Zestcash is fairly new in the payday loans business and was co-founded by former Google CIO Douglas Merrill and former Capital One Chief Customer Officer Shawn Budde, in 2009.  They currently lend money to customers in Utah, Idaho, South Dakota and Missouri, and have plans to expand to four other states in the first quarter next year. These new states have not yet been announced but are rumoured to expand their customer base significantly.

 ”We’re right on the edge of a massive growth spurt,” said Merrill, the company’s CEO. He declined to disclose the new states but said they represent a larger potential customer base than the existing states.

Below is a promotional video released by Zestcash

Zestcash offers payday loans type products at what they claim to be half of what regular payday loans cost. The reason they are able to offer loans at reduced rates is due to the background information they collect that allows them to make better lending decisions. This additional information has helped reduce the default rate on their loans, therefore keeping costs down.

From our research we have found Zestcash loans to be more flexible and somewhat less expensive, however, not as easy to qualify for.

Sacramento, California - Many officials from all over California have been calling for tougher laws concerning payday loans. This comes at a time when lawmakers are actually trying to increase the cap on payday loans from $300 to $500.

While many states and the U.S. military have banned payday lending and deemed it usury, California has seen an increase of 2 million loans issued compared to five years age. In 2006, the Department of Defense decided payday lending was “predatory” and a threat to troop morale and national security. As a result of that, Congress passed a law capping interest rates at 36 percent on payday loans made to U.S. military service members.

Insurance Commissioner Dave Jones, a former Assembly member, said “People are having to forgo food on the table or clothes on their backs or transportation in order to pay back these loans,” Jones was the one who introduced a bill in 2007 similar to those in other states that proposed a cap on interest rates at 36 percent because “the evidence was really compelling that the rules needed to be changed in California.” He also stated that payday lenders are “extraordinarily influential,” and Sacramento lobbyists persuaded Assembly leaders to shelve his bill.

Political contributions in California from payday lenders have  more than tripled in the last ten years.

Spartanburg, South Carolina - Advance America has pasted it’s third quarter earning for 2011 which are up ten fold from the same time last year. The company said its net income for the quarter was more than $14.5 million, compared with $1.4 million during the same quarter last year. The first nine months of the year has seen Advance America’s net income more than doubled to $41 million, compared with $20 million during the same period a year prior.

These higher earnings are not just being reported by one payday loan company – most are reporting higher than usual earnings. The reason for these higher than expected earnings is actually not just the economy, but rather the bank rates which are now being charged. Banks have many fees associated with accounts which range from check fees to overdraft charges. Many banks require a minimum ballance to avoid additional fees, and the list goes on.

Credit unions have also seen an increase in business with the banks upping their rates to an all time high. With many Americans now having bad credit, payday loans or credit unions are their only alternative. The FDIC has surveyed data showing one-third of South Carolina households and one-quarter in North Carolina either have no bank account at all or use payday lenders for their financial transactions.

The FDIC’s consumer survey also found 31% of U.S. households that dropped a bank account did it because they didn’t want to pay fees or couldn’t maintain the required minimum bank balance to avoid additional charges.

Tulsa, Oklahoma – It seems that several payday loan companies are actually being operated online by Oklahoma Indian Nations. This has caused a conflict with state regulators due to the fact that tribal sovereign immunity excludes these companies for having to follow state laws.

Oklahoma state law has placed a limit of $500 on payday loans and a maximum fee of $65 per loan. Like most states Oklahoma claims to have authority over payday loans that are made to its residents. Since the federal government has granted Indian tribes sovereignty this basically makes them equal to state governments.

According to the Oklahoma Department of Consumer Credit, there have been several instances in the past year were they were unable to resolve issues involving Internet lenders that claimed to be owned by Indian tribes.

“That is the one area of regulation where it’s extremely difficult to regulate, mainly because of the doctrine of sovereign immunity, it’s difficult from an enforcement standpoint” said Roy John Martin, general counsel for the Oklahoma Department of Consumer Credit.

 

“I can tell you that if we don’t get this issue settled, the industry has a huge incentive to move all of its business to tribally connected arrangements in an effort to evade state usury laws, state small loan rate caps, even state payday loan laws,” said Jean Ann Fox, the  director of financial services for the Consumer Federation of America.

 

Riverdale, Utah – The council in Riverdale has unanimously approved allowing title loan companies to locate in any area that is C3 zoned. This new decision has not included the previous requirement that these payday loan operations be at least 500 feet from a residence.

Riverdale’s payday loans and check cashing companies, along with banks and credit unions, are also allowed to be located in these areas and are now governed by the same rules in the ordinance under a financial institution category.

Councilman Alan Arnold said “we didn’t want to limit the number of title loan establishments in Riverdale, just the location of them. Title loan companies should be allowed along the Riverdale Road corridor, regardless of the proximity to residential areas.”

As most areas seem to be tightening laws regarding title loans/payday loans, it seems odd that Riverdale is making them more available. Administrator Randy Daily did defend the new decision by stating that council can still consider a companies impact on an area when it applies for a business license.