Alabama Establishes Payday Loan Database

more+
less-

On September 18, Alabama Governor Robert Bentley announced new State Banking Department regulations that will create a state database of payday loans made to borrowers. Under the Alabama Deferred Presentment Services Act (DPSA), payday lenders are prohibited from making loans to borrowers with more than $500 in outstanding payday loan debt. According to the announcement, the Governor believes that the database is needed to enforce this restriction because lenders and borrowers can easily exceed the $500 limit by obtaining loans from multiple lenders. The regulations also implement other aspects of the DPSA, including a payday lender licensing regime. The database is expected to be operational by January 2014. Following the Governor’s announcement, a group of payday lenders reportedly filed suit in Montgomery County Circuit Court to prevent the state from implementing the database provisions. According to reports, the lenders argue that (i) the Banking Department is trying to create the database by regulation after it failed to obtain legislative authority to do so, (ii) the database is discriminatory because it does not apply to other lenders, such as banks and online lenders, and (iii) the state is unlawfully imposing a tax by charging payday lenders a fee to access the database.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© BuckleySandler LLP | Attorney Advertising

Written by:

more+
less-

BuckleySandler LLP on:

Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:

Sign up to create your digest using LinkedIn*

*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.
×
Loading...
×
×