Article from the Denver Post discussing the nature of certain online lenders and their tribal partnerships. Quote fromthe Colorado attorney general’s office last year these certain “lenders treat the law.”

“They flout it,” Deputy Attorney General Jan Zavislan told The Post. “They think they’re untouchable.”

So what happens when you regulate an industry out of business? Specifically payday lending? Not only do you eliminate access to credit, but the economy also takes a hit.

A Colorado law that was passed last year extended the terms of the loans from a few weeks to six months and capped interest rates at 45 percent annually, basically eliminating the industry from serving customers who need access to short-term credit.

Jamie Fulmer, vice president at Advance America, said the law did more than reform the industry. “The law eliminated payday lending. It created a new system of six month installment loans. It is an entirely new product.” He continued, “Our company has closed half of our centers in the state and over 400 jobs have been lost in Colorado as a result of the law.”

Here’s a snapshot of how this industry previously served the Colorado economy (survey was done by IHS Global Insight in 2007).

The industry contributed over $294 million to Colorado gross state product (GSP) in 2007.

The payday lending industry supports over 4,200 jobs1 in Colorado, including 2,093 people directly employed in 641 storefront locations.

• The industry indirectly created another 783 jobs in supplier industries.
• Payday loan store and supplier industry employees induced the creation of 1,354 jobs through the purchase of goods and services using earned wages.

In Colorado, the total labor income impact from the payday loan industry is $184.5 million:

• Through direct employment, payday loan stores contributed $80 million in labor income.
• Suppliers to the payday lending industry contributed $41.6 million in labor income as an indirect result of the revenues generated by the payday loan industry.
• $62.9 million was generated from the wages of payday loan store employees and supplier industries’ employees as they were spent in Colorado’s economy.

An op-ed in Janesville, WI paper want tougher restrictions on payday lending.

Missourians travel to Ohio to protest JP Morgn.  Story gratiously mentions payday lending. 

Dallas Morning News weighs in on pending payday lending legislation.

Payday lending mentioned in Denver Mayor’s race article.

Initial approval was granted in Colorado regarding a disputed rule from last year’s payday lending legislation. In a debate that touched on lost jobs and shuttered stores from last year’s bill, the Denver Post provided this headline:

House give initial OK to bigger profits for payday lenders

The Colorado-Statesman reports that a payday lending bill is on the “fast track.”

House Bill 11-1290 requires that that the origination fee charged on a payday loan be “fully earned” at the time of the loan. Under the new bill, a borrower would be responsible for paying all of the origination fee, rather than being able to pay a pro-rated portion of it if the loan is paid off early.

For all the naysayers that claim short-term credit lenders aren’t regulated, there is proof in The Denver Post:

Dallas-based Payday Everyday, which also operates as Fastbucks, agreed to pay Colorado more than $125,000 in consumer restitution after the state found the company had violated a variety of payday-lending laws and failed to fix the problems.

Consumers are using fewer payday loans in Colorado.  From the story:

The statistics show that Colorado consumers who took the payday loans of high interest in 2008 were more in numbers when compared to that of 2009. However, the amounts being borrowed were larger in 2009. The number of people taking the loan actually saw a drop to 8.8% in 2009 from that of 10.3% in 2008. But, the amount of money taken as a loan grew around 2%. The lending report was dispatched by the Attorney General’s office in Colorado. 

From the Denver Post: 

From the story:

Payday lenders will be required to give pro-rated refunds to customers who pay off their loans early, The Pueblo Chieftain reports.

Under enforcement rules adopted Tuesday by the Colorado Attorney General’s office, payday lenders cannot keep origination fees for their loans.

There’s a big fight in Colorado over the proposed payday lending rules.