September 01, 2010 06:30 PM UTC

Payday Lenders Lose, Consumers Win

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• by: Colorado Pols

As the Pueblo Chieftain’s Patrick Malone reports:

Payday lenders will be required to give pro-rated refunds to customers who pay off their loans early.

Under enforcement rules adopted Tuesday by the Colorado Attorney General’s office, payday lenders cannot keep origination fees for their loans…

Representatives of the payday lending industry testified Tuesday before the Council of Advisors on Consumer Credit that lawmakers carved out the origination fee as nonrefundable as a compromise to keep the industry viable in light of the consumer-friendly changes in the law.

Consumer advocates countered that making the origination fee nonrefundable was contrary to the law’s overall intent, which they said was to protect consumers from a predatory fee structure…

The rule change governing HB1361 takes effect Nov. 29, and largely defuses criticisms of incumbent Colorado Attorney General John Suthers related to the payday lending industry.

Suthers, the Republican nominee to retain the office, has come under fire from Democratic challenger Stan Garnett because Suthers’ office initially proposed to allow payday lenders to keep the origination fee.

This is a happy ending for just about everybody involved: John Suthers puts an end to a damaging series of press articles raising fundamental ethics questions, but opponent Stan Garnett can still claim victory after turning the $10,000 Suthers received from the payday lending industry while these rules were being drafted by his office into considerably more trouble than it was worth. Meanwhile, the changes going into effect for payday loans, from what we understand, come respectably close to making them a workable option for cash-strapped consumers instead of a one-way ticket to endless debt. This apparently left the payday lending lobbyists fuming, and not interested in commenting to waiting reporters: which also pleases us. Now will you stop the spam?

One word of caution from this hearing did come in the form of Assistant Attorney General Laura Udis’ note that if any of the new rules are a problem, they can certainly be “amended” in the next session of the legislature. Not that we think it was her intent to bring it to mind, but we couldn’t help but immediately recall those fat checks from Ace Cash Express we discussed yesterday…