COLUMBIA -- Payday lenders have given nearly $64,000 to the 2008 candidates for president, with a vast majority of that going to Democrats, many of whom have accused the industry of unfair lending practices.
In addition, U.S. lawmakers from South Carolina, as well as key state lawmakers, have taken thousands in contributions from payday lenders, their employees, political action committees or trade associations.
The contributions come as the industry and its largest company, Spartanburg-based Advance America, Cash Advance Centers, face three S.C. lawsuits over accusations of predatory lending and violations of consumer protection laws.
Payday lending critics also are trying to rally congressional support for federal legislation that would cap the interest rates that payday lenders can charge.
Susan Lupton, a senior policy associate with the Center for Responsible Lending in Raleigh, N.C., said payday lenders fear Congress soon will act. After the 2006 passage of legislation that capped interest rates at 36 percent for payday loans to members of the military, the industry is worried lawmakers could try to set a similar cap across the industry, she said.
"I'm quite sure the last thing they want is for that interest cap to be extended to other groups," Lupton said. "If they're giving money to national candidates, they want to be sure they're hedging their bets."
Democratic presidential candidates Hillary Clinton, a U.S. senator from New York, and New Mexico Gov. Bill Richardson each has received more than $22,000 from payday lending sources, more than any other candidates during the campaign
Among the S.C. congressional delegation, Republican U.S. Sen. Lindsey Graham has received $25,000 and Republican U.S. Sen. Jim DeMint $9,600 since 2006. Overall, the delegation received more than $53,000 since 2002.
In the S.C. General Assembly, Senate Majority Leader Harvey Peeler, R-Cherokee, received a pair of $1,000 contributions to top the list after the first nine months of 2007.
Lupton and others accuse payday lenders of preying on the poor by charging exorbitant interest rates and fees that often trap customers into a cycle of debt.
The industry disputes those arguments. The Community Financial Services Association, a payday lending trade association, says in a "myth vs. reality" page on its Web site that its critics intentionally mislead policy makers and the public.
For example, critics say payday loans often charge a 390 percent annual percentage rate. But, the association argues, its loans are not annual loans. They typically are 14-day loans that charge 15 percent interest for that period.
"We're being targeted, yeah," said Steven Schlein, a spokesman for the association.
The association in July hired S.C. Sen. Tommy Moore, the 2006 Democratic gubernatorial candidate, to be its executive vice president. Moore resigned his Senate seat to take the job. Moore's job, in part, is to dispel "misperceptions about the service" and to further the group's "efforts to promote responsible regulation," Moore said after taking the job.
Candidates are getting campaign contributions from the industry, Schlein said, in part because of efforts to tighten state and federal regulations.
"The industry has a lot of issues before state legislatures and before Congress and like any industry, they make contributions," Schlein said. "But there are a lot of individuals in the industry who have a long history of political activity."
At the top of that list is Billy Webster, co-founder of Advance America. Webster worked in the Clinton administration and has long supported Hillary Clinton in her bid for the White House.
New Mexico Gov. Richardson, also seeking the Democratic nomination, was Bill Clinton's ambassador to the United Nations and secretary of Energy.
Of the nearly $70,000 in industry contributions to presidential candidates, more than 35 percent came from Webster or members of his family. Another $14,000 came from George Dean Johnson, the other co-founder of Advance America, or his business interests.
Advance America spokesman Jamie Fulmer said the company is not unlike others that "support candidates and also educate folks about the values of our product."
"There's not any specific formula behind that," Fulmer said. "Billy Webster has been active in the political process long before Advance America was even a company."
Fulmer said it's unfair to paint the contributions as attempts to derail legislation.
"Tying one to the other, while making it a better story, you have to put it in the full context: Billy has always been active politically," Fulmer said.
But state Sen. John Hawkins, R-Spartanburg, said contributions typically come with strings attached.
"Every candidate has to respond and deal with contributions in their own way and .f.f. make sure they don't let the contributions influence their actions," he said. "But, in real life, you know, I know, the money has an influence."
Hawkins has not received payday lending money.
'the new video poker'
Hawkins also is suing the industry.
He and state Sen. Vincent Sheheen, D-Kershaw, have filed twin lawsuits against Advance America and other payday lenders on behalf of a Myrtle Beach couple who claim they were unable to pay back their payday loan and the lenders should have known it.
In the other lawsuit, former U.S. Attorney Pete Strom was joined by 13 state lawmakers in suing Advance America and other companies. They accuse the companies of violating consumer protection laws.
Of those attorney-lawmakers, two Sen. David Thomas, R-Greenville, and Sen. Brad Hutto, D-Orangeburg received contributions from payday lenders.
Thomas took $1,000 from World Acceptance Corp. of Greenville in April and Hutto took $1,000 from QC Holdings of Overland Park, Kan., in July.
Hawkins chaired the Senate Judiciary subcommittee that heard testimony this year on his bill to tighten payday lending regulations. The bill died after it was watered down by the industry's allies.
"The payday lending industry has become the new video poker in South Carolina, and they are determined to exert as much influence as they can in the political process, and evidence of that is that this legislative year they successfully killed any kind of reasonable regulation," Hawkins said.
Key members of the S.C. House and Senate have received more than $15,000 in contributions from payday lenders so far this year. The maximum contribution to a state legislator is $1,000.
Hawkins' lawsuit targets Advance America, Cash Advance Centers of South Carolina, Carolina Payday Loans, Check into Cash of South Carolina, Check N Go of South Carolina and Local Cash Advance of South Carolina.
Fulmer, the Advance America spokesman, said the lawsuits are frivolous, adding that his company follows the law.
"We certainly don't take the accusations lightly," Fulmer said. "We operate a legal and regulated business in the state, and we're going to continue to defend our business practices in the courtroom and intend to do so on the merits of the case."
conflict of interest?
For the candidates for president, the issue creates a potential conflict.
Many of the Democratic candidates have railed against payday lenders and other industries that target lower-income people who need non-traditional forms of credit, such as subprime mortgages.
Former U.S. Sen. John Edwards of North Carolina, an outspoken critic of payday lenders, has said if elected he would pursue tighter restrictions on the industry. Edwards, an S.C. native, has not received campaign contributions from the industry in this campaign, although he did when he first ran in 2004.
(Edwards also has been criticized for his ties to a subprime lender that foreclosed on S.C. homes.)
Richardson pushed for new payday lending regulations in New Mexico, although he later was criticized by fellow Democrats who accused him of watering down earlier, stronger proposals.
Efforts to reach Richardson's campaign were unsuccessful.
Clinton, too, has worked to limit payday lenders' influence, said Zac Wright, her S.C. spokesman.
"Hillary has been a leader in the Senate on cracking down on payday lending abuses," Wright said. "She opposed the weakening of the Community Reinvestment Act that would've led to an increase in payday loan stores in low-income neighborhoods. She called for hearings on payday loans and military families, and pushed the FDIC to close a loophole allowing for payday loans."
Still, the Center for Responsible Lending would just as soon the candidates talk the talk but not take the money, Lupton said.
"I'd rather any candidate who gets this money say, 'Oh, this is too toxic to take. I'm going to give it back."'