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RICHMOND — Additional consumer protections for Virginians who take out payday loans - particularly U.S. military personnel - take effect July 1. The changes in Virginia law include greater restrictions on collection efforts used by payday lenders against U.S. military service members who take out these small, short-term loans.

In February, the Virginia General Assembly approved legislation which further clarifies the Virginia Payday Loan Act, first adopted in 2002. The 2005 changes prohibit payday lenders from garnishing military wages or conducting collection activities against U.S. military service members deployed in a combat zone. They also prohibit payday lenders from contacting a military service member’s commanding officer or anyone in his chain of command in an effort to collect on a loan made to that borrower or his spouse. In addition, they bar payday lenders from making loans to military personnel from locations that have been declared off limits by a base commander.

The State Corporation Commission’s Bureau of Financial Institutions is contacting military installations throughout Virginia to remind them of the upcoming payday lending law changes. Military officials are urged to notify the Bureau of alleged violations and whenever a base commander declares a particular payday loan office to be off limits to military personnel.

There are currently 84 businesses licensed as payday lenders in Virginia. Those companies have between one and 114 branches for a total of 730 licensed payday lending locations throughout Virginia. Another seven applications for a payday lender license are currently pending before the Commission. Applicants must meet the standard tests of financial responsibility, character, reputation, experience and general fitness before the Commission will issue a license to them.

In addition to the enhanced protections for military personnel, the new legislation clarifies the following:

* Loans based on income tax refunds are not payday loans.
* The Virginia Payday Loan Act applies to Internet payday lending if such lending involves Virginia consumers.
* Unlicensed persons are prohibited from making payday loans for consumers residing in Virginia, whether or not the lender has a physical location in Virginia.
* Brokering or arranging payday loans to consumers residing in Virginia is prohibited, regardless of whether the person arranging or brokering the loans has a location in Virginia.

For additional information about payday lending, call the SCC’s Bureau of Financial Institutions in Richmond at (804) 371-9657 or toll-free (in Virginia) at 1-800-552-7945 or visit its website at http://www.scc.virginia.gov/division/banking/index.htm. The website contains a list, updated weekly, of licensed payday lenders in Virginia, their trade names (where applicable) and their branch locations. A Consumer Guide to Payday Lending is also available through the Bureau’s website.