October 1, 2005
The State.com: South Carolina's Home Page
Jim DuPlessis

South Carolina advocacy groups for the poor said Friday they will press the S.C. General Assembly to cap the number of payday loans borrowers can hold, saying those types of loans trap the poor in debt with exorbitant fees.

S.C. law now limits the size of such loans to $300. Lenders can charge fees of up to $45 on that amount paid up front  and must draw the principal automatically from the borrower's checking account within one month. However, the law does not limit the number of loans companies can make to the same borrower, said Susan B. Berkowitz, director of the S.C. Appleseed Legal Justice Center.

Payday lenders now have about 1,100 offices across the state, and collected $153 million in fees last year on 4.3 million loans, a number that exceeds the state’s population.
We have a huge problem,said Berkowitz, whose group is part of an alliance that includes S.C. Fair Share, a nonprofit citizens advocacy group, and AARP South Carolina, the state chapter of the national nonprofit group serving retirees.

Most payday lenders cluster their offices around neighborhoods with high percentages of blacks or military personnel, said John Ruoff of Fair Share. When the number of offices is compared to the size of the population, the biggest disproportionate clusters are around Fort Jackson in Columbia, in North Augusta, near Fort Gordon in Georgia, and near the Charleston Air Force base.

Payday lenders target soldiers, sailors and airmen, Ruoff said.

The alliance is trying to close loopholes left in a 1999 reform law by limiting the number of such loans to three or less.

To ensure compliance, the law would require payday lenders to report information on their loans to the state, but would prevent the disclosure of borrowers' name or other personal information to the public, Berkowitz said.