Alabama

In 1999, there were 19 states which limit interest rates for small loans. Although Alabama was included in this list in 1999, payday lenders remained in operation due to a court injunction while awaiting litigation between the Alabama Banking Department and the Alabama Check Cashers Association.

Judge Eugene Reese allowed this interim injunction that allowed the plaintiff check cashers to provide payday advance loans until the case was decided. The case was delayed for four years, while Judge Reese waited for the Alabama State Legislature to pass a law concerning the issue, which to date has not happened. On June 21, 2002, Judge Reese ruled that the lenders were not subject to the Alabama Small Loan Law.

Payday lenders hold that while the case is a matter for the Legislature and not the courts, Judge Reese’s ruling stands, keeping payday cash advance lenders from regulation via the Small Loan Act. Payday loan providers also add that their business practice is different from other small loan providers.