A high-cost lender has closed its store in North Little Rock, several weeks after lawmakers approved a bill aimed at shuttering its business model.
CashMax, at 4700 John F. Kennedy Blvd., had "Store Closed" signs in its windows Thursday and Friday. At a CashMax store in Hope, the phone rang for several minutes without going to voice mail.
Cheney Pruett, chief executive of CashMax, did not return a request for comment Friday.
Hank Klein, the former head of the group Arkansans Against Abusive Payday Lending who had been watching the business, said the North Little Rock store had been operating with reduced hours and staff for several weeks.
"I'm glad they have closed up and that scourge is gone from our community," he said. "These predatory lenders prey on people down on their luck."
Act 944, sponsored by Sen. Jason Rapert, R-Bigelow, mandates that fees count as interest on loans made by businesses like CashMax.
Before Act 944 was enacted, the company had said it complied with Arkansas law because fees -- which count as interest under federal law -- didn't count as interest under state law.
CashMax charged up to 280 percent interest on loans, as calculated by the company under the federal Truth in Lending Act guidelines. Arkansas caps interest rates at 17 percent under Amendment 89 to the Arkansas Constitution. Loans ranged from $300 to $1,000.
In previous interviews, Pruett said the business provides a necessary service that would otherwise go to pawnshops.
He cited a 2016 Federal Reserve study that found that 46 percent of Americans don't have enough money to cover a $400 emergency expense.
"Situations happen, emergencies happen, and typically people don't have the savings and are not prepared for these unexpected expenses," Pruett said in an October interview.
He said CashMax provides third-party loans to consumers and the business itself is not a lender, but a facilitator that charges a fee.
In an interview, Rapert said he knew of no other businesses like CashMax in Arkansas.
"Arkansas made a decision several years ago that we wanted to institute a usury cap to protect people from predatory lending practices in our state and I'm sad that some tried to go around that usury cap through creative definitions of how they were conducting business," he said.
CashMax was one of several efforts around the country to use laws meant to help consumers repair their credit histories in new ways.
Some national advocates thought Arkansas' constitutional cap would be enough to stop such businesses.
"Arkansas is a little unique in that you have that constitutional interest rate cap," said Nick Bourke, director of small-dollar loans for the Pew Charitable Trusts, in a previous interview. "It's a pretty powerful tool and law -- if the regulators decide to use it."
While Klein praised Rapert, he panned inaction by Arkansas Attorney General Leslie Rutledge. Her office has acknowledged receiving complaints about the CashMax businesses, which opened July 13 in North Little Rock. However, her office did not publicly address them. Judd Deere, a spokesman for Rutledge, said the attorney general had no comment Friday.
Metro on 04/29/2017