gotten into credit-card debt. Counselors negotiate a payment plan with a client's creditors. The client then makes one monthly payment to Consumer Credit Counseling.
But payday lenders won't participate in such programs, Witherspoon said.
"I would like to see them give people the opportunity to pay these debts off at a low rate," he said.
Wichita Eagle, Deb Gruver, Staff Writer
Related Stories - Kansas
- Legislator targets payday lenders [December 11, 2006]
- Loan shops cash in on the suburbs [September 5, 2006]
- Payday loan company pays $500,000 in back wages [August 18, 2006]
- Some overuse bank overdraft programs [June 26, 2006]
- Interview with JJ Selmon, Community Organizer - LoanMax Protest [June 24, 2006] -
- Regulate payday loans [June 19, 2006]
- Industry leaders, consumer advocates to meet about payday loans [June 9, 2006]
- Protesters target local loan businesses [June 4, 2006]
- Group to protest payday loans [June 2, 2006]
- Payday loan company QC Holdings reports drop in income [May 4, 2006]
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