NEWS RELEASE

Several Colorado lenders affected
Consumers United Association and CoPIRG
applaud federal crackdown on payday lending

Denver, CO - January 9, 2002 - Payday lenders have been using the charters of national banks in order to evade state small loan and usury laws. Through a National Bank Act loophole, these payday lenders claim they do not have to abide by state law since they are partnered with a national bank. However if a new action by the Office of the Comptroller of the Currency is any indication, that loophole may be closing.

"Something's wrong when borrowers can be charged interest rates approaching 520 percent, when calculated on an annual basis," said Renee Rupe, Executive Director, Consumers United Association. "It's time someone looked into the practices of certain payday lenders."

The Office of the Comptroller of the Currency did and recently announced that Eagle National Bank has agreed to stop its payday lending business. Eagle National was essentially providing payday loans via the Dollar Financial Group. The Colorado Public Interest Research Group (CoPIRG) reports that Dollar Financial Group runs storefront operations in Colorado called Cash 'Till Payday, Check Mart, Loan Mart and Money Mart.

Payday loans are a bad deal for consumers, and here is how they work. If you need $100, you give a lender a check for $100 plus $15 to $30 in interest. In turn, the lender gives you the cash and agrees to wait a week or two before cashing the check. If you can't cover the check, the lender rolls your loan and assesses additional interest. Before long, the interest can exceed the amount of the loan. "A Venus's fly trap is what comes to mind when I think of payday loans," said Rupe. "They're attractive but they are easy to get stuck in."

"CoPIRG applauds the Comptroller of the Currency," said Emily Hoopes, Consumer Advocate, CoPIRG. "This is a clear sign that regulators won't stand for national banks renting out their charter in order to rip off vulnerable consumers. We need continued strong efforts by both state and federal regulators, in order to close the national bank loophole and stop these banks from ripping off consumers and breaking state law."

Consumers in need of quick cash may have other unexplored options that don't cost as much. Some may qualify to join a credit union or borrow money otherwise. Some may need more assistance in managing money and credit problems. Still others could utilize the services of local nonprofits that provide emergency assistance.

Consumers United Association (CUA) is a nonprofit consumer advocacy association serving consumers in Colorado. CUA is an association made up of people and corporations who are dedicated to educating consumers on financial issues, which impact their personal lives. CUA offers services and resources to aid consumers in the resolution of consumer problems and provide a united voice for consumers in the legislative arena. For more information visit www.cuacolorado.org.

CoPIRG is a state-wide non-profit, non-partisan, consumer and environmental advocacy organization. For more information, visit www.copirg.org