We tried to work within the constraints of the law, but lost money each and every month we tried to operate there under the new rules. We have proven that it cannot be done.
Allan Jones, CEO, Check Into Cash

Check Into Cash, one of the nation's largest payday loan companies, has closed its remaining 13 stores in Oregon. The action comes one year after the Oregon legislature passed a law imposing a 36 percent annual percentage rate cap on payday loans.

"With the closing of our remaining stores, Oregon citizens will no longer have access to short-term credit and will be forced into costly products such as overdraft protection and bounced check fees," said Allan Jones, CEO. "We tried to work within the constraints of the law, but lost money each and every month we tried to operate there under the new rules. We have proven that it cannot be done."

"We are saddened that we have been forced to close our stores, putting our employees out of work and leaving our customers without a service they appreciated," Jones added.

When the legislature passed the 36% APR the company closed many of its stores. No longer able to offer payday loans, Check Into Cash tried to meet customer needs by offering check cashing services and a new loan product. "These new products were not popular with consumers, nor profitable for the company," continued Jones.

"As we warned the legislators in Oregon, payday lending cannot be offered under a 36% rate cap. An annual percentage rate of 36% applied to a two-week loan amounts to less than a dime a day on a $100 two-week loan. That cut us from $15 to $1.38 for the two-week transaction. The legislators seem fixed on the APR of 391% as being bad, when in reality, it amounted to $15."

Jones went on to point out that annual percentage rate (APR) is a calculation for comparing annual periods, one year to the next. "It becomes erratic and meaningless when used for days," he said. "Making us quote a one year rate for a two week term is misleading." Jones used as an example "if someone wants $100 for 14 days, our fee is a onetime charge of $15 which equates to 391% APR. If that same person came in and paid off one day early, the APR skyrockets to 421%, and if they come in one day late, it drops to 365%. Just paying off one day early to one day late creates a 56% APR spread which violates the new law, even though the consumer cost is the same $15."

The legislators will now have to answer to the tens of thousands of consumers whose credit choices are now limited because this type of micro-lending has been abolished, forcing consumers to more expensive options where no APR disclosure is required, such as overdrafts.