"That's illegal; to threaten someone like that," Skull told Credit Union Times. "I told her to fax the loan agreements to my office so that I could write the checks to pay off the loans. But four of the payday lenders wouldn't even accept my company check as payment. They made her get certified checks. The way they do business is unconscionable. I just am determined to do something about it."

Mike Lane had been trying to get the Virginia legislature to do something by pounding at the doors, but he said the payday lobby is very strong and also very generous to politicians in the General Assembly. "I'm just appalled that this system abides people who soak money from the least among us. I testified before the General Assembly last year. I thought to myself that there must be someone doing something about this. So I went to the Virginia Partnership for Equitable and Responsible Lending in Richmond and they put me in touch with Ward."

Lane and Skull met for lunch and separately did some research, finding like-minded organizations with which they wanted to work. They contacted Neighborhood FCU, a CDFI in Newport News, they learned of the Real Solutions' efforts of the Filene Institute; they spoke with people at the Center for Responsible Lending, in Raleigh.

"We think credit unions should be on the front lines of all this. The payday lenders have taken their members away. We just don't understand it," said Skull. "I spoke with Rick Pillow, the president of the Virginia League because I wanted him to come to one of our meetings. We'd like to work together to finally get a law passed in Virginia. Twelve other states have done it and Congress has limited it for military personnel finally. But Virginia is a state where payday lending rages on."

The Virginia League prefers to work entirely within its own guidelines, which include fostering alternatives to payday loans through its CU membership, said CEO Rick Pillow. "We're not a part of that organization. They've invited us to meet with them to explain some alternatives to payday lending and that's fine. But we've made it clear that our Board and management has determined not to take a position on any particular legislation, which they would like us to do."

Pillow explained that while VAPL may not like that stance, the league thinks it's time and resources are better spent "by providing products and services that are better for users than payday lending. It's better than getting embroiled in the legislature."

Lane and Skull see that position as caving, more or less, to the power that payday lenders wield. They point to the advertising campaign launched by The Washington, D.C. Financial Services Asso-

ciation, a coalition of over 40 payday advance stores in the District that feature Washington payday advance customers who believe that payday advance is a re-

sponsible and critically important financial option. (To see the ads, visit: http://www.reformpayday.com

/media/tv.)

The DCFSA began the campaign "to help ensure payday advance remains safe and legal in Washington," according to a press release. They did it in response to a bill under consideration in the D.C. City Council to cap interest rates on payday advances at 24% APR. "The bill is essentially a ban on the industry, because if passed, the maximum fee a lender could charge is 92 cents per $100 loaned," they said.

That's just the kind of limitation VAPL would like to see enacted in Virginia. To their minds, a partnership or coalition with credit unions seemed like a perfect match, and they were baffled that the league gave them the cold shoulder. And that's when they turned up the heat a bit. They began to write Op-Eds to the local newspapers and a few Web sites saying:

"Payday lenders, who can legally charge up to 782% APR in Virginia, entrap borrowers with few viable financial alternatives and limited financial education in cycles of inescapable debt. This product, or 'service' as industry proponents would have the public and policy makers believe, is dramatically different from loans offered to the more affluent consumers. Payday lenders target the desperate, and it is in their desperation that payday borrowers become victimized by an industry consumed by its own greed. Many Virginians have found these business practices, especially the triple-digit interest rates and the debt trap, to be nothing less than egregious. And many, in turn, have begun to respond."

They want to repeal the law allowing payday lending or, at a minimum, amend the law to address the most predatory practices to include a 36% APR interest rate cap and "removal of the debt trap" created by rolling over a loan repeatedly.

Lane wrote a piece for dailypress.com on July 24th that threw down the gauntlet to the Virginia League with this: "So far, I cannot say that the credit unions have been on the front lines against usurious payday loans. In fact, the credit unions' lobbyist in Virginia is the same lobbyist who has lobbied so vigorously on behalf of the payday lending industry. This is troubling, to say."

In the Roanoke Times, they wrote: "Payday lenders, unlike legitimate financial institutions, cannot operate on a 36 percent APR or even 72 percent. They require an APR in triple digits. If 'hypocrisy is the homage that vice pays to virtue,' payday lenders have taken hypocrisy to new levels as they parade victims of payday loans as beneficiaries of the industry and convince lawmakers of the value of their services to those in need. But the multibillion-dollar payday loan industry and their high-priced lobbyists are not your average hypocrite.

"The Virginia General Assembly cannot be blamed for 'falling victim to the assault of this billion-dollar megalith any more than the victims of the loans should be held responsible,'" they maintain. "In fact, the legislators in good faith directed the industry to reform itself. This mandate was met with something between a sneer and a snarl as the predatory lenders contemptuously expanded their disreputable business."

Pillow responded with a letter to Lane and Skull with an opening salvo of his own. "Gentlemen, I am compelled to address your efforts in the media and elsewhere to mischaracterize the position of the Virginia Credit Union League in the debate over the payday lending industry in Virginia. Historically, the VCUL has refrained from taking a position on issues or legislation affecting other financial institutions or the financial products and services offered by our marketplace competitors."

Pillow stressed that the VCUL Board "has specifically directed staff neither to advocate for nor against proposed legislation affecting the payday loan industry, nor to join forces with any organization that supports or opposes that industry." The league will develop its own alternatives instead, and work to foster financial education to alleviate the need for payday lenders instead, Pillow told Credit Union Times.

"While they may not be happy with our position," said Pillow in response, "we think our resources are better spent in providing products that are better for users of the payday lending industry; it's better than getting embroiled in the legislature," he said.

And while the League monitors its policies all the time, "if we change our tack, it'll not be to combine with them but to do our own effort. I won't knock what they're trying to do, but we see it from a different point of view. Our goal is to wean people away from using payday lenders over and over again."

When asked if he thought there might be a perception of a conflict of interest if the same lobbyist worked for the League and also represented the payday lending industry, Pillow said, "The legislators understand when he's representing payday lenders and when he's representing credit unions."

The VCUL has not, and does not plan to take a position on payday lending, he said. "If we thought we should be down there putting forth a position on payday lending we'd have to deal with that. Conflict is in the eye of the beholder. Ultimately, legislators aren't dummies. They see lobbyists all the time."

Pillow was irked by the force and challenge of the VAPL's founders. "We started out wanting to work with this group. But I object to the techniques they're using."

–[email protected]