Regions Bank Battles It Out With Anti-Payday Loan Coalition
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UPDATED: Sep 24, 2013
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Another battle in the Payday Loan War is unfolding as Regions Bank faces off against a coalition of anti-payday loan activists in Illinois, Missouri, and Iowa.
Regions Bank’s Ready Advance loans are the center of this dispute. These loans are alleged to be akin to payday loans, and have earned the ire of various consumer advocacy groups.
These groups banded together and submitted a letter to Regions Bank’s Grayson Hall, who is the bank’s chairman, president, and CEO, calling for an end to Ready Advance loan lending.
One prominent voice in the coalition that opposes Regions Bank is the National People’s Action (NPA).
Liz Ryan Murray, spokeswoman for the NPA, said that while the Ready Advance loan is marketed for occasional or emergency uses, in actuality, they are used with very high frequency. This leads borrowers and their families to fall into cyclical debt.
“The high cost of the loans and the long-term indebtedness means that families have less money to pay for other necessary goods and services — leaving the family in a much worse position and harming local economies when income is trapped in near endless cycles of high-cost debt repayment,” she said.
Spurred to act against such an allegedly dangerous payday loan-like product, the NPA banded together with Grass Roots Organizing Missouri, the Illinois People’s Action and Iowa Citizens for Community Improvement.
Far from being blinded by anger, the coalition believes that Regions Bank can easily offer short-term loans with much more consumer-friendly interest rates and terms.
“Regions could begin by complying with the proposed guidance issued by the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation in April of this year,” said Murray. “Regions could also adopt the provisions of the national Military Lending Act, which caps interest rates for consumer loans at 36 percent APR for active duty military and their families.”
According to Murray, Regions is finding itself increasingly isolated as a national payday loan lender due to no small part on the coalition’s pledge to warn current and potential customers of the damage that Regions’ short-term loans can cause.
Defending its product and brand, Regions Bank was quick to state that it is certainly not deceiving customers.
“Ready Advance is intended to meet the occasional and immediate credit needs of existing Regions Bank customers who have a checking account in good standing,” said Evelyn Mitchell, Spokeswoman for Regions Financial.
Mitchell explained that the fees are generally half what customers would pay elsewhere. On top of that, every Ready Advance borrower receives the option to participate in a free online financial education course. The bank also reports repayment history to credit bureaus in order to help customers establish or build up their credit.
“Initial feedback from customers indicates that satisfaction from this service is very high,” said Mitchell.
To Regions Bank’s credit, their website does feature a comprehensive FAQ covering the Ready Advance and a quick guide that lays out how much money borrowers will be charged depending on how many statement cycles have passed since their first Ready Advance.
The Coalition’s letter stipulates that they would like a response from Regions Bank and that they are willing to meet to discuss the issue. Executives from Regions Bank have yet to meet with the coalition.