November 04, 2008
An effort to repeal caps on so-called “payday loan” interest rates in Ohio appeared headed to a resounding defeat statewide.
In early returns, the payday loan issue, Issue 5, showed 69 percent of voters in favor of keeping limits on how much the industry can charge and only 31 percent against it, a rare “yes” vote for a statewide initiative.
The Associated Press predicted the measure would pass.
“Ohio voters stripped payday lenders of their permit to fleece working people,” said Bill Faith, executive director of the Coalition on Homelessness and Housing in Ohio and treasurer of the Vote YES on Issue 5 committee, in a statement.
“Issue 5 united people of all faiths, philosophies and professions. The hard work of so many helped us overcome the lenders’ 61-to-1 fundraising advantage and one of the most deceptive ad campaigns in modern times.
“Consumers across Ohio should celebrate.”
The state’s payday industry, including the Kenwood-based parent of industry leading Check ‘n Go, had waged an extensive campaign against the ballot initiative, trying to upend the new law that was passed in May. They had argued that the newly passed law would endanger financial privacy records of individuals.
A spokesman with Check ‘n Go’s parent declined comment, saying the company wanted to wait for the full results to come in before making a statement. A spokeswoman for the “no” campaign did not return messages seeking comment at press time.
While payday lending long has been controversial, more than 1,600 stores had opened up in Ohio since being legalized in 1995.
But the state legislature stepped in earlier this year and capped rates at 28 percent annually, or about $1.08 per $100 borrowed for a two-week loan typical of the practice.
That upset payday industry officials, who then threatened to pull out of Ohio, arguing the fee limits will force store closures and as many as 6,000 layoffs statewide.
The industry also argued that the measure would have left consumers with fewer financial tools to navigate the state’s troubled economy.
Consumer advocates say the payday lending industry is predatory – designed to create repeat business and charge fees of 391 percent when annualized.
Source: News.cincinnati.com