Jennifer Williams still gets the calls.

The voice on the other line — from one of the many payday lenders in her neighborhood — says they miss her. “Do you need any extra money?” the voice asks.

For years, Williams spent every payday driving to as many as nine stores in three separate towns, paying an $87 fee for each $400 loan she had taken out.

Each fee ensured the store wouldn’t deposit the check she wrote them, for money she didn’t have, until the following month — an arrangement prohibited by state law.

“I was taking out payday loans to pay bills after I had spent the majority of the money (in my paycheck) on payday loan fees,” said Williams, a high school teacher in Cleveland, Miss.

Williams finally whittled away the $4,000 debt she accumulated from multiple payday loans after taking a financial course in 2014 from Arkansas-based Southern Bancorp, which offered a lower-interest loan upon completion.

“You’re making fools of us,” she said of the payday lenders. “You know we need it and you know we’re going to take whatever interest rate you give us, especially if it’s to survive.”

Despite losing Williams’ business, the payday lending industry is alive and well in Mississippi, a state that has for years led the nation for the highest number of check cashing stores per capita.

Consumer-protection advocates saw hope in rules the Obama Administration’s Consumer Financial Protection Bureau, the federal agency that looks out for customers’ interests in the financial industry, proposed to regulate the industry considered usurious by its critics. But the payday loan industry has sued in federal court to keep those rules from taking effect next year, while President Donald Trump’s Administration is lobbying for more time to rewrite, and most likely weaken, them.

Meanwhile, the Mississippi Legislature quietly gave new life to a law that created a new kind of small-dollar loan just in case the Obama-era rules moved forward. The draft version of the federal new regulations would require, among other things, that lenders better verify a borrower’s ability to pay back the loan. Writing loans “without reasonably determining that consumers have the ability to repay the loans,” would be classified as an “unfair and abusive practice,” according to the CFPB’s website.

“They’re going to come down with some regulations that basically, if we don’t do anything, will put this industry out of business,” Rep. Hank Zuber, R-Ocean Springs and chairman of the House Banking Committee, told his House colleagues in 2016.

Zuber’s remarks came as he introduced the Mississippi Credit Availability Act, which created a new product called an installment loan. Critics say the loans target low-income Mississippians with poor or no credit while the industry maintains the loans help people who lack access to traditional loans.

Zuber did not return messages seeking an interview for this story nor did the Community Financial Services Association of America, a trade group that lobbies for payday loan businesses in the state.

The consumer installment loan is described as a hybrid between the payday loan and title loan — in which a person swaps the title of their vehicle for cash. Under an installment loan, a lender can loan up to $2,500 — six times the largest payday loan allowable by state law — and has greater recourse against delinquency than under a title loan.

Lenders can charge up to nearly 300 percent annual interest on consumer installment loans, which are mostly offered in payday lending and check cashing stores.

After the law passed in 2016, 200 stores applied and received a license to offer installment loans. Another 160 received the license in 2017 and 25 more this year so far. Many of these 385 license-holders have multiple stores across Mississippi.

Jennifer Williams, who serves as a kind of financial counselor for her friends and family, consulted a friend who wanted to take out a $2,000 installment loan, which could rack up $4,507.42 in fees over a year’s time. Williams discovered her friend would pay back over $6,000 by the end of the year and advised her against it.

“If I had $6,000, I wouldn’t need the $2,000,” Williams said.

Even though Mississippi, the most impoverished state, with nearly one-in-five people living below the poverty line, created a new small-dollar loan, other states, including neighboring Southern states, are moving in a different direction. Eighteen states, including Arkansas, Georgia and North Carolina, prohibit extremely high payday lending fees. In many other states, there have been efforts to curb the fees as well.

Next door in Alabama, where the average payday loan annual interest rate averages 300 percent, state senators recently passed a law to cap the rates at 36 percent, though the bill eventually died. Tennessee began allowing “flex loans” — open lines of credit under $4,000 — in 2015, but they imposed a 24 percent annual interest cap. In July, Ohio enacted a 60 percent annual interest cap on payday loans.

Colorado, where payday loans average a 129 percent interest rate, will vote this November on a ballot proposal to cap rates at 36 percent.

A Express Check Advance sign, located in the 1400 block of Ellis Avenue in Jackson photographed Monday, October 2, 2018. Credit: Eric J. Shelton, Mississippi Today/ Report for America

Mississippi hasn’t so much as entertained a lower annual interest cap, which has been met with great resistance from the payday lending industry and its powerful lobbying group.

In 2013, Mississippi lawmakers removed a provision in the law that required the Legislature to periodically renew the statute that allows payday lending, essentially authorizing payday lending permanently.

Credit Availability Act author Sen. Rita Parks, R-Corinth, received more than $8,800 in 2016 — nearly half of all contributions she received that year — from companies within the high-interest lending industry. Zuber received more than $10,800 from related groups in 2016.

In 2017, the PAC for Financial Service Centers of Mississippi, the firm that lobbies on behalf of payday lenders, donated $25,800, though it did not itemize the contributions in its report on the secretary of state’s website.

The Mississippi Title Pledge Association has also given $84,375 to candidates in the last 15 years.

Another political action committee that donates on behalf of small loan companies, Lender’s PAC, gave state officials $78,100 in 2017, $37,100 in 2016 and $145,000 in 2015. Lender’s PAC, the most prolific of related donors, according to available reports, represents other small loan companies besides the payday lenders, such as Tower Loan, and did not lobby for the Credit Availability Act. The loans offered by Tower Loan are capped at 59 percent annual interest.

Under the installment loan, folks can borrow up to $2,500 with a monthly interest cap of 25 percent, which translates to 297 percent in annual interest. For anything over $500, the borrower has up to a year to pay off the loan, during which the interest accrues month after month.

Rep. Hank Zuber, R-Ocean Springs Credit: Mississippi House

When he introduced the legislation two years ago, Rep. Zuber stressed several times that the lenders are not required to charge a monthly interest rate of 25 percent — that it is simply the cap. He suggested market competition will drive down those rates.

At least one store in Williams’ neighborhood charges the max.

Unlike title loans, the installment loan comes with legal recourse for the lender. A lender can go to court and receive a judgement against the borrower over nonpayment, whereas with a title loan, the only recourse is to repossess the vehicle and hope to make the money back.

Charles Lee of the Mississippi Center for Justice said the installment loan is no better for a consumer than a payday loan or a title loan just because it allows a longer payback period.

Lee said teachers and other state employees are especially susceptible to the offerings of payday lending because they’re only paid once a month, making budgeting more difficult.

“There’s always more month than money, is what they say,” Lee said.

Mississippi law prohibits a lender from offering to rollover the payday loan principal to the next month in exchange for the monthly fee, which is what Williams experienced.

“You aren’t supposed to, but it does happen,” Lee said.

It happened a few years ago, when Mississippi’s banking department found All American Check Cashing had been violating this law and forced the Madison-based payday lender to close 70 stores across the state and pay a $1.5 million fine in 2017.

Mississippi law prohibits these stores from lending more than $500, including fees, in payday loans per customer, but that doesn’t stop borrowers from visiting multiple stores in order to stay afloat.

With the installment loan, lawmakers expect lenders will educate consumers on the front end about what fees may incur over the lifetime of the loan.

“What else that we’re trying to do besides make it easier to pay back these loans is we want more disclosure,” Zuber said on the House floor. “We want full and open disclosure, and we want to make sure the person trying to get these loans knows exactly what he or she is contracting for.”

Williams said when she first started using these lenders, she didn’t spend much time considering the long-term interest rate and fees.

“When I went in, my whole focus was getting the extra money, not, ‘Hey, once you sign these papers, you’re stuck for life,’” Williams said. “Being a teacher and your pay is not so much, you can’t just go in and give them $487 and just walk away.”

In the United States, four out of 10 people cannot afford an unexpected expense of $400, according to Federal Reserve Board’s latest Report on the Economic Well-Being of U.S. Households.

Cash In A Flash Check Advance’s sign on Ellis Avenue on Monday, October 2, 2018. Credit: Eric J. Shelton, Mississippi Today/ Report for America

Rep. Kathy Sykes, D-Jackson, who represents many low-income neighborhoods, co-authored the 2018 bill to reenact the law creating installment loans.

Sykes said she didn’t realize the fees could be as high as $4,500 for a $2,000 loan, as Mississippi Today found.

Still, Sykes said, “Until the majority institutions make credit available to those of us who have low income … then these institutions are important.”

Some institutions, like BankPlus and Hope Credit Union, offer programs for the unbanked or underbanked — folks who have been shut out of mainstream banking.

But they’re up against the convenience and accessibility of a seemingly unlimited number of stores advertising “fast cash” in primarily low-income and minority communities.

Today, Williams said she would “go without before going back into one of those stores.” That doesn’t mean closing all payday lending stores is what’s best for her community, she added.

“I do feel like if they take it away, it’s going to affect a whole lot of people in terms of being able to survive,” she said. “They could control the interest rate, at least have them be similar or a little more than the banks, instead of this extreme interest rate people can’t pay back.”

Rep. Kathy Sykes, D-Jackson Credit: Gil Ford Photography

When signing the Mississippi Credit Availability Act in 2016, Gov. Phil Bryant said high-interest  installment loans would not appeal to most Mississippians, adding that he supported the legislation because he believes in “greater consumer choice, personal responsibility, and free market principles.”

“This legislation gives consumers another option when seeking emergency cash,” he said, according to the online publication for the Catholic Diocese of Jackson, which opposed the bill.

This would be fine, Lee said, if everyone were on the same playing field.

“We don’t have a financial education requirement in the state, so you can’t say everyone has the opportunity to learn about interest rates and compound interest,” he said.

Lee would agree with Gov. Bryant “if payday lenders were in everybody’s communities and not just in some.”

Editor’s note: A previous version of this story included the total donations to lawmakers from Mississippi Consumer Finance Administration and Tower Loan, which are regulated under a different state statute than payday and title lending companies. Additionally, neither the MCFA nor Tower Loan lobbied for the passage of the Mississippi Credit Availability Act. 

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Anna Wolfe is a Pulitzer Prize-winning investigative reporter who covers inequity and corruption in government safety net programs, nonprofit service providers and institutions affecting the marginalized. She began reporting for Mississippi Today in 2018, after she approached the editor with the idea of starting a poverty beat, the first of its kind in the state. Wolfe has received national recognition for her years-long coverage of Mississippi’s welfare program, in which she exposed new details about how officials funneled tens of millions of federal public assistance funds away from needy families and instead to their friends, families and the pet projects of famous athletes. Since joining Mississippi Today, she has received several national honors including the Pulitzer Prize for Local Reporting, the Livingston Award, two Goldsmith Prizes for Investigative Reporting, the Collier Prize for State Government Accountability, the Sacred Cat Award, the Nellie Bly Award, the John Jay/Harry Frank Guggenheim Excellence in Criminal Justice Reporting Award, the Al Neuharth Innovation in Investigative Journalism Award, the Sidney Award, the National Press Foundation’s Poverty and Inequality Award and others. Previously, Wolfe worked for three years at Clarion Ledger, Mississippi’s statewide newspaper, where she covered city hall, health care, and wrote stories about hunger and medical billing, earning the Bill Minor Prize for Investigative Journalism two years in a row. Born and raised on the Puget Sound in Washington State, Wolfe moved to Mississippi in 2012 to attend Mississippi State University, where she currently serves on the Digital Journalism Advisory Board. She has lived in Jackson, Mississippi since graduating in 2014.