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In a big win for consumers, Alabama-based Regions Bank has shelved its practice of making predatory, high-cost “payday” loans in North Carolina. This is from a statement released today by my colleague Jeff Shaw at the Justice Center:

MEDIA RELEASE: Regions Bank Halts Illegal Payday Lending in North Carolina

RALEIGH (January 16, 2013) – After a campaign by consumer advocates and state leaders, a bank dropped its harmful payday lending program in North Carolina.

Payday loans have been illegal in North Carolina for more than a decade, but that hasn’t stopped all payday lending.  For the past year, Regions Bank has used federal banking law to offer payday loans that are illegal for any other lender to make in our state.  These loans carried, on average, an annual percentage rate (APR) of 365%.  Now, after significant pressure from consumer advocates and the state Attorney General’s office, Regions has quietly dropped its payday lending program for North Carolina customers. Read More

In case you missed it, the North Carolina Legislative Black Caucus sent a powerful letter to Regions Bank this week. Regions is the Alabama bank that’s trying to reintroduce the banned practice of high-cost, predatory payday lending in the state. The group joins Attorney General Roy Cooper and a large group of consumer protection groups calling on Regions to halt making the loans — which can have interest rates as high as 365% APR.

 

 

Dozens of consumer advocates and concerned citizens staged a demonstration in front of Regions Bank in Raleigh Wednesday to send a strong anti-predatory lending message.

The NC General Assembly made payday lending illegal in 2001, and the Attorney General chased out the remaining payday lenders in 2006. But now, Regions is offering North Carolinians 365 annual percentage rate (APR) loans.

Activists say the out-of-state bank is exploiting a federal loophole that allows banks to ignore the state’s usury laws.

“Banks should not be allowed to undermine our state usury cap,” said Al Ripley, director of the Consumer Project at the NC Justice Center. “We’ve made a choice in North Carolina to stand up against abusive loans, and we need to affirm that choice now.”
“This product simply traps struggling families in debt,” said Chris Kukla of the Center for Responsible Lending. “Our research shows that the average bank payday loan borrower ends up taking 16 of these loans in a year, which translates into being in debt to the bank an average of 175 days per year.  Put another way, the average borrower who takes out a $300 loan will end up paying at least $480 in fees.”

To hear more from those protesting the predatory products, click below:

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