The position of those who seek to ban payday lending in Virginia has been clearly spelled out in recent media coverage, including a front-page article in The Alexandria Times two weeks ago, but it does not represent the position of the more than 400,000 Virginians who used the service last year.
As with everything in life, if you didnt have a need for something in the first place, you are not affected if its gone.
The payday lending industry has taken substantial steps to better serve consumers. These steps include a requirement that all member companies of the Community Financial Services Association of America (the national trade group for the payday lending industry) provide their customers with the option of an extended payment plan, at no additional cost, that allows customers additional time to repay a loan.
Association members are also required to post fees in large type on 18 x 22 posters in all stores and on all company websites.
Industry critics have dismissed these steps as window dressing. They argue that no matter what steps the industry takes to help customers make educated choices, payday lending should still be banned. And in making this argument, they do us all the favor of making plain the underlying dynamic of this debate.
Put simply, the question is this: Do you believe that adult Americans are capable of making a reasonable decision about financial services products when they are presented with clear, understandable and truthful information about the costs of those products? And are they better offer for having these choices?
For those calling for a ban, the answer is clearly no. Their side believes that the citizens of Virginia may not be smart enough or sophisticated enough to make their own choices, and therefore its up to government to deny them those choices for their own good.
When consumers decide to take a payday advance, they do so based on full awareness of the costs involved. No coercion or enticing is involved.
For those who seek a ban on payday loans, the idea that any rational human being would ever freely choose to take out a payday advance is simply beyond comprehension. Therefore, they come to the conclusion that borrowers must be saved from themselves hence the call for legislation that would drive our industry out of Virginia.
We profoundly disagree. We believe this attitude of condescension is wholly without merit.
The truth is that the customers we service everyday are smart, capable, rational individuals. They may not have thousands of dollars in savings, but they are perfectly able to manage their personal accounts. They are hard-working, responsible people who take care of themselves and their families. When they come to the decision to take out a payday advance it is after they have carefully considered the cost of the service, compared it to the cost of alternatives and decided that the best value for their circumstance is a payday advance.
Ironically, those who call for a ban on payday loans say it would set consumers free. Of course, they are advocating for the exact opposite. They want to deny consumers their freedom and force Virginians to suffer the consequences.
Virginia has to make a choice. We believe in the right of informed adults to make their own financial decisions. We urge our leaders to stand up for that core value. In the end, protecting that right is truly the best way to stand up for the hard working people of Virginia.
Darrin Andersen is President of the Community Financial Services Association of America, the national trade association of payday lenders, representing 800 payday loan centers in Virginia that employ 2,400 people.