Stop Payday Lending Abuse Initiative Gains Momentum With Resolution in El Paso, Launch of New Web Site www.stoppaydayabuse.org

AUSTIN, Texas, March 16 /PRNewswire-USNewswire/ -- Cities and towns across
Texas are urging legislative leaders in Austin to close a loophole in state
law that allows payday lenders and auto title lenders to charge exorbitant
rates for short-term loans, fostering a cycle of dependency that often leads
to financial ruin.

(Logo: http://www.newscom.com/cgi-bin/prnh/20030514/AARPLOGO)

Today, the El Paso City Council unanimously adopted a resolution by
Councilmember Susie Byrd calling on the Texas Legislature and the Governor to
stop usurious lending and require these operations to comply with the same
standards as licensed consumer lenders in Texas. Meanwhile, a group of
consumer and public interest organizations, including AARP, launched a new Web
site - www.stoppaydayabuse.org - with information, a call to action and
opportunities for consumers who have been victimized by these practices to
share their stories.

In December, the City of Brownsville placed a six-month moratorium
prohibiting these lenders from opening any new "money stores" in town. Other
cities have gotten into the act as well, most of them adopting zoning laws
that prevent the expansion of these operations without a special permit.
Among them are Irving, Mesquite, Sachse, Richardson, Garland and Little
Elm.

Bob Jackson, director of AARP Texas, noted that AARP will continue working
with local officials in every corner of the state to urge similar actions.

"The abusive lending practices of these largely unaccountable operations drain
community wealth and trap consumers into a destructive cycle of debt," Jackson
said. "We hope that these efforts at the local level will spread like
wildfire in 2010 and signal to the Texas Legislature that Texans are serious
about ending these abuses."

Payday loans are cash advances due by the borrower's next payday. Auto-title
loans are similar but secured with car titles. Borrowers of these two types of
loans can incur fees from both their lenders and their banks. They can lose
their vehicles, even if they've paid hundreds or thousands of dollars in
interest and fees.

Payday and auto title lenders use a loophole in state law to charge Texans an
annual percentage rate (APR) of more than 500% for loans by operating as
"credit service organizations." This allows them to escape any regulatory
oversight and consumer protections that apply to other lenders. They operate
a multi-billion dollar lending business in this state, yet, unlike most other
lenders, are not licensed, regulated or subject to any meaningful consumer
protections.

Texas has more than 2,800 payday lenders and auto title lenders. Among the
key characteristics are:

* Average payday loan borrower pays $840 for a $300 loan.
* Women make up the majority of payday loan borrowers.
* Payday and auto-title loans do not generate sales tax revenue for local
governments.
* Concentrations of payday and auto-title locations give neighborhoods a look
of economic decline and hinder other, more beneficial businesses, from
locating in those neighborhoods.

Fifteen states and the District of Columbia have adopted an annual
percentage rate limit of 36% or lower for these small loans. The federal
government has adopted a similar rate cap for payday and auto title loans to
the military based on a Department of Defense finding that the loans
"undermine military readiness, harm the morale of troops and their families,
and add to the cost of fielding an all-volunteer fighting force."

AARP is a nonprofit, nonpartisan membership organization that helps people 50+
have independence, choice and control in ways that are beneficial and
affordable to them and society as a whole.

SOURCE AARP Texas

Rafael Ayuso of AARP Texas, +1-512-480-2432, RAyuso@aarp.org