LEXINGTON, Ky. - Consumer advocates say too many Kentuckians can't escape the payday lending debt trap, and want state lawmakers to consider a cap on the interest rates and fees those businesses charge. Dozens of Kentucky groups are putting a stamp of approval on a plan for a 36 percent interest rate cap on those short-term loans.

Jason Bailey, research and policy director with the Mountain Association for Community Economic Development, says information from Kentucky's real-time payday lending database shows lenders are racking up millions in fees from borrowers who can least afford it.

"Folks who take out payday loans are very often underwater and they're caught in a debt trap where they have to take out loan after loan after loan, and that is the source of this industry's revenue for the most part."

The state's database shows Kentuckians have paid more than $80 million in fees so far this year from payday loans, with up to 400 percent annual interest rates. Brigitte Blom Ramsey, special projects director with the Kentucky Youth Advocates, says that database reveals how families searching for a quick financial fix still end up short-handed.

"Many borrowers take out multiple loans in a year's time. And the database for the first nine months of 2010 showed that on average, Kentuckians are taking out 8.6 loans per borrower in that period of time."

Ramsey says the identity of the typical customer who struggles to repay the two-week loan may come as a surprise.

"The majority of payday loans go to unmarried women with dependent children. And the payday lending model was put together supposedly to support an emergency need, but in fact, because of the short repayment period and the fees, families and individuals are forced to repeat that borrowing to make ends meet."

Ramsey says the database shows more than 95 percent of payday lending revenue comes from customers with multiple loans, with the remainder mostly coming from borrowers who took out only one loan. Since 2008, the number of payday lenders in the state has declined from 781 to 667.

Federal law already puts a 36 percent cap on payday loans made to military families. Payday loan companies say the interest rates and fees are justified for the high-risk loans they grant, and that their loans fill a need, since traditional banks won't help people with bad credit. In some states where caps have been placed on the loans, payday lenders say they've been forced to close.




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Wisconsin lawmakers recently debated reforms for payday loans. Efforts to protect consumers come amid new research about financial pain associated with cash advances offered through smartphone apps. The Center for Responsible Lending is out with findings that detail how "earned wage advances" from digital platforms come with extra costs disguised as things like tips. Traditional payday lenders are often criticized for charging excessive interest rates on loans that are usually around $500.

Lucia Constantine, a researcher with the Center for Responsible Lending, said customers are usually seeking smaller amounts from the apps, but she warns they can be just as costly.

"They are trapping consumers in a cycle of borrowing that is similar to that of a payday loan, " she said.

The report said after using these financial products, customers are seeing overdrafts on their checking accounts increase by 56% on average. Industry leaders deny they're barraging consumers with hidden fees, stressing that features such as suggested tips are optional. More broadly, a bipartisan payday loan reform bill in the Wisconsin Legislature failed to advance this month.

Constantine said like longstanding payday lenders, these cash advance apps can be hard to regulate. Meanwhile, she urged those in a bind to explore other options.

"[They should] try talking to their friends and family as a first source. The other option which I would recommend is reaching out to their credit union or banking institution to see if they can get some sort of small-dollar loan," she said.

She noted places such as credit unions typically provide more transparency on loan costs. According to the report, three-quarters of consumers took out at least one advance on the same day or day after a re-payment was posted.


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Food prices remain high, in Montana and across the country.

A new report by the Federal Trade Commission says the country's largest grocery companies are gouging consumers, by keeping prices artificially high.

Many grocers, retailers and wholesalers have consolidated to cut costs. Grocers continue to blame supply chain problems, even though regulators have said most of those issues have been resolved.

President of the advocacy group Farm Action, Angela Huffman, said retailers were doing more than making up for lost revenue during the pandemic-era supply chain disruptions - and the FTC report says they continue to do so.

"In 2021, the retailer revenues, they rose to more than 6% higher than their total costs, and that those profits are still going up," said Huffman. "So, in the first nine months of 2023, the profits increased to 7%."

At nearly 6.5%, Montana had the nation's ninth-highest grocery price increase in 2023.

The FTC data show Amazon, Kroger and WalMart each gained market share during and after the pandemic - while profits continued to rise.

Other large retailers and wholesalers have consolidated, which they say gives them more buying power and the ability to pass those savings on to customers.

Huffman said that isn't what's happening, and calls on regulators to fine the grocers, or more.

"This would be kind of the farthest extent of what they could do, but go so far as breaking them up," said Huffman. "In years past, they broke up the telephone companies and the railroads and, you know, that would be the ideal outcome for us, is to take away their excessive power."

Huffman also points to a 150% increase in egg prices in 2023, which producers blamed on the avian flu. The FTC says the disease did not justify the drastic price hike.

April is Financial Literacy Month, when the focus is on learning smart money habits but also how to protect yourself from fraud.

One problem on the rise in the Southeast is the "impostor" scam, when scammers represent themselves as fake government agents or bogus businesses. They are really on the prowl for your cash and personal info, costing victims in North Carolina almost $190 million last year alone.

Natalya Rice, Southeast Regional attorney for the Federal Trade Commission, listed some key red flags to look out for.

"Utilizing a payment app, sometimes even cryptocurrency, things like that," Rice noted. "Anyone who contacts you from what seems like it could be a legitimate company or business, if they're asking you to send them money or some type of payment through one of these type of payment methods, that is a red flag that you're dealing with a scammer."

Other warning signs include requests to transfer your funds or even demands for a verification code to access an account. If you have concerns, Rice advised it is best to stop communication and contact the actual company directly. Still other scams big in the Southeast include online shopping, investments and job offers.

Nationwide, a record $10 billion was lost to scams in 2023.

More than 25,000 North Carolina residents reported possible identity theft last year. Rice recommends acting promptly when you realize or suspect you have been scammed. The first step is to contact your financial institution and report the incident to its fraud department. She added it is crucial to notify federal and state agencies for further investigation.

"You can go to reportfraud.ftc.gov and fill out a report there and let us know what happened," Rice noted. "In the state of North Carolina, there's also another place you'll want to report it to, and that's the North Carolina Attorney General's Office."

If you suspect your identity has been compromised, Rice stressed the FTC can assist you in developing a recovery plan. She added getting your money back is never guaranteed but the sooner a scam is reported, the sooner it can be investigated and other people can be warned.


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