Arkansas goes after payday loan companies - WMC Action News 5 - Memphis, Tennessee

Reported by Ben Watson

Arkansas goes after payday loan companies

Arkansas' attorney general wants to put payday lenders out of business in his state.

In a letter mailed this morning, Attorney General Dustin McDaniel told the 60 or so companies to "cease and desist your lending practices." The letter also warned the companies to void customers' debt or face legal action.

Managers at the "Advance America" in West Memphis appeared caught off guard by the letter.

By phone from corporate headquarters in South Carolina, Advance America spokesperson Jamie Fulmer fired back at McDaniel's requests.

"The attorney general has determined that we operate in violation of state law, however no determination to that effect has been issued by any Arkansas court, and so we have some concerns about the apparent lack of due process here," Fulmer said.

McDaniel took action after a recent state Supreme Court ruling that made it clear to him that the charges imposed by the payday lenders violate the state's constitutional ban on interest rates higher than 17 percent. He calls rates ranging from 300 to 500 percent "unlawful and unconscionable."

The president of the Arkansas Financial Services Association, said singling out payday lenders hurts consumers who "sometime fall short of cash between paydays."

The Associated Press contributed to this report.

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