With payday and title loan legislation scheduled to be introduced during the 2014 Alabama legislative session, some members of the industry are firing back at criticism.

It would be the second time in as many sessions that such legislation has been introduced. Last year, payday loan legislation passed in the Alabama House of Representatives, but stalled in the Senate.

Payday loan storefronts often charge 400-percent interest rates for 14-or 30-day loans. State Rep. Darrio Melton (D-Selma) is a co-sponsor on one of two bills to lower interest rates on payday loans and said the rates are morally and ethically wrong.

“When working mother comes to them for an advance to put food on the table for her children or when a single father needs his check a few days early to pay rent, it isn’t right that they will now be locked into a cycle of repaying debt on astronomically high interest rates,” Melton said. “This only requires more advances and creates a deeper, self-fulfilling cycle.”

On the other hand, industry representatives say the interest rates plastered on store walls are an unfair way to evaluate the loans because of their short-term nature.

“While it is easy to criticize our industry based on part of the facts, our customers understand the cost of our product,” Advance America Senior Vice President Jamie Fulmer said. “Most commonly the customer comes in one time and we never see them again. It’s not like they are trapped in some sort of cycle of debt.”

A better assessment of Advance America — a payday loan franchise with dozens of locations in Alabama — comes by evaluating extra fees based on the amount borrowed. Fulmer said Advance America charges customers $17.50 per $100 borrowed, with no extra fees added for late payments.

Fulmer said a one-time fee may reduce overall profitability, but most loans are paid back on time, making the story of an endless cycle of debt rare for his company’s customers.

Approximately 95 percent of Advance America’s loans are regularly paid back on time; 2.5 percent of the company’s total loans are late, but ultimately collected; and 2.5 percent are never collected, according to Fulmer.

“We offer our consumers a product that is cost competitive in the marketplace,” he said. “Part of the reasoning [for the one-time fee] is that this is a two week loan. This is a not a loan product that you are locked into for a year, like a car.”

Instead of increasing regulation on storefront businesses, Community Financial Services of America — an organization formed to promote fair practices — says legislators should focus on illegal, online loan agencies.

“The entire industry is painted with one brushstroke and everyone seems to think that we conduct business in the same way,” CFSA representative Amy Cantu said. “You have good actors who follow the law and bad actors who seek to commit fraud and scam consumers”

The payday loan legislation is expected to include an interest rate of 36 percent. According to Fulmer, the rate would equal $1.36 per $100 and would close many payday loan businesses across Alabama.

“Thirty-six percent is not a compromise, it is an effective repeal of our industry,” he said.