Ordinance sets restrictions on KCK payday loan shops

Earlier this year, Unified Government officials counted at least 26 payday loan shops throughout Kansas City, Kan.

A new ordinance passed last week by the UG’s Board of Commissioners likely ensures that 26 is the most the city will ever see.

That’s because the new ordinance calls for any new payday loan shops to be located no closer than two miles from an existing shop, and at least 200 feet away from any residence, in effect placing a moratorium on new payday loan businesses.

But the geographical restrictions are far from the only components of the adopted ordinance:

• All payday loan shop owners, within 60 days, will have to acquire an annual “Payday Loan and Title Loan Business License” from the UG

• Licensed business will be required to post a notice detailing information about interest rates and fees charged on loans, the annual percentage rate equivalent of all interest and fees charged per $100 borrowed, warnings about what collateral may be recovered upon default, any state and federal laws pertaining to payday loan businesses and directing consumers to call 3-1-1 for more information.

The ordinance isn’t without peers, as many surrounding communities have passed similar ordinances, including Kansas City, Mo., Lenexa, Overland Park and Shawnee.

Ordinances in the three Kansas cities all come with one-mile separation requirements, though permitting, signage and penalties all differ from one city to the next.

The KCMO ordinance doesn’t include a distance requirement, but does include inspection and judicial review clauses increasing the strength of the ordinance.

Staff responsible for crafting the ordinance said they received little feedback from the payday loan community, but the industry has embarked on numerous public education campaigns during the last few years.

The Community Financial Services Association of America and its Web site, www.cfsa.net, offer loan consumers information on products and services.