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Home > Blogs > Ohio politics > Archives > 2009 > June > 02 > Entry
Lawmakers look to close payday lending loopholes
State lawmakers are looking to pass a new law that would close off loopholes that the payday lending industry is using to continue charging high-interest, high fee loans in Ohio.
A year ago, Gov. Ted Strickland signed into law a measure designed to cap short-term loans at 28 percent annual percentage rates, down from as high as 391 percent. And last fall Ohioans voted by nearly a 2 to 1 margin to uphold that law.
But it didn’t quite do the trick.
Payday lenders are now offering short-term loans under other sections of Ohio’s laws and charging extra fees.
The loan industry calls it perfectly legal. State Rep. Matt Lundy, D-Elyria, calls it thumbing their noses at the law.
Lundy is introducing a bill Wednesday, June 3, that would require all loans of 90 days or less and $1,000 or less to be interest only - no fees. It would also extend protections in Ohio’s Consumer Sales Practice Act to payday borrowers.
Currently, Ohio has 959 payday lending stores, down from 1,571 in April 2008, according to state data.
In March, the Housing Research and Advocacy Center in Cleveland issued a study that said payday lenders got licensed through the Small Loan Act and the Mortgage Loan Act, which allow them to make 14-day loans with an APR of 423 percent to 680 percent, respectively. Some stores started issuing loans through a money order or check and then charged a fee to cash the order or check, the study said.
Bill Faith, executive director of the Coalition on Housing and Homelessness in Ohio, ran the successful campaign to pass Issue 5 only to find that payday lenders found a way to pile on fees. “It is just a way to get back to charging the rates they were charging before. It’s a way for them to circumvent the law,” Faith said.
Jamie Fulmer, spokesman for Advance America, the largest payday lender, said Lundy’s bill “is designed to, quite frankly, eliminate branch-based lending in Ohio. We certainly don’t support that. It would put the 3,000 workers out of work and limit the choices that consumers have.”
Payday lenders offer loans with a 28 percent APR but it’s up to the consumers to decide which financial product they need, Fulmer said.
“We are trying to meet the needs of consumers in Ohio by providing products they find value in,” Fulmer said.
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Comments
By Kara
October 15, 2009 9:42 AM | Link to this
For more information on payday lending, check out this report published by Policy Matters Ohio, New Law, Same Old Loans: Payday Lenders Sidestep Ohio Law. This report confirms initial findings that payday lenders in Ohio are deliberately circumventing the new Ohio Short-Term Loan Act, which among other protections instituted a maximum 28 percent annual interest rate on loans. Payday lenders are not in compliance with the Short-Term Loan act, which guaranteed borrowers at least 30 days to pay back loans and established other consumer protections to keep borrowers out of the debt trap.
By jkursman
June 23, 2009 10:50 PM | Link to this
Today, lenders operating under the Small Loan Act in Ohio are allowed to charge a $30.00 fee, plus approx $5.40 (28% APR) on a 2-week, $500 loan. By contrast, several banks and credit unions in Ohio have begun offering a short-term product at $10 per $100. This is $14.60 MORE than we are allowed to charge for a $500 loan. Check Cashing is an optional service offered not only by short-term lenders, but banks, credit unions, grocery stores, gas stations and thousands of businesses in the state. Cincinnati-based Check ‘n Go offers this service at 4%, reasonable by comparative standards and only 1/3 of our customers choose to use the service. Are those who would limit only the fees of Ohio’s short-term lenders and not its banks and credit unions acting in the best interest consumers? The facts suggest otherwise!
By MMc45414
June 6, 2009 1:39 PM | Link to this
To no wonder: Thinkaboutit is correct, you missed the point, and you are presumptive regarding my personal finances. What I see is a bunch of people who have never needed the service advocating legislating for the “protection” of those that have and do. They will only make themselves feel better, and not save anybody from themselves. They will only transfer the revenue to the banks in the form of late fees or utility companies in the form of disconnect/reconnect fees. How is it right for a late fee imposed by a bank or utility to exceed the interest rates being legislated against, but illegal to pay for a lesser amount for a payday loan that avoids the fee? If a person can pay $45 to avoid getting their car repossessed and losing their equity AND their transportation, they are not going to do it unless they have no alternatives. Perhaps this should be put to a referendum vote, and you need to bring in a receipt proving you have used the service to vote?
By Need Cash Sometimes
June 5, 2009 4:53 PM | Link to this
Payday loans are accessed by 19 million Americans each year because they offer significant cost savings versus: · The avg. $27-plus-interest fee on a bank overdraft (APR 704%) · The avg. $29 fee on a late credit card payment (APR 757%) · $51 in NSF and merchant fees on a $100 payment (APR 1329%) · A $50 late/reconnect fee on a $100 utility bill (APR 1303%) In addition to being more expensive, these options negatively impact credit ratings and may hurt a consumer’s access to employment, housing, insurance and other credit options. APR is a measurement tool designed to compare ANNUAL products and does not accurately depict the fees a consumer pays for a $100 two-week payday loan. Payday loans are more appropriately compared to the real-world alternatives listed above. So, payday loan borrowers are often making reasonable choices to proactively manage their finances in the face of more-onerous circumstances. They certainly don’t need ivory-tower politicians, over-zealous editors or so-called “consumer advocates” limiting their financial choices. Let’s give consumers access to well-regulated credit options and let them choose which ones are best for them and their families.
By jkj
June 3, 2009 11:45 AM | Link to this
The lawmakers need to look at the banks. My bank is doing this also, offering “payday” loans at higher % rates than the payday lending companies…yet no one is saying anything about them. Why not??
By geez
June 3, 2009 11:39 AM | Link to this
Nooooo!!!! My mom died a few months ago and I had a lot of bills to pay so I couldn’t save up properly for my property taxes due on July 15th. I planned to take a loan in July and have no problem paying it off in August. Why is the government punishing me?
By Mike
June 3, 2009 11:27 AM | Link to this
Here we go again…I need the state to protect me because I’m too stupid to know what is and isn’t a good deal. But, then again how many state attorneys missed the loop hole before the law went on the ballot and how much are we going to spend again….Idiots! Leave it alone! How about banning those on welfare from playing Ohio’s lottery…Protect them Ohio..Protect them..
By It's about time
June 3, 2009 11:00 AM | Link to this
a little short sometimes-If the shoe fits.
By Englewood Resident
June 3, 2009 10:50 AM | Link to this
McRib-do you know how to use your spell check? Looks like you’re the one who needs to change their name to “No Brains”.
By a little short sometimes
June 3, 2009 10:49 AM | Link to this
“it’s about time” - are you calling me undesirable, you little puke, because I sometimes borrow a hundred or two from these businesses? I’m already in your neighborhood, stupid. I’m your neighbor. Your nephew. (doubt you’ve procreated or I’d say son). I’m Joe six-pack. It’s NO PROBLEM to pay their fees. Sometimes things happen which require their services so please shut up.
By been there done that
June 3, 2009 10:23 AM | Link to this
These lawmakers need to focus on bringing or keeping living wage jobs to this area. $8.00-$10.00 per hr is not enough to pay for food, shelter and utilities and have $ left to save for an emergency. Why don’t they use the stimulus money to create the US Payday, where the government loans you the $ you need until next payday. If you didn’t pay back in 2 weeks it would be the same criminal offense as robbing a bank. These lawmakers could work there, find out why their constituents have a need for this kind of place, and finally they’d be earning their paychecks.
By McRib
June 3, 2009 10:10 AM | Link to this
Nowonder should change their screen name to no brains! It’s a person’s RIGHT to make their own decisions. Those companies employed 8,00 people in Ohio and now employee less than 4,000. If these laws are passed - it’s oon to be zero in Ohio.
By It's about time
June 3, 2009 10:09 AM | Link to this
The only thing these places are good for is bringing the undesirable into my community. I for one, can’t wait for all of them to be shut down for good!
By no wonder
June 3, 2009 10:06 AM | Link to this
If the bank will laugh in your face because you are requesting a loan that is because you obviously have not lived within your means.
By L Berry
June 3, 2009 10:02 AM | Link to this
All of the peoploe making comments who “need” to give their money away to the so-called legal loan sharks should explore other whys. If they are on line they must have computer. Go to pawn shop and get cheaper loan on computer. Then pay off loan and get it back.
By no wonder
June 3, 2009 10:00 AM | Link to this
The reason these institutions exist is because people do not take responsibilty for their actions. If the bank will laugh in your face because you a
By theshawn
June 3, 2009 9:25 AM | Link to this
While the payday and short term loan places need to be reigned in a bit, big brother is getting out of hand. The politicians need to focus on managing OUR money as well as they like to tell others how to manage theirs.
By Bill
June 3, 2009 9:19 AM | Link to this
Boy! either the mental midgets are out in force or the rip off loan industry has a “comment” boiler room this morning. It should not take more than a third grade education to understand why lawmakers are finally doing what they were elected to do…protect the consumer. You’re already hurting for money so you can’t wait to give it to loan sharks…give me a break!
By Random
June 3, 2009 9:01 AM | Link to this
Dear Gov. Strickland, Mr. Lundy and Mr. Faith, I’m sure you are well intentioned but you aren’t helping the people that need help. People that use payday lenders do not have the resources to go to more traditional banking institutions. It’s fine and well to say, “if you managed your finances properly, you would not have to use places like these if you managed your finances properly, you would not have to use places like these” but the fact remains many people have not managed well and need this kind of temporary fix. If you want to help, develop programs that teach personal financial management to those in need. It’s easier to treat the symptoms but more effective to treat the the illness.
By aharddaysnight
June 3, 2009 9:01 AM | Link to this
So what I want to know is, where were all these people on voting day? I have several friends who have been put out of work because this law was passed. And I’ll have more friends put out of work if it’s changed again. it’s called personal responsibility people. If I wanted a loan right now the bank would laugh in my face. Payday lending is obviously needed or they would have never been in business in the first place.
By Shelly
June 3, 2009 8:49 AM | Link to this
The government has no right to tell people if they can use this service or not. The ones on here who think people need to learn how to save and not spend, there are situations that make this impoosible (economy, job lose, medical, car repairs, etc)
By sandy
June 3, 2009 8:38 AM | Link to this
dayton is really going to hell.after ncr moves whats left. and the ones who is bitching about us who needs to watch are money. better watch out cause they maybe the next ones who will have to watch.
By Thinkaboutit
June 3, 2009 8:30 AM | Link to this
Nowonder: Your missing the point, its my money and I can do what I want….I work hard for it, situations are sometimes out of ones control, your obviously not someone who has not fallen on difficult times for unforseen reasons. Why don’t you stop being so blind!!!!! Things happen that you cannot always plan for and with the way the economy is and jobs being lost its a nice thing to have just in case you need it…..but my main point is mind your own business!!!!
By no wonder
June 3, 2009 8:15 AM | Link to this
To MMc45414-If you think Joe’s comment was one of “the most intelligent and succinct observation I have ever read” it is no wonder why the two of you are so dependent on these services. The point is, if you mananged your finances properly, you would not have to use places like these and get yourselves further into trouble. It does not take a genius to know that these places are bad news. Instead of wasting your money on all of these fees, you could be putting your money towards a financial self help course.
By ELW
June 3, 2009 7:26 AM | Link to this
Will the “lawmakers” quit trying to save me? No one forces me to take out these loans. They have “enabled” me to get my car fixed and keep utilities on. Shtuff happens at the most inopertune times and usually after you’ve “blown” your paycheck on rent and groceries. I’m just happy I have a job at all right now. Direct your energy to stopping the murder and drug dealing. No wonder people are leaving Dayton. Atlanta looks pretty tempting me as well.
By Mike
June 3, 2009 7:24 AM | Link to this
Obviously the payday lending system can be used irresponsibly. Thank goodness the state is here to save us from ourselves! Let’s hope they save us from other dangers, as well. Maybe mortgages? Car loans? Business loans? Stop the madness!
By MMc45414
June 3, 2009 7:23 AM | Link to this
I think Joe has posted the most intelligent and succinct observation I have ever read on one of these DDN comment sections…
By who do you work for?
June 3, 2009 7:07 AM | Link to this
From reading the other blog’s, you can tell who works for these “payday companies”. The real idiots are will pay a 300% interest rate. My credit union offers short-term loans, at a reasonable interest rate. They do require you take classes in managing you money, and most importantly they limit the number of loans you can take out. Ohio needs to get rid of these loan sharks.
By truthdetector
June 3, 2009 6:27 AM | Link to this
It will be a good day for organized crime and sleezy banks when all the payday loan offices close. Thanks a lot for making many lives more difficult. If the reward doesn’t cover the risk of these loans, they will no longer be available at any price. You’ll just be out of luck.
By Brian
June 3, 2009 5:46 AM | Link to this
The overdraft and insufficient fund fees that banks charge frequently exceed the APRs that payday lenders charge, when those fees are annualized. These laws should really apply to the banks, who regularly gouge consumers, instead of narrowly focusing on the payday lenders. The banks are the worst offenders.
By I agree
June 3, 2009 5:04 AM | Link to this
I agree with all of the comments aleady mentioned. I also have used these places to get me by until payday. Also, since I have bad credit I will not be able to get a loan for any amount at a bank.
By Thinkaboutit
June 3, 2009 12:59 AM | Link to this
I wonder who is really pushing this legislation???The jealous banks who are not getting small signature loans anymore, whats the diffrence if I put 300.00 on a credit card look at all the interest that i would pay to just get it paid off…Its alot more than the forty-five dollars on the two week loan. People wake up the numbers look bad because there inflated because its a two week loan. If you were to get a 500.00 loan from the bank you would pay alot more once you add up your payments. The first blogs are correct, its my money if I need an advace and want to pay 15,dollars for every 100.00 then its my business. I don’t see law makers shutting down the state lottery do you!!!!How many people lose weekly on that addiction….You law makers are a bunch of out of touch idiots, do you even talk to your constintuents anymore, time for you to go,,,,vote 2009!!!!!!….Mind your own and quit pushing the larger agendas, your suppose to be representing the people not the banks that are losing business to the pay day lenders……
By joe
June 2, 2009 9:22 PM | Link to this
I too use these services sometimes and it has been a great help. If it wasnt for those places My truck wouldnt have gotten fixed and id be drawing welfare as id of lost my job. Problem is its the people who have all the money they need trying to tell us what to do. If i want to spend 20 or 30 dollars on a 200 loan its my money I worked for it.
By a little short sometimes
June 2, 2009 4:25 PM | Link to this
You know, screw the lawmakers!!! I sometime use this service when I find I’m a little short and will not make it to payday. I usually ONLY borrow $100.00, sometimes 200. IT HELPS ME. I don’t mind a fee of 15 or 30$$. Again, IT HELPS ME!! I don’t want the gubment telling me what to do with MY money. Please go far, far way, Mr. “Faith” you idiot!!!