COLUMBIA, S.C. -- With South Carolina becoming the new battleground for payday lending, the South Carolina Credit Union League said last week it has conducted an update of its member CUs on alternative products and found a large number already offering them or making plans to do so.

The league surveys come amidst a fight brewing in the state legislature over a restrictive bill vigorously opposed by large payday firms led by Advance America, which has its national headquarters in Spartanburg.

A House bill, due for hearings in about a week and backed by the league along with AARP and consumer groups, would cap rates at 36%. It also stipulates the rate on the outstanding balance can be no greater than the rate charged during the loan term.

A second bill in the state Senate would ban payday loans outright and calls for criminal penalties.

"We have no real usury law in our state and so the payday shops have been invading from the north and the south ever since North Carolina and Georgia expelled them," explained Stephen Fowler, executive vice president of the league making reference to an attorney general's prohibition in North Carolina and tough anti-payday statutes enacted in Georgia.

Regarding CUs offering alternatives, the league said the recent informal survey showed 23 were providing small loans to members "burdened by usurious payday loan rates". The average minimum is just over $250 with rates in the 16.9% range.

At a Senate hearing on one tough payday bill, State Sen. John Harkins (R- Spartanburg), said he would not support an outright ban but was "deeply disturbed" by the potential for abuse under the state's current laws.

Advance America and other payday firms have said earlier they will pour millions of additional dollars into advertising this year to sway policymakers.

According to news reports, Advance America spent an extra $3.8 million on marketing last fall, and expects to spend about $3-$7 million this year "where the payday loan product is challenged by legislative bodies," Chief Executive Ken Compton told analysts Feb. 8.

The industry's association, the Community Financial Services Association of America, announced plans Feb. 21 for a public relations blitz that includes $8 million in advertising to urge responsible use of two-week loans for up to $600 that carry $90 in finance charges, the equivalent of a 390% annual percentage rate.

Fowler, of the league, said in backing the 36% cap bill, the trade group has been working with AARP, consumer groups and Appleseed Legal Justice Center, a Columbia nonprofit serving the poor.

As the antagonist in the payday scrap, Advance America remains the largest provider of payday cash in the U.S. with 2,900 outlets in 36 states. --jrubenscut@aol.com

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Amidst Payday Scrap, South Carolina League Surveys CUs

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