A Victory Over Predatory Payday Lending
The people of Ohio won a big victory over the predatory payday lending industry this June when a new state law banned the sky-high interest rates that had trapped many poor Ohioans, as Tom Allio describes in the August issue of Sojourners. Below, Allio, who is chair of the coalition of faith-based consumer, labor, and human services groups that won the June law, describes the ongoing fight against the industry's attempts to reverse the law.
The payday lending industry is intent on rolling back the consumer-protection legislation promoted by the Ohio Coalition for Responsible Lending (OCRL), which was signed into law on June 2 by Gov. Ted Strickland. The industry is seeking two ballot initiatives for the November election. One would completely overturn H.B. 545. The second initiative would eliminate the central section of the bill, which prevents payday lenders from charging exorbitant interest rates -- rates that amount to an astounding 391 percent APR for the typical two-week loan.
And, as OCRL spokesman Bill Faith put it, "The industry is now using high-priced lawyers and misleading language to mask its efforts to legalize 391 percent interest." The misleading language is in the "summaries" of the referendums -- the words that payday lenders asked to use when gathering petition signatures to get their referendums onto November's ballot. The industry's wording, which was neither clear nor concise, omitted information about key consumer protections -- and did not even mention that both the referendums would repeal the 28 percent interest-rate cap that is the centerpiece of this June's anti-payday-lending law!
Under state law, summary language must be judged acceptable by Ohio Attorney General Nancy Rogers before the industry is allowed to begin circulating petitions. In June, Rogers rejected the proposed language of the first referendum because of its inaccuracy. Later, she rejected the industry's revised try at a "summary" because it was 17 pages long (only two pages shorter than the referendum itself).
The summary language for the second referendum petition has been approved, and the trade group for the industry has provided $850,000 for the Reject H.B. 545 Committee to assist in the hiring of the petition circulators and for other contracted services.
One thing remains clear in this ongoing "David and Goliath" battle in Ohio: The payday lending industry will do anything in its power to maintain its privileged, and predatory, position in the marketplace. Rumors are rampant that they are prepared to spend upwards of $15 million in this fight for their survival.
Tom Allio is chair of the Ohio Coalition for Responsible Lending and a board member of Sojourners.