JACKSONVILLE, Fla., Oct. 3 /PRNewswire/ -- "The Center for Responsible Lending ('CRL') in their September 16, 2008 CRL Report 'High Cost Payday Lending Traps Arizona Borrowers' misinterprets statistics published by Veritec as part of our contractual agreements with various state agencies," said Thomas Reinheimer, CEO of Veritec Solutions LLC of Jacksonville, Florida.

The CRL Report inaccurately reflects referenced information in state regulatory program reports published by Veritec that are based on millions of actual loan transactions. "For example, the CRL Report implies that Florida borrowers are 'trapped' into renewing an initial loan 8 times each year. This is absolutely wrong and reflects a misunderstanding of Florida law," according to Mr. Reinheimer. "Florida law prohibits multiple outstanding loans or loan renewals and requires a 24-hour waiting period between loans. The statewide real-time database integrated with all licensed lenders effectively enforces these provisions despite CRL claims that consumers re-open their original loan every 2 weeks. CRL continues to make these claims that are contradictory with information reported from these states."

Other findings by Veritec that contradict conclusions reached in the CRL Report include:

-- Over 30% of borrowers in Florida discontinue using the product after one year.

-- Almost 66% of borrowers in Florida discontinue using the product after five years.

-- Over 75% of payday loans are paid off within 2 days of the borrowers due date.

CRL makes unsupported claims about "ineffective" payday lending reforms without defining what constitutes "effective reform". The CRL Report clearly points out that "much stronger enforcement" mechanisms in states with a statewide database are an effective means of ensuring compliance with statutory limitations. However, CRL fails to provide information or guidance about reasonable limitations that will ensure responsible usage of this short-term credit instrument. The CRL Report suggests that a 36 percent rate cap is the only means of effective payday lending reform but also recognizes that this limitation may eliminate this product from the marketplace.

Veritec Solutions LLC is a regulatory services company that manages statewide lender compliance programs in seven states with statewide databases and related limits included in their respective payday lending (aka deferred presentment, deferred deposit) statutes. Veritec helps state agencies regulate lenders through the management of these programs. Veritec's primary customers are state regulatory agencies; the firm does not supply any goods or services to the payday lending industry.

SOURCE Veritec Solutions LLC