Man-standing-at-lighted-door-within-green-matrix-postAlabama recently put a new database into action that helps the state to track payday lending. According to this database, over 462,000 payday loans, for a total of $146 million were processed over a ten week period. The group that tracks this activity, the Alabama Banking Department, started tracking payday loans back in August, after being victorious in a court battle to create the database to help enforce existing regulations that put a $500 cap on payday loans for consumers at any given time. The numbers collected so far help to provide an inside look at how much money consumers borrow from payday lending companies in the state of Alabama.

One “consumer advocate” who has petitioned for more regulations on payday lenders, Shay Farley, said, “Anyone, who looks at these numbers, I challenge them not to have their eyes opened because it is shocking,” with regards to the information from the state database. Those who are critical of payday lenders say that the state should take additional actions to provide additional protection for borrowers from what they describe as a “debt trap.” Representatives of the payday lending industry, however, say that the numbers provided are proof positive that the payday lending industry is already on a decline because of the increased regulations that have already been put into place.

When consumers take out a payday loan, they pay a flat fee – usually around $15 for every $100 that they borrow – and then pay the loan principal plus the fees back in about 10 to 14 days. Those who are critical of the payday lending industry have argued the borrowers wind up trapped in debt because they take out multiple loans to pay off their initial payday loans. According to Farley, the people of Alabama are well “ahead of the curve” with regards to payday loan usage.

The state of South Carolina, which has a population similar to that of Alabama, along with similar loan limitations, processed about one million payday loans the entire fiscal year of 2014. The state of Washington, processed just over 871,000 payday loans the same year. Farley went on to describe her opinion about these differences, saying, “In other states that have moved for reforms, there has been no rioting in the streets to bring back payday loans.” Again, however, payday lending industry insiders have countered that statement by saying that the numbers prove that people desperately need the financial services that payday lending companies offer, and that the industry itself is taking serious hits because of the new regulation.

Max Wood is the owners of several Cash Spot stores in Alabama cities. Wood says that figures he has been privy to show that about 300,000 people take out payday loans in Alabama. According to Wood, “There is no other choice for those 300,000 people for all practical purposes. Wood went on to argue that Alabama was not out of line with regards to citizens’ usage of payday loans, and that the numbers revealed by the database were not surprising in the least to those who really understand the industry. It looks like the public fights about payday lending in Alabama are not going to slow down any time in the near future. However, those consumer advocate groups need to realize just how much lower income people depend on these loans in the great state of Alabama, and that new regulations need to balance compassion with common sense in order to be truly effective for all parties involved.