December 6, 2012
The YWCA Central Alabama recently hosted a Lunch & Learn to educate the community about predatory lending practices in Alabama and its impact on citizens. The Lunch & Learn featured Alabama Representative Patricia Todd and Shay Farley, JD, Legal Director of Alabama Appleseed.
YWCA Board member Gloria Anderson serves as Chair of the Board's Social Justice Public Policy Committee. "The purpose of this event was three-fold: we wanted to open the door for the conversation to take place, encourage others to use their influence to spread the word and help educate our friends and neighbors," said Anderson.
In addition to hearing about the legislative procedures required to regulate lending from Rep. Todd and Farley, guests at the Lunch & Learn were able to hear a first-hand account of a woman who was trapped in a vicious web of predatory lending as she found herself between jobs.
A victim of predatory lending, she described the overwhelming pressure that she felt as she became dependent on payday loans, stating that at one point, she had as many as six loans. "They're addictive and are so easy to get," she stated. About six months into borrowing, she realized that she was in over her head. Facing eviction and the repossession of her car, she says reached out to her friends who came to her rescue and helped her end the cycle once and for all.
"To anyone who is thinking of getting a payday loan - don't. I've been there and done that. They are horrible. It was the worst feeling in the world," she said.
Currently, in the state of Alabama, the Deferred Presentment Services Act (Alabama's payday lending law) allows interest rates of 456% APR on loans under $500, a rate almost 13 times prior limitations provided in the Small Loan Act. This is no moral or ethical justification for such exorbitant interest rates.
Alabama Appleseeds's goal is to seek and gain passage of legislation repealing the Deferred Presentment Services Act. Such modification does not target any specific industry or business; it simply removes barriers to lending by reversing the special interests' carve-outs obtained through industry supported legislation (protecting known legislative personal interests), and would return all consumer loans under $1000 to governance by the Small Loan Act.
Alabama Appleseed is a nonprofit, nonpartisan organization based in Montgomery that was founded in 1999 to identify significant needs in the State of Alabama, tackle their root causes and craft practical, lasting solutions to systemic problems through legal advocacy, community involvement and policy expertise.
"Our hope is to create a coalition of concerned citizens who can advocate for appropriate legislation to regulate this devastating practice that is currently unregulated," Anderson added.
The YWCA Central Alabama would like to thank Rep. Patricia Todd, Shay Farley and Alabama Appleseed for helping us educate the Birmingham community about predatory lending.
There are two ways to join the fight against predatory lending practices in the state of Alabama. The first step is to educate ourselves and others about predatory lending and its detrimental and long-lasting effects on Alabama citizens. The second way is to establish communication with your legislators. Contact your state representative and or senator and express your concerns. To find out more about Alabama Appleseed and other ways to advocate against predatory lending, click here.