The Raw Story: Ohio battles over payday loan interest rate cap

by Nick Langewis

Ohio, having dealt a blow to its payday loan industry by enacting a usury law, is teeming with charges of deceit in a petition drive to reverse the law.

HB 545 was signed in June by Governor Ted Strickland, and will go into effect in early September. Under the law, the APR for a payday loan will be capped at 28%, and an Ohioan would be limited to four loans per year.

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Interesting, it seems that petition gatherers are using some of the same tactics that PCE used last year during last year's voucher battle.

"Petitions to reverse HB 545 are currently circulating. An Ohio Public Radio program airing August 12 exposed signature collectors who were incorrectly representing the petition as one that would lower the interest rate cap further. Residents of a Butler County homeless shelter also alleged that they were offered money for their signatures.

Payday loans are a debt trap, charges advocacy organization END 391, which notes that 90% of revenues from payday loans are from repeat borrowers, and about 50% of repeat loans are initiated on the same day a previous loan is paid off. Americans spend $4.2 billion in payday lending fees per year."

Birds of a feather flock together!

Pay day Lending and Liquor Stores

By Jean Welch Hill
Democratic Candidate for Utah Attorney General

As I was driving home yesterday, I heard an interesting radio ad from a pay day lender. After touting the virtues of overpriced loans, the ad ended with the comment "always use pay day advances responsibly."

This struck me as very simlar to the comments made at the end of beer and other liquor commercials that end "please drink responsibly."

And that's when the idea hit that perhaps the solution to pay day lending is to treat this business the same as we treat the sale of alcohol. Pay day lenders already have mark-ups on their products almost as high as the alcohol tax (though without the public benefit the alcohol tax provides since the tax pays for school lunch programs across the state), all we need to do now is limit all pay day lendors to 1 per 100,000 people, locate them in the most out of the way spots, perhaps right next to our liquor stores, or, if they are more centrally located, charge a membership fee to enter!

Okay, perhaps its not a perfect solution, but if the lenders recognize the dangers of "overindulging" in pay day loans, shouldn't they also be willing to accept some common sense protections for those who have a tendency to do so, just like our local bars, taverns, and clubs?

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