Frustrated by the influx of payday lenders into Rock Hill and the failure of state lawmakers to do anything about it, city leaders are using their own authority to crack down on the industry.
Their goal is to curb a trend evident along Cherry Road, where neon-painted businesses lure customers with window slogans such as "Loans in 15 Minutes" and "Two advances free."
Under tougher zoning rules approved on Monday night, new payday lenders cannot open within 300 feet of neighborhoods, churches and schools -- and within 1,000 feet of existing lenders.
The businesses already operating in Rock Hill won't be affected, but supporters hail the new rules as a way to prevent more from coming in. Six years ago, fewer than a dozen lenders operated in the city limits. Now, there are 38.
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"What's to keep us from having a meeting next year to discuss having 68?" said Debbie Hayworth, community impact director for the local United Way branch. "Someone has to speak for the people that are being victimized."
Payday lending essentially allows people to borrow against future paychecks. The typical loan period in South Carolina is two weeks, and the current cap on interest is $15 for every $100. That works out to 400 percent annual interest. Critics say high rates keep low-income families trapped in a cycle of debt, forcing them to take out more loans to pay off others they can't afford.
The state's powerful payday lobby bristled at the approach taken Monday by the City Council.
"Are you going to start zoning out McDonald's because it's bad for your health?" said Jamie Fulmer of Spartanburg-based Advance America, the nation's largest payday lender. "If you take away our product, all you've done is take away one of the tools that folks have to choose from when they find themselves in need of money."
City acts after state balks
Payday lenders have flooded into South Carolina in recent years because the practice is banned in North Carolina and Georgia. In Rock Hill, about half are located on Cherry Road, city officials said.
The city took action because state lawmakers failed to agree on a plan.
During a speech in April to the General Assembly, U.S. House Majority Whip Jim Clyburn urged lawmakers to pass legislation to curb payday lending, which he called the "unfair exploitation of the working poor and unsophisticated consumer."
But a proposal failed to get out of the Senate, held up in large part by opposition from the powerful payday lending lobby. The legislation would have limited loans to five a year, set the loans' maximums at $400 each and required that borrowers pay off one loan before getting another.
Cities don't have authority to take those steps. That's why Rock Hill instead turned to zoning rules. The idea is to prevent businesses from clustering close to each other, because they often refer customers who cannot pay off their loans to another lender next door, where they get another loan.
"It may not be the best format," Hayworth said. "(But) that's the only route we have available to try to watch after those that are living on the edge."
Fulmer, director of investor relations for Advance America, argues the quick cash service actually saves consumers money. He says the alternative is for people to bounce checks, fall behind on their utility bills or turn to shady Internet lenders.
"If you eliminate payday lending, you've done nothing to address the fact that people have short-term needs," Fulmer said.
Under the rules, lenders also cannot open in stand-alone buildings. Instead, they must be located in shopping centers or supermarkets of at least 30,000 square feet.