Hunger Network in Ohio

Creating Awareness - Seeking Solutions

"Fair Gain"

"Email conversations about changing conditions causing hunger in Ohio and around the world"

TO	Advocates for reducing hunger
FROM	Hunger Network in Ohio
ABOUT	Payday Lending Avengers

In case you missed it this past week or so, a fresh and vicious battle has begun in Ohio. After being restricted by the General Assembly from charging exorbitant charges for short-term loans, payday lenders are taking their case directly to voters. Disgruntled quickie loan-givers are trying to stick their fingers in the eyes of the Governor, Senate President, and Speaker of the House-Republican and Democrat alike.

Their option is by a referendum on legislation passed by both houses in May and signed by the Governor on June 2nd. House Bill 545, which cracks down on payday lenders by setting a maximum interest rate of 28%, limits customers to 4 loans per year, and establishes a minimum loan term of 31 days. However, the bottom line is payday lenders want to continue charging a 391 percent annualized interest rate ($15 per $100 on a two-week loan).

Their opening media volley forecasts that the payday lending association will fill the fall airwaves with crudeness, deception, and vitriol. For now, they'll dominate grocery store and library entrances with clipboard and pens poised for your signature. To qualify for the Nov. 4 ballot, the group must submit at least 241,365 valid signatures of registered Ohio voters by September 1st.

However, some petition practices have come under fire. Circulators are routinely misleading voters by insisting that the referendum would lower interest rates on payday loans. But make no mistake! The referendum in November for which the national payday lobby is currently circulating petitions will NOT lower interest rates on payday loans. Still others are reported to have illegally paid to petition signers.

Their commercials claim that the new rate approved by the legislature and Strickland would put them out of business, costing the state 6,000 jobs. However, most of those lenders potentially impacted have already applied for new licenses.

Beyond condemning these underhanded tactics, critics--including a vast number of church leaders in Ohio--have primarily pointed out that the two-week loans prey on the poor and trap too many borrowers into repeatedly taking out new loans to pay off old ones. They cite figures that show the average borrower takes out 11 or 12 loans per year and too frequently those already on the edge economically spiral into insurmountable indebtedness and greater poverty.

SHORT CUT:
For those who insist, "JUST TELL ME WHAT TO DO!"

FIRST, PAY ATTENTION AND EXERCISE DISCRETION WHEN YOUR ARE ASSAULTED BY COMMERCIALS OR HUSTLED BY PETITIONERS. ALTHOUGH YOU'VE A CONSTITUTIONAL RIGHT TO SUPPORT THIS EFFORT TO PUT THE CONTROVERSY BEFORE THE VOTERS ON NOVEMBER 4TH, DON'T BE FOOLED BY MISINFORMATION.

SECOND, IF YOU HAVE SIGNED A PETITION BELIEVING THE REFERENDUM WILL LOWER INTEREST RATES ON THESE LOANS, YOU HAVE THE LEGAL RIGHT TO ASK THAT YOUR NAME BE REMOVED BY CALLING "REJECT HB 545" COMMITTEE CAMPAIGN MANAGER JOHN CAMPBELL AT 614-477-5042 AND ASK HIM TO SUPPLY YOU WITH PROOF OF THE REMOVAL.

THIRD, CONTACT THE OFFICE OF THE SECRETARY OF STATE AT HTTP://WWW.SOS.STATE.OH.US/SOS/ELECTIONS.ASPX
Toll Free: (877)-SOS-OHIO) IF YOU ARE OFFERED MONEY FOR YOUR SIGNATURE.

AND FINALLY, RECOGNIZE THE STAKES: WHILE BUSINESSES OF COURSE NEED TO MAKE MONEY, THEIR GAIN SHOULD NOT ABUSE SOCIETY'S MOST VULNERABLE CONSUMERS AND PROSPER BY EXPLOITING AN UNDERCLASS.

LONG SUIT:
For those who plead, "GIVE ME MORE DETAILS"

Colliding Conclusions

State leaders have geared up to fight what they expect will be a $16 million campaign by Ohio's payday lenders to retain the ability to charge high interest rates.

Gov. Ted Strickland and Republican legislative leaders are pitted against a referendum that, if successful, would allow the state's 1,500 payday-lending stores to continue charging 391 percent annual interest ($15 per $100 on a two-week loan). Strickland and other opponents hope Ohioans realize that the loans are defective products with, as the governor put it, "outrageous and unacceptable" interest rates.

Lenders argue that the new rate approved by the legislature and Strickland in late spring would put them out of business, costing the state 6,000 jobs.

State leaders disagree -- the Department of Commerce reports that 1,093 lenders have applied for new licenses allowing them to charge up to the new maximum of 28 percent plus a one-time $15 origination fee on short-term loans.

Demonstrating the bi-partisan breadth of legislative objection, this contradiction was pointed out in a recent press conference by Senate President Bill M. Harris, R-Ashland: "Those people who want to make a reasonable profit and provide a service will be able to stay in business."

Responding to criticism of the government's intervention, House Speaker Jon Husted, R-Kettering, said he is a strong believer in free markets but thinks payday loans are "undermining the fundamental underpinnings of the free market.

"With the free market comes trust and responsibility that the product you are providing is going to work. In this case, it doesn't," he said. "The business model is based on people not being able to pay it off and become trapped in a cycle of debt. It's devastating for people that are trying to get on their feet."

Harris said the law created in 1996 was designed to help people with short-term cash-flow problems but it "unintentionally created the situation we're faced with."

Countering these objections, Kim Norris, of Ohioans for Financial Freedom, that their message of job losses and free choice resonates with the public. Norris would not comment on whether Ohioans for Financial Freedom would spend $16 million on its campaign.

Down on the Farm

The new pitchman for the payday lending industry is a farmer in a John Deere cap standing next to his Chevy pickup. "If this old truck here breaks a belt before payday," he drawls, "I can borrow a hundred bucks, replace that belt, and repay 'em a hundred and fifteen on payday."

The ad got a good laugh at the Ohio Farm Bureau leadership conference in Columbus last week. A spokesman countered that "Farmers don't get weekly or monthly paychecks like people with commuter jobs. And where is he finding a fan belt for $100 for that old truck?"

But there is anger underneath the laughter -- anger whose target goes deeper than the poor grammar and good ol' boy demeanor. Some farmers are insulted that "the ad implies that farmers are poor money managers."

Although the Ohio Farm Bureau hasn't taken a stand on the payday lending bill, farmers are taking a stand against the ad.

The farmer in the new ad warns "they're riskin' six thousand good-payin' Ohio jobs by passin' laws that would shut um down" (this is the actual spelling and grammar on the voice-over posted on the lenders' Web site, www.ohioans4financialfreedom.com).

Never mind that the 6,000 jobs is an industry figure that would happen only if every single job at every single payday lending institution disappeared (not likely). A spokesman for the Ohio Farm Bureau said the ad paints another false picture: "Financing a farm business is an extremely intricate matter - not 'I ran out of $100 and I need it today.'"

Ohio farmers aren't happy that payday lenders "are trying to sell a controversial message by wrapping it in the goodwill that farm families have worked so hard to earn. We're the biggest farm organization in the state of Ohio and no one from this group talked to us. My suspicion is that an ad agency said, 'People like farmers, let's use one of them.'"

Innuendoes and Lies

Voters from around Ohio took part in a news conference this week to expose the illegal payments and the false information being used by the petition circulators.

	Residents of a Butler County homeless shelter, CHOSEN, said petition circulators showed up at the shelter and paid more than a dozen residents $1 each to sign -- a practice banned under Ohio law.
	A Toledo City Councilman said he was asked to sign a petition while attending a summer festival and told the ballot issue is intended to bring about a rate cut, not a rate increase. In conversations with other festival-goers, he encountered several who regretted signing the petition once they learned its true intent.
	In Columbus, a circulator who would not give his name masqueraded as a friend of the consumer. "These guys are legal loan sharks and we want to regulate 'em,'' he said, according to a tape recording of the conversation. When asked if lenders could still charge 391 percent APR if the referendum succeeded, he fired back: ''No ma'am. No ma'am. Five percent. Do you want to see that it writing? Five percent it'll be the max." In the second conversation, another circulator described the referendum this way: "They're trying to bring the rates down ... they're trying to get one flat rate so when you go out and get your money you won't have to pay all the interest and stuff." (Copies and transcripts of the conversations can be found at www.end391.org by clicking on Dirty Secrets).
	In Youngstown, State Rep. Robert Hagan, a co-sponsor of HB 545 taped a similar conversation on his cell phone. A petition circulator told the legislator that the referendum's goal is to provide loans with five percent interest. Hagan said he encountered two circulators, both in Youngstown who told him the referendum would lower rates.
	At the Columbus Metropolitan Library, a petition circulator told the advocacy director for the Coalition on Homelessness and Housing in Ohio that interest rates would drop if the referendum succeeds.
	And an Akron resident who had been petitioned presented an affidavit stating that a circulator told her she would not be permitted to cast a vote on the issue - one way or another - unless her name appeared on one of the petitions.

Central Issues

"What is at stake here is nothing less than the integrity of the petition-gathering process," said Tom Allio, who chairs the Ohio Coalition for Responsible Lending. "Referendum leaders have a moral and legal obligation to ensure that those who work for them are properly trained, fully transparent and truthful in all their representations to signers. In fact, they should make such a pledge today."

"It is inconsistent for the lenders to claim that they are 'pro consumer choice' yet fail to provide signers with accurate information that is necessary to make informed decisions. We want all voters to know if they sign one of these petitions, they are supporting predatory, usurious practices."

Those who signed a petition under false pretenses have the legal right to ask that their names be removed.

Again, the referendum is being financed by the national payday lobby, which hopes to continue charging 391 percent APR on two-week loans. A success at the ballot would undermine the state's new payday lending reform law, which caps interest at 28 percent annually, is scheduled to take effect September 1. And, as demonstrated with the dramatic rise in the number of these lucrative loan establishments in recent years, they further compound-along with interest--the "woes of the downtrodden" and the "miseries of the weak."

PRIMARY REFERENCES AND LINKS (*)

Payday Pundit: What H.B. 545 Means to Ohio - Fact Sheet _2008-08-08;
Ohioans for Financial Freedom; http://www.ohioans4financialfreedom.com/
OHIO COALITION FOR RESPONSIBLE LENDING; http://ohiocoalitionforresponsiblelending.org/

"State bracing for payday fight: Well-funded lenders seek referendum to keep high interest rate" By Jim Siegel; THE COLUMBUS DISPATCH; August 8, 2008; jsiegel@dispatch.com

"Payday lending: Opposing sides will fight over ballot wording" By Laura A. Bischoff
August 11, 2008; DAYTON DAILY NEWS; lbischoff@DaytonDailyNews.com.

"Campaign to preserve Ohio's payday reforms" by Sandy Theis; August 12, 2008; sandy.theis@gmail.com

Commentary: "Latest payday lending TV commercial has Ohio farmers riled up" by Mary McCarty, August 12, 2008; DAYTON DAILY NEWS; mmccarty@DaytonDailyNews.com

Action Alert Update on Signature Removal by Cathy Johnston; August 12; OHIO COALITION OF HOMELESSNESS AND HOUSING; Cathy@cohhio.org

"Ohio Payday Lenders Caught Lying in Ballot Initiative Signature Drive" by Christopher Peterson; August 13, 2008; PUBLIC CITIZEN: Consumer Law and Policy; Blog; http://pubcit.typepad.com/
"Ballot taking shape on Ohio's new payday-lending law"
By JIM PROVANCE August 15, 2008; TOLEDO BLADE COLUMBUS BUREAU; jprovance@theblade.com

"'Yes' vote will mean 'no' to payday-lending excess: Board spends hours on ballot language" by Jim Siegel; August 15, 2008; THE COLUMBUS DISPATCH; jsiegel@dispatch.com

(Evidence of Proponents Spreading Misinformation): OHIO PUBLIC RADIO reporter Bill Cohen http://www.wcpn.org/index.php/WCPN/news/13623/

CENTER FOR RESPONSIBLE LENDING; http://www.responsiblelending.org/issues/payday/

Guidelines for Payday Lending; FEDERAL DEPOSIT INSURANCE CORPORATION; http://www.fdic.gov/regulations/safety/payday/

Payday Loan Consumer Information; http://www.paydayloaninfo.org/

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Phone: 614-424-6203
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