PHOENIX — Another payday lending company's decision to leave the state shows the expiration of a law that allowed high-interest loans is working, Arizona Attorney General Terry Goddard said.
Advance America Cash Advance Centers Inc. announced plans this week to close all 47 of its locations in Arizona, along with 75 locations in several other states.
The Spartanburg, S.C., company made millions "off of a business model that preyed on vulnerable borrowers," Goddard said in a news release Friday.
"They could have amended their business practices like other companies and charged lawful rates, but they chose to fold their tent here," Goddard said. "That's just what Arizona voters hoped would happen when they rejected this industry at the polls."
Payday lenders write checks for short-term loans while charging fees that can amount to interest rates of more than 400 percent on an annual basis. A decade-old law allowing the high-interest loans expired June 30, and lending companies unsuccessfully tried to persuade voters or the Legislature to extend it.
State law now caps the annual interest rates for loans at 36 percent.
Advance America spokesman Jamie Fulmer said last month that the end of payday lending could force customers looking for cash to turn to unregulated Internet loans.
"The consumers who find themselves between paychecks with some type of unbudgeted or unexpected expense should be very concerned about the options left," Fulmer said.
Goddard announced a program last month to pursue payday companies that continued operating as usual after the law changed. His "Operation Sunset" plan includes a task force, public education campaign and consumer hot line.
According to the state Department of Financial Institutions, there were about 600 payday loan stores in Arizona last month.
Cincinnati-based Check 'n Go said last month that it plans to close all 34 of its locations in the state.
Besides its Arizona locations, Advance America said late Thursday that it is closing 55 stores in Washington and Colorado, two states that also changed their loan laws recently.
The company's shares fell as much as 6.3 percent in early trading Friday before closing up 1 cent to $3.83.