Ohio battles over payday loan interest rate cap Nick Langewis

Published: Sunday August 17, 2008





Print This Email This 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. Opponents of the legislation argued that outlawing such small, short-term loans, with an APR of up to 391%, will eliminate 6,000 jobs in Ohio and force as many as 1,500 statewide store locations to close. Lynn DeVault, president of the Community Financial Services Association, issued a statement saying that lawmakers "[turned] their backs on their constituents and [played] politics." "It is a sad day," she wrote, "when the opinions of editorial writers and so-called consumer groups count for more than the opinions of the people responsible for putting lawmakers in office." 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. 240,365 signatures must be collected and submitted to the Ohio Secretary of State in order to place the repeal, dubbed Issue 5, on November's ballot. Ohioans who believe they were misled into signing the petition can call 614-477-5042 to have their signature removed.