TAMPA BAY - UPDATE: See the statement Amscot Financial gave us after this story aired at the bottom of the article.
Two major Florida banks are getting into a business many normally associate with hard times and rough neighborhoods- payday loans.
Largely the province of pawn shops and storefront companies like Amscot, payday loans are a source of emergency cash when the month is too long for the money. (See full statement from Amscot Financial below).
But now, Regions and Fifth Third banks, both headquartered out of state but with a large presence in Florida are offering a similar financial product.
"We are extremely disappointed to see the national banks step into this product" said Alice Vickers a lobbyist for the Florida Consumer Action Network. Vickers believes payday loans with annual interest rates of 120 to over 300 percent are exploitive.
"Consumers can get caught up in a cycle of debt that's difficult to get out of because of the high cost and fees" said Vickers.
Regions gave us a statement saying their program is "intended to meet the occasional and immediate needs of existing Regions Bank customers".
Regions says their loans can also help people establish or rebuild credit.
But payday loans are under scrutiny in congress right now for preying on financially unsophisticated and needy customers. Dorothy Washington waiting for a bus across the street from an Amscot store on Himes Avenue in Tampa says her daughter's been paying on the same Amscot advance loan for over a year.
"She can't get out of the hole. She's always trapped. She's always got to take out another one, redo it again. It's continuous cycle that never ends" said Washington.
And though the Regions and Fifth Third Bank advance loans are less expensive than those on the street corner, Vickers says it's more of the same.
"We don't see it any different that the storefront payday loans. In fact we see it even worse because the banks are essentially preying on the customers they have now" said Vickers.
Fifth Third Bank also gave us a statement saying their loans offered a solution for short term cash flow assistance.
UPDATE: Amscot Financial gave this statement after the story aired:
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