An End to Payday Loans?

By Kate Sheppard - American Prospect
Thursday, May 08, 2008 - Web Link
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May 6, 2008

In late March, the town council of Kilmarnock, Virginia, voted 4 to 2 to keep in place zoning laws that would effectively block the payday-loan industry from expanding in their town. Fifty citizens -- an impressive turnout in a town of just 1,244 -- crowded into the council meeting to plead with elected leaders not to change the town's zoning laws to let Advance America, one of the largest payday lending companies in the country, set up shop at the local Wal-Mart complex.

"I think they practice usury," said Frank Tomlinson, the council member who led the opposition to the proposed zoning change. "They loan to people who have their backs against the wall, and then they quite frankly stick it to 'em."

Tomlinson's concerns were echoed by members of the clergy, local residents, and statewide anti-poverty advocates from the Virginia Poverty Law Center and Virginians Against Payday Lending, who showed up in force at the town meeting. The coalition that has sprung up in Kilmarnock and across the state is an unusual one, an alliance of the left, religious groups and conservative politicians. Such activism is unusual in Kilmarnock, which occupies just 2.69 square miles along the Chesapeake Bay. Kilmarnock's picturesque Main Street has been featured in a JCPenney "Living in America" commercial, and most classify the town as politically and socially conservative.

But Advance America filed suit against the town, claiming that it deserved "equal protection" under the law. Scared by the potential costs of litigation, the Kilmarnock city government reversed its decision several weeks later.

This outcry about the payday-lending industry isn't just happening in tiny Kilmarnock: Similar coalitions of have sprung up across the state, setting an unprecedented example for protecting the interests of poor and working-class Americans. When the Virginia state legislature considered a bill to curb payday loans this year, the industry sent dozens of lobbyists to the state House and flooded the state with a multimillion-dollar ad campaign, successfully derailing the tough legislation. But by building on the diverse coalition of support for regulation, advocates hope to continue their fight to take down this powerful, predatory industry.