Horry County Couple Sues Payday Lenders
Plaintiffs Say They Were Trapped in Cycle of Debt

Eric K. Ward
Free Times

With the General Assembly reticent to drop the hammer on predatory payday lenders, an Horry County couple is attempting to do so via the legal system.

The couple’s case is no frivolous half measure, either. Their legal team features two state senators: Republican John Hawkins of Spartanburg and Democrat Vincent Sheheen of Kershaw.

John and Rebecca Morgan filed suit Aug. 28 in Horry County Court of Common Pleas against Advance America Cash Advance Centers of South Carolina, Carolina Payday Loans, Check Into Cash of South Carolina, Check ‘n Go of South Carolina and Local Cash Advance of South Carolina.

In their lawsuit, the Morgans say they became trapped in a cycle of debt as a result of the payday lenders issuing them loans without regard to whether the couple could re-pay the money.

The payday lenders are making loans when they know or should know that some of their customers cannot make good on the debt and that doing so would “put their customers in dire financial straights and make it highly likely that the customers will need additional payday loans to cover the existing loans,” the filing says.

It seeks class action status for every South Carolina resident who has borrowed money from the defendants. Charleston lawyers Alan Sloan and Joseph Wilson also are representing the Morgans.

The couple are poster child examples of consumers whom payday lending critics say fall victim to an unscrupulous industry that takes advantage of people living paycheck to paycheck.

Payday lenders typically issue two-week loans and, as allowed by state law, charge interest rates that amount to 390 percent on an annualized basis.

More than 1,000 payday lenders have sprouted across the state in the past several years. About 10 are located near Fort Jackson, a clustering that confirms a Pentagon report that payday lenders target military personnel.

Sue Berkowitz, director of the Columbia-based South Carolina Appleseed Legal Justice Center, says it might take a lawsuit to rein in the industry.

“I think it’s great,” Berkowitz says of the Morgans’ case. “The litigants are on the right track of challenging the practice and the ways payday lenders do business because they make loans to people knowing they can’t pay them back, and that violates state law.”

Advance America, the nation’s largest payday lender, is headquartered in Hawkins’ hometown of Spartanburg.

In other media reports about the lawsuit, Advance America spokesman Jamie Fulmer said the company operates within state law. “We operate legally and ethically,” Fulmer said. “We look forward to vigorously defending our position in the court.”

The filing asks for an unspecified amount of monetary damages and for the court to order the defendants to stop issuing loans until they establish procedures to determine the ability of borrowers to pay back what they owe.

Despite the involvement in the case of Hawkins and Sheheen, the Legislature has been loath to strictly regulate payday lending. Advance America is connected among the honorables and has successfully led the charge to kill bills aimed at clamping down on the industry.