RALEIGH, N.C. – More than 1,000 check-cashing outlets here were recently ordered to stop accepting post-dated checks and delayed deposits for payday loan transactions as state lawmakers failed to reach a compromise that would satisfy both the check cashing industry and consumer groups. General statute 53-281 of the Check Cashing Act passed in 1997 by the North Carolina General Assembly that authorized payday lending expired on Aug. 31, and the North Carolina Commissioner of Banks issued a memo to immediately stop offering the controversial loans. The law initially had a "sunset" of July 31 but an extension was made with hopes to have reform on the books. Since the cease order went into effect three weeks ago, the check cashing industry and consumer advocates have been waiting to see if lawmakers will address the issue before the legislative session ends in a few weeks. In the meantime, check-cashing outlets are prohibited from engaging in payday lending including conducting transactions through agents, facilitators or out-of-state lending institutions, according to a memo issued by Hal Lingerfelt, North Carolina's commissioner of banks. Still, the news is not so glum for some. Lenders with national charters can continue to make loans because federal laws allow them to do so, pre-empting any state regulations. At least three out-of-state national banks have partnered with check-cashing stores to continue offering the transactions, according to the North Carolina Housing Council. State Attorney General Roy Cooper has said his office will explore these alliances to determine if the state can prevent short-term, high-interest loans. Under the old state law that expired in August, payday lenders could offer loans of up to $300 that had to be paid off within 31 days and lenders deducted a 15% fee for the transaction. Prior to the expiration date, a compromise measure was brought before the Assembly that would change the loan period to a minimum of 60 days and limit payday loan transactions to four per year or restrict total outstanding loans to under $300 at any time. A provision also would attempt to keep out-of-state companies doing business in the state from claiming exemption from the 15% fee. So far, the Senate and House have yet to move on the provisions and some are saying the lack of "unilateral" approaches from both sides is not helping the situation. Meanwhile, the North Carolina Credit Union Network continues to promote alternatives to payday loans such as the Salary Advance offered by State Employees Credit Union (SECU), the largest in the state. SECU has been offering its version since January and more than 8,000 members have used the loan for emergencies, said Jim Blaine, SECU's president. The Salary Advance allows members to apply for a $500 line of credit at an 11.75 percent interest rate. Over a two-week payroll period, the interest paid on $500 totals $2.50 compared to more than $40 for a payday loan through a check casher, Blaine said. Credit history is not examined by the credit union and members need only have a checking account and a direct deposited payroll arrangement. An informal survey conducted last August by SECU revealed that roughly 4,000 members used payday loans, Blaine said -

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