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Payday sharks take it on the fin

In case you missed it, another happy result of this week’s election was the defeat of two anti-consumer ballot measures in Ohio and Arizona that were pushed by the predators in the “payday” lending industry. Here’s a release from the Center for Responsible Lending:

 

“Ballot measures in Ohio and Arizona doom deceptive tactics and predatory practices

Ohio and Arizona voters saw through the deception of the payday lending industry at the ballot box Tuesday and voted to reject payday lending in their states, as the trade group used dirty tricks and misleading advertising to try to keep predatory 391 percent annual interest rates legal for payday loans.

Ballot propositions initiated by the industry, supported by over 30 million of their trade groups dollars, and featuring measures that prop up their predatory practices, experienced stunning defeats in both states, as voters recognized the deception in the industry and its advertising.  Payday lenders outspent the Ohio grassroots coalition by over 60 to 1, and still lost by a 2 to 1 margin in the vote. In Arizona, the grassroots campaign was outspent about 90 to 1.

“These two citizens ballots are really a mandate for cracking down on payday lending throughout the nation,” said Uriah King, policy associate for Center for Responsible Lending. “You can get no clearer message than a huge majority of voters rejecting 400 percent interest loans. A reasonable two-digit cap is sensible, fair, and it works to keep bad apples out of the consumer lending arena.”

Combating millions of dollars of deceptive advertising, spirited grassroots campaigns in each state took on a national industry that depends on making high-interest loans repeatedly to customers who cannot afford to pay them off for good.

Payday loans are systematically converted into long-term, high-cost debt for working families. The average payday borrower has more than eight transactions per year, costing them more in interest than the original loan. Congress passed a 36 percent cap protecting military families from this practice, and 15 states plus the District of Columbia have chosen to control predatory lending by enforcing interest rates in that range.

Ohio’s new law had no sooner passed when the industry initiated a ballot measure that would have repealed the interest rate cap of 28 percent. Arizona’s current law exempting payday loans from the state’s 36 percent cap on small loans is due to expire in 2010, and lawmakers are unlikely to renew it given its negative impact on borrowers and the economy.

The failure of the payday industry to circumvent state lawmakers in Ohio and Arizona suggests not only that citizens are in the mood to crack down on irresponsible lending practices, but also that people are catching on to the deceptive practices of the industry.

The conventional wisdom for ballot measures is “when in doubt, vote no.” Thus the payday lending industry in Ohio had a big advantage by having the “no” vote. This is only the second time in history of Ohio referenda, established in 1856, that the ‘yes’ vote won, and victory in this bellwether state sends a strong message to policymakers everywhere.

In Arizona, the payday lenders tried to capitalize on the trend toward reform, going so far as to attack their own practices as unethical. Community groups, business leaders, political leaders of all parties, faith groups, military and consumer advocates endorsed the “No” vote, and news reports and internet bloggers helped spread the word that the reform was false.

Visit our Web site to learn more about the payday lending debt trap.

9 Comments

  1. Rob Schofield

    November 7, 2008 at 9:36 am

    P.S. I wonder where the paid payday apologists from Ohio and Arizona (who had the time and resources to comment on a North Carolina blog) will go now. Let’s hope they don’t have to go back to crappy loan shark jobs in the states where this scam is still legal.

  2. cash advance

    November 7, 2008 at 11:52 am

    You know I totally disagree. I have use payday loans so many times in my life when money is tight. If you don’t like the intrest rate then don’t use them but I don’t make tons of money so if my car breaks down what am I going to do? Are you going to let me borrow money for you, probably not. That is why we have payday loan companies. They are not loan sharks the are companies that can loan a small ammount of money for a short time when you need.

  3. Payday Loans

    November 7, 2008 at 1:06 pm

    I think that payday loans are a great benefit when money is tight and you need a little extra cash. It’s obviously important to only use them when necessary and not to take advantage of the service.

  4. AdamL

    November 7, 2008 at 1:20 pm

    I’m surprised anyone from Check City has time to comment here. I thought you would be too busy suing customers who can supposedly afford payday loans.

    http://findarticles.com/p/articles/mi_qn4188/is_/ai_n21228289

  5. Rob Schofield

    November 7, 2008 at 3:22 pm

    We contemplated deleting the above messages from “cash advance” and “Payday Loans” but they are both such obvious fabrications from paid industry hacks that we thought we’d leave them up since they speak for themselves.

  6. payday loan software

    November 7, 2008 at 3:25 pm

    Why are people so concerned about the APR of a payday loan? The APR is not a realistic way of looking at a Payday loan. A payday loan is until your NEXT payday. $8 per $100 per week is a great deal when you compare it to returned check fees and late fees on utility bills. Do you ever hear about people losing their house because of a payday loan? No! They lose their house from credit cards that have ridiculous credit lines.

  7. Ryan

    November 7, 2008 at 4:49 pm

    The passage of Issue 5 in Ohio is a great victory for consumers and payday loan borrowers. It is my hope that the payday lenders who remain in Ohio will work hard to conform to the new law. Ohioans saw through the lies and deceptive advertisements of the payday lending industry and voted overwhelmingly to approve the reforms. Voters strongly repudiated over a decade of predatory lending and asked for a return to fair and reasonable small loan lending! Most importantly, the payday loan debt trap has ended for hundreds of thousands of hard working Ohioans.

  8. Chris

    November 10, 2008 at 10:34 am

    In response to Adams post I think he should do a little research before he talks. He thinks the payday loan companies are out sueing those that can afford payday loans? Payday loans are for those that can’t afford anything at the moment because of some unforeseen expense. The so called APR that everyone seems to be outraged about really doesn’t even apply to this kind of loan because the loans are SHORT TERM. Not annual. Good luck with the local economy when millions suddenly have no place to borrow for short term needs let alone the thousands that will suddenly be out of jobs when the industry shuts its doors.

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    November 19, 2008 at 12:26 am

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