They are more prevalent than McDonald’s and maybe even more tempting.

They are payday loan companies — and in Mississippi there is one on almost every corner.

More than 1,139 payday loan companies operate in the state compared to 130 McDonald’s restaurants. And many of them are located near military institutions or in poor neighborhoods, which some believe make them predatory. There are about 30 payday loan companies that operate in Lauderdale County.

Otis Gough believes the payday loan industry preys on those who may not qualify for any other type of loan.

Gough, who owns Twin States Finance Inc. on Eighth Street, believes the companies are hurting his business.

“The biggest impact it has had on the finance industry is the litigation that is caused from it,” Gough said. “The justice courts are burdened to the hilt. And once they get a judgment against them, they file a garnishment and then they can’t pay the court. The trickle down effect is where it affects us.”

Gough said when a person comes into his office to apply for a loan, he has no way of knowing if that person has outstanding loans at one or more payday loan companies. He said that knowledge would make a difference in whether or not he lends money.

Targeting the predatory practices of the payday loan industry is one of the main objectives of the Mississippi Center for Justice, a non-profit law firm that works for civil legal advocacy on behalf of poorer minority communities in the state.

David B. Miller, staff attorney with the Mississippi Center for Justice, discussed the issue with The Meridian Star’s editorial board. He said they would like to see changes in the payday loan industry and with predatory mortgage lending.

Miller said in the next legislative session, the center will push for the establishment of a reporting system to require payday lenders to enumerate the number, date and individual values of loans made at each of the state’s payday lending locations.

“What we want the state to take a look at is getting some information on these folks and how they practice,” Miller said. “You will hear some people argue that this is a necessary emergency service and we have to have it, and if people actually use it as an emergency service, that might be a legitimate argument, but we would still take issue with the amount of interest they charge.”

Miller said the payday loan industry has been regulated by the state since the 1990s. The way the industry works: a borrower can receive up to $400 for up to 30 days, and for every $100 they borrow, they pay an $18 fee.

“The normal amount of time that a loan goes out for is two weeks,” Miller said. “So if you take that 18 percent fee and annualize it, it comes out to about 470 percent annual interest. Even if you do the loans for 30 days, it comes out to about 220 percent in annualized interest.”

Gough said his finance company charges about 30 percent annual interest, which he admits is high, but a drop in the bucket compared to the payday loans.

The Meridian Star contacted at least five local payday loan companies, each of which declined to be interviewed.

Miller said the legislation is particularly important because the statutes that govern the industry are set to sunset in 2009.

“So we feel it is important for the Legislature over the next couple of sessions to take a look at the way this industry is working and if additional measures are needed,” Miller said.

BY THE NUMBERS

Here’s a look at a few facts concerning the payday loan industry in Mississippi:

7.6 million: The number of borrowers each year who take out payday loans

83 million: The number of payday loans that are taken out each year

$2 billion: The annual revenue for payday lenders

$25,000: The average income of a payday borrower

8 and 13: The number of payday loans borrowers takes out each year

SOURCE: Mississippi Center for Justice