Activists Inflate North Carolina Consumer Loan Costs Opposing NC HB810
7 May 2011
Raleigh, North Carolina - Activists have grossly overstated costs for North Carolina consumer loans in an attempt to oppose proposed North Carolina legislation in House Bill 810. In a video posted on the NC Policy Watch website on April 28th, 2011, and in a corresponding radio broadcast “News & Views” which aired Sunday, May 1st on WRAL radio, Al Ripley of the North Carolina Justice Center grossly overstated consumer loan costs for existing rates and rates under the new NC proposal (HB810). Ripley had previously received detailed information on the costs of the loans. Yet, in both the video and radio interview, Ripley exaggerates loan costs and erroneously states how loan costs are calculated. Ripley has been asked by William Braxton, President of North Carolina’s independent lenders association (RLNC) to retract inaccurate statements. “The error in Al Ripley’s statement of actual loan costs is so significant that it calls into question his ability to understand how interest costs are calculated for our amortizing installment loans,” stated Braxton. “A more troubling concern would be if there were intentional efforts on the part of the NC Justice Center to mislead legislators, the media, the Department of Defense (DOD), and the general public. I hope that’s not the case.” Under the NC proposed legislation, an amortized $500 installment loan for six months requires a monthly payment increase of only 10%, from about $97 a month to $107. Ripley calls this an egregious increase that will drive families to bankruptcy—for an increase of less than $10.00 a month. Also under the new law: for a $1,000 one year loan, the cost would be $3.83 a month for each $100 borrowed. The proposed rate would be $121.67 a month. If paid back early, a rebate feature makes the loan cost even less. The industry indicates that the NC loan rate has not changed in 28 years. Stated C. Everett Wallace, policy advisor for the NC Credit and Personal Finance Council: “The effect has been a reduction in the number of smaller dollar traditional installment loans in NC where they are greatly needed.” This reduction in the number of small loans provided has forced thousands of North Carolinians into higher cost loans through unregulated Internet lenders or cross border loans (loans obtained by crossing state lines to apply for a needed loan in a nearby state that has such loans), as well as other higher cost loans obtained from unregulated individuals. This negative effect is in line with known consequences of unilateral loan restrictions in other states, and thus is not unique to North Carolina. “Given these egregious misstatements on loan costs made by Al Ripley, and what it would mean to military members serving in NC, I am concerned that factually incorrect costs were given out to draw the DOD into a state legislative decision,” stated Wallace. “Comments made recently by the DOD representative focused on unrelated credit products not allowed in NC (for example, payday loans) and not in HB 810. I am troubled about what was actually communicated to the DOD.” Positive support was present last Thursday in Raleigh at a press conference, with several participants associated with the military appearing in support of the industry’s traditional installment loan service. This included a retired Marine Master Gunnery Sergeant and a retired Army Sergeant Major, along with an active duty spouse, who spoke in favor of the industry and its benefits to enlisted members. In 2007 the US Department of Defense exempted installment loans from legislation designed to prohibit predatory lending to service personnel and their families, acknowledging in its report the need to protect access to beneficial installment credit while closing down less safe forms of credit. Chris McKinley, a member of the state’s independent lending association, was also at the press conference: “With respect to the misrepresentations in this situation, the industry hopes it is a case of math errors. If what Al Ripley thought was a huge increase is just a few dollars a month, one might ask what all the hostility is about. Considering the NC Justice Center also previously opposed a small late fee on loans later than ten days, it may indeed be a case of deliberate misrepresentation to the public and legislators. It is hoped, however, that it would be just a case of needing a good calculator and a correct understanding of what the legislation is requesting.” Contact: Sarah Martini, Director of Communications, Dolphin Media Group, (213) 239-3890,