Billed as predatory lenders by many community leaders, payday loan industry leaders are working to dispel such negative images.

"I'm very proud of what we do," Jim Marchesi, owner of 12 Check City stores in the Las Vegas Valley, said. "This is not a shady business, everything we do is aboveboard. We don't violate any laws."

However, Assemblywoman Barbara Buckley, who is also executive director of Clark County Legal Services, said in her role at the free legal service provider, she has seen many cases where a person who defaults on a payday loan ends up paying much more than the original amount borrowed.

"We're not surprised when we see someone who walks into our office who borrowed $400 and she's paid back $600 and now she's been requested to pay $1,500 more. In some cases it's just legalized loan sharking, and it's putting people on a debt treadmill, and it's ruining their lives," Buckley said.

Marchesi also is president of the Nevada Financial Service Association, an organization representing 22 member companies that handle 80 percent of the state's payday loan transactions. Companies such as his, Marchesi said, don't prey on the poor but help fill an economic need. He said his industry helps people avoid such things as late fees and costs associated with bouncing checks.

He said the industry has some unscrupulous operators that make the rest of the industry look bad.

"We don't loan money to the poor. It would be senseless to loan money to people who can't pay us," Marchesi said. He said the average payday loan customer makes between $25,000 and $45,000 a year and has some college education.

Nevertheless, some local goverments have taken steps to control the growth of payday companies.

The city of Las Vegas prevailed earlier this month in Clark County District Court after payday loan company USA Cash Services filed a petition to force the city to allow the company to take over an existing payday loan facility from another company.

Clark County District Judge Valerie Adair ruled that the company had filed the lawsuit too late. The court filing argued that Ward 1 Councilwoman Janet Moncrief and other City Council members abused their discretion by voting to deny the company a special use permit without a justifiable reason in October. Before voting to deny the special use permit Moncrief asked how many payday loan companies were in her ward and after learning there already were 31 such businesses she said there was an "oversaturization" of payday loan companies and then voted to deny the request, the lawsuit said.

The company said its representatives met with Moncrief several times to explain that they weren't opening a new business, and that Moncrief agreed to vote to approve the special use permit at a later council meeting, but never did.

"I have some sympathy with your client that they wanted to work with (the city). I don't think (the) petitioner has shown there was an abuse of discretion," Adair said when making her ruling.

Moncrief said she would have considered approving the company's petition for a permit if both companies had the same description. The previous business was designated as a finance services company and not a check cashing/deferred deposit business. Because of the discrepancy in designation, Moncrief said she didn't put the issue back on the city council's agenda.

This store, at 6820 W. Charleston Blvd., is one of 12 Check City franchises in the Las Vegas Valley. Photo by Ethan Miller

Matthew Saltzman, an attorney for USA Cash Services, said his client hasn't decided what it will do in response to Adair's decision.

Marchesi said that the city of Las Vegas acted unfairly in the lawsuit and that there will probably be litigation in the future against the city.

The cities of Las Vegas, North Las Vegas and Clark County have restrictions on the growth of payday loan companies. The communities force payday loan companies to apply for a special use permit that is either subject to approval by the planning and zoning board, commissioners or City Council members. The city of Las Vegas and Clark County have restrictions on how far apart the stores can be from each other and from residences. Other restrictions also limit the type of signs and the colors of business displays.

"From a land-use standpoint a concentration of these uses has the potential of negatively impacting a neighborhood, so we thought it best to spread it (zoning) out further," Charles Pulsipher, zoning administrator for Clark County Department of Comprehensive Planning, said.

The city of Henderson is considering an ordinance that will force payday loan companies to apply for a conditional use permit before setting up shop. Last year the State Assembly passed AB433, which limited fees to $25 and required up front disclosures by payday loan companies.

Marchesi said the laws amount to unfair discrimination against his industry. He rejects allegations that the industry uses a "loophole" in a federal banking law to charge exorbitant interest rates by partnering with federal banks. He said Check City doesn't have a partner bank.

"All the credit card companies operate under that. (It) allows banks to export their rates from one state to the next. It's not a loophole; it's a statute," Marchesi said.

Alana Roberts covers courts and labor relations for In Business Las Vegas and its sister publication, the Las Vegas Sun. She can be reached by e-mail at alanar@lasvegassun.com or at (702) 259-4059.