Advance America is forced to desert 122 stores after Arizona banned their trade from the state. Image from Wikimedia Commons

After the Arizona ban on payday lending went into effect, and new legislation is being passed in Colorado, Advance America announced it was closing more than 100 store locations nationwide.  One of the nation’s largest payday lenders, and one of the few that grew large enough to be publicly traded, is shutting down 122 stores in Arizona, Washington and Colorado.  The stock price for Advance America then quickly tumbled on the New York Stock Exchange or NYSE, dipped 5 percent. Advance America has been in a stock lull so far this year

Advance America to shutter 122 stores

Advance America announced it would close 122 stores. The affected states are Washington, Arizona and Colorado. The state of Arizona recently let a law lapse that allowed payday lenders to operate in the state. The law was not renewed, and payday lending is now illegal in Arizona which has forced numerous payday loan stores to close their doors. Advance America will be closing 47 stores in Arizona and 75 other locations in Colorado and Washington state. The company will incur up to $5 million in closing costs in doing so.

Stock price dips

Advance America announced the store closures on July 9, after an all time low for the year. The share price for the firm was down to $3.55 on the NYSE. As of July 22, the stock price had climbed back up to $3.66. Publicly traded payday lending companies are thought to be at great risk with the creation of the Bureau of Consumer Financial Protection, as some believe the newly created agency will regulate cash advance lenders out of business. Since the average payday loan store employs at least 3 people, 366 people are now going to be out of work due to these closures.

State governments starting to slip the noose

Payday lending has been under fire for more than a decade. While no one relishes the idea of high cost lending, payday lenders entered into a market that the banks had left. One wonders what options will be left if the finance market that is not Wall Street is driven out of existence.

Further Reading

Advance America closures

NYSE

Good payday loan stores check up on both customers and employees. (Photo Credit: ThinkStock)

Much has been alleged by payday loan opponents regarding the so-called exploitative nature of the products payday loan stores have to offer. That is a diatribe-style argument that will rage on with certain activists, regardless of data pointing toward the contrary. However, here’s something that the best payday loan business organizations do that not only reflects top-quality customer service, it helps ensure that employees are doing their jobs properly: a surprise audit.

Why a surprise audit? The reason may surprise you

Payday Loan Industry Blog suggests that payday loan stores perform a surprise audit fairly often. This is not done in secret by ownership. In fact, once the audit commences, employees should be made aware of what’s going on. The reason Payday Loan Industry Blog gives is that it has noticed that while the vast majority of payday loan business employees are trustworthy and industrious, employee fraud can occur.

Pick a customer from the recent past

This is a chance to follow up with the customer via contact they’ve given. Identify yourself and your store, and remind customers that you appreciated their business when they were last in. Then simply say “Thank you” and ask if there’s anything else you can do for them. Then allow the customer all the time they need to reply. This is classic customer retention effort through conscientious customer service.

Listen to what customers say

Ideally, customers will say they had a positive experience and would use a payday loan again. Sometimes, an employee may have been rude, and the customer will recount this. It happens, and it can typically be adjusted with minor correction.

What if there has been employee fraud?

Employee fraud is a difficult thing for any business to face. Employee fraud erodes the internal trust a business has with its employees and causes great damage to customer relationships. What happens in this case is that dishonest employees take out a loan for themselves under another identity. It’s essentially identity theft. Payday Loan Industry Blog claims it has found “as many as 22 percent of payday loan contracts are bogus” at its store,” but in all likelihood that number is quite high for most payday loan stores. However, a surprise audit should still be used as a preventative measure. It’s the way each and every payday loan business can ensure that the customer truly does come first.

Sources:

Payday Loan Industry Blog

The Iowa payday loan moratorium was sparked by concerns that payday lending causes urban decay. Image from Wikimedia Commons.

The city council of Des Moines, Iowa, has declared a moratorium on payday lenders and pawn shops throughout the city. The intention is to put a stop to any new businesses of that type setting up shop in the city while regulatory legislation is considered. No new payday loan stores or pawn shops may open for the next six months in Des Moines. Meanwhile, the Iowa legislature is considering legal restrictions on payday lenders, and the federal government is considering the same thing as part of the financial reform bill.

Payday lenders blamed for urban blight

The Des Moines City Council has put a temporary halt to any new payday lenders, according to the Des Moines Register, to mull over some potential changes in zoning code along with potential financial regulation changes.  It has been alleged that payday lenders are a cause, or at least implicated, in urban blight.

Potential new zoning

Des Moines City Council is looking into proposed zoning laws . There may be distance requirements between payday lenders and pawn shops, such as those that already exist for liquor stores and bars in Des Moines. Concerns are being raised that more payday lenders and pawn shops in the area would negatively impact the Des Moines area, especially real estate. This will not be the first time the urban blight argument has been raised.

The Urban Blight argument

There have been many allegations that payday lenders are a cause of urban blight, or urban decay.  Granted, sometimes there are payday lenders that operate in decaying areas, but it isn’t proven whether this is coincidence rather than causality. For instance, urban decay in Detroit has been tied to the decline of the auto manufacturing industry.  Jobs moving away from manufacturing plants and resulting urban decay, was going on well before payday lenders showed up. It also happened in other areas well before payday lenders opened their doors — apparently, no one has ever heard of the Rust Belt before.

Surveillance cameras are a good investment for payday loan stores.

The payday loan police have been pretty busy lately, tracking down and locking up men who are suspected of robbing multiple businesses, including several payday loan stores.

The first payday loan store robbery story I have for you comes out of Indiana, where a man is accused of robbing a shocking number of payday loan stores.

From NWI.com:

Police said they have arrested a man suspected of robbing 16 payday loan stores in Illinois and Indiana during the past four months.

Lewis Gilbert III, 45, of Schererville, was taken into custody Monday at his girlfriend’s Hammond home, but he wasn’t immediately jailed because he fell ill during questioning and was hospitalized. He was charged Tuesday with one count of robbery and he faces additional charges.

According to police, Gilbert robbed five stores in Indiana — including stores in Lake, Porter, LaPorte and St. Joseph counties — and 11 in Illinois. Valparaiso police Detective Dan Koepke estimated about $30,000 was taken during the robbery spree.

What took you so long?

Sheesh, this guy robbed 16 stores before police caught him? There must be some kind of issue up there in Indiana. Perhaps the payday loan stores need to beef up their security. And it wouldn’t hurt for the police to be a tad more diligent, methinks.

But wait, that’s not all! I have more payday loan store robbery mayhem for you. This next story takes place in Wichita, Kansas.

From the Wichita Eagle:

Wichita police have issued an arrest warrant for a second man linked to a series of robberies this summer.

Police say Lloyd Preston Adams, 36, is a suspect in recent robberies of at least two cash advance businesses — including the Loan Smart at 1716 E. Central on July 28.

…

A 31-year-old man was arrested Friday morning in connection with the case, police have said.

Investigators say the two men may be responsible for the robberies of six payday loan businesses, one restaurant and four motels between April 19 and July 28.

Serious serials

So these guys didn’t allegedly rob 16 different places like Gilbert, but they still have gotten away with quite a bit, if they are, in fact, the perpetrators.

Well, those two stories have a little bit of light at the end of the tunnel, in that at least one person has been caught in both cases. Police investigating a recent payday loan store robbery in Arizona haven’t been so lucky yet.

From ABC15.com:

Authorities say police are investigating an armed robbery at a Tempe payday loan store on Wednesday afternoon.

According to Tempe Police spokesman Scott Smith, two armed men walked into Cool Cash, near McClintock Drive and Guadalupe Road, about 2 p.m., where they demanded cash from a clerk.

They were described as Hispanic males, 5 feet 6 inches tall and 155 pounds, wearing dark shirts.

It was unclear how much money the suspects took during the robbery.

Smith said no one was hurt.