COLCHESTER, Vt. (10/7/14)--While Vermont's attorney general is cracking down on illegal payday lenders, the state's credit unions are moving forward with an income advance loan program with United Way.
Among the 81 identified illegal lenders who have done or currently do business in Vermont, Attorney General Bill Sorrell's office has obtained relief for more than 1,600 consumers totaling more than $1 million in canceled loans and refunds (NewsLines Express Oct. 3).
Last week, the attorney general's office reached a settlement with Intercept Corp., Fargo, N.D., that processed loans for more than two dozen online lenders--none of which were licensed to lend in Vermont--charging interest rates of than 100%. Intercept will pay about $85,000 in refunds and civil penalties. More than 1,000 Vermonters had payday loans processed by Intercept.
Vermont requires any person or entity which is not a state- or federally chartered bank or credit union to obtain a state lending license from the Department of Financial Regulation before making or soliciting a loan in Vermont.
To combat abusive payday lending, an income advance loan program piloted by NorthCountry FCU, South Burlington, with $446 million in assets, has become part of the United Way's Working Bridges program.
Employers and credit unions team up to provide emergency cash advances--repaid through automatic payroll deduction-- and financial counseling to employee-borrowers, who pay no fees for the service.
The loan program helps employees meet emergency needs, begin saving and build credit. According to the United Way, 95% of participants have repaid their loans in full and on time, with nearly 50% continuing to save after repayment.
Other Vermont credit unions that are participating include New England FCU, Williston, with $1 billion in assets; Heritage Family FCU, Rutland, with $361 million in assets; Green Mountain CU, South Burlington, with $23 million in assets; and River Valley CU, Brattleboro, with $77 million in assts.