By Nikita Stewart
Washington Post Staff Writer
Thursday, September 13, 2007

Stacey Brown said he went to Check 'n Go on Eighth Street SE in 2001 and borrowed $500 in a payday advance to help him pay some bills.

Last week, he finally paid off the loan and all the fees and interest that came with rolling it over. His total in fees and interest: $14,997.

Yesterday, Brown received an apology from Cameron Blakely, a former Check 'n Go manager, on the steps of the John A. Wilson Building during a news conference touting D.C. Council legislation that payday lenders say could put them out of business in the city.

The council voted 12 to 0 in July to give preliminary approval to the legislation, which would limit the annual percentage rate charged for such two-week loans to 24 percent, the same rate as banks and credit unions.

On the eve of the council's final vote on the measure, a parade of advocates and former Check 'n Go employees surrounded council member Mary M. Cheh (D-Ward 3), one of the bill's sponsors. Cheh said she wanted to combat the industry's aggressive campaign against the bill. "They're swarming all over this District building," she said.

Cheh said she hopes the council will vote unanimously to approve the measure Tuesday.

In mid-August, the D.C. Financial Services Association, which represents 41 of 48 payday loan stores in the city, started an advertising campaign encouraging residents to speak out against the bill.

Check 'n Go issued a statement through Dan Pinger Public Relations yesterday rebutting accounts by employees.

"At a news conference today, three disgruntled former employees made false and reckless statements regarding the business practices of Check 'n Go. . . . Check 'n Go adheres to all local regulations and industry best practices that provide for a variety of consumer safeguards," the statement said.

The District association, led by Check 'n Go and ACE Cash Express, says that if the legislation is adopted, residents would lose a lending choice, one that does not require a credit check and that helps people who need money for emergencies.

Currently, lenders can charge a $16.11 fee per $100 borrowed.

The proposed 24 percent rate would result in a little over 90 cents per $100 borrowed, which payday lenders say would make it impossible for them to operate.

Council member Marion Barry (D-Ward 8), who co-sponsored the bill with Cheh, said that he does not want to put the stores out of business and would like to implement changes to prevent the cycle of debt. Barry, who voted against the bill in committee and abstained in the initial council vote, said he wants the council to consider an alternative to the pending legislation. He said other adjustments, such as an extended payment plan and limits on fees, could improve the industry.

But Cheh said such changes are "costume jewelry" and would not alter the industry. Blakely and two other former Check 'n Go employees said the fees would pile up because loans would be worth much more than a borrower's pending paycheck, and borrowers would have difficulty repaying the loans within two weeks.

Micheal Donovan, who recently resigned as a district director and who managed Check 'n Go operations in the city, said: "We virtually guarantee customer retention by encouraging customers to borrow up to 85 percent of their gross income. That is, more money than they actually receive in take-home pay."

Repeat customers are part of the business model, he said. "It is the basis for bonuses. It is the basis for store payroll budgets."

Blakely, Donovan and Bill Harrod, a former store manager, said they were ashamed to have been a part of the payday lending industry. "I could no longer continue exploiting customers, making hard lives harder," said Donovan, who worked at Check 'n Go for a year.

Blakely, who said he worked at Check 'n Go from February to August, said he was trained to be friendly with customers and to keep them coming.

"Stacey meant two things to me," Blakely said. "First, keeping him on my customer list added roughly $20 to my quarterly bonus. Second, keeping him on my customer list also meant I could maintain the payroll budget at my store. . . . I owe people like Stacey a big apology because I abused them and I insulted their intelligence."

Brown, 43, said he did not realize how much money he had spent. He just saw it a no-hassle loan. "It was easy. You didn't have any credit checks," he said.

But he said he regrets having spent nearly $15,000 over the past six years. His advice to others: "Get out of it. Quick."