Consumers Denied Choice, Jobs Threatened as Ohio Senate Votes to Ban Payday Lending
May 15, 2008Legislators Play Politics, Ignore Tens of Thousands of Ohioans
WASHINGTON, D.C.-Ignoring the pleas of tens of thousands of customers and employees, Ohio Legislators chose instead to vote today to ban payday lending in Ohio, said the Community Financial Services Association of America.
Expressing outrage over today's Senate vote, D. Lynn DeVault, CFSA president, said, "There was absolutely no public clamor for this legislation. In fact, tens of thousands of payday lending employees and customers were ignored by legislators, who listened only to the editorial writers and elitist consumer groups."
HB 545, which passed the House two weeks ago, places a 28% annual percentage rate cap on payday loans, reducing the allowable fees from $15 to $1.08 per $100 borrowed for a two-week period.
"Operating under HB 545 is not economically feasible," said DeVault. "Our member companies say they expect stores to close and jobs to be lost."
DeVault said the Senate has asked lending companies to create a new business model that would allow them to continue making small-denomination, short-term loans available in Ohio. "Companies are doing their due diligence to see what options may be available under current law," said DeVault, "But we are not hopeful. If companies are forced to operate under HB 545, they cannot."
"Ohio's Legislators do not understand the impact of what they have done," says DeVault. "Our industry worked with lawmakers in good faith to forge a compromise that would protect consumers and preserve their access to credit. We now appeal to Governor Strickland to do anything he can to lessen the human impact of this over-zealous action."
Independent research has shown that without the option of payday lending, consumers bounced more checks, filed for more bankruptcies, did not pay bills and even chose such dangerous options such as forgoing prescription medications.
A recent Zogby survey found 84% of likely voters in Ohio believe citizens should be free to make their own decisions about what kind of credit they can use, and 70% said the government should not be in the business of telling adults they cannot get a payday loan.
"Unfortunately, legislators did not listen to consumers surveyed in the poll, nor to employees begging for their jobs or customers asking where they would turn without payday loans," said DeVault.
For Further Information: Steven Schlein or Lyndsey Medsker 202-296-0263
About the Community Financial Services Association of America
The Community Financial Services Association of America (CFSA) is the only national organization dedicated solely to promoting responsible regulation of the payday advance industry and consumer protections through CFSA's Best Practices. As such, we are committed to working with policymakers, consumer advocates and CFSA member companies to ensure that the payday advance is a safe and viable credit option for consumers. To learn more about CFSA and the payday advance industry, visit www.cfsa.net.
Visit CFSA's blog, the Payday Pundit, www.paydaypundit.org, for up-to-date news and research on the payday lending industry.
