Published:

Judge Says No Time to Clarify Payday Lending Ballot Summary

PHOENIX, Aug. 27 /PRNewswire-USNewswire/ -- Superior Court Judge Sam Myers ruled today that Secretary of State Janice Brewer does not have to clarify the language summarizing a payday lending-industry backed measure that will appear on the ballot this November. The ruling means that the essential effect of the measure, which would provide payday lenders a permanent exemption from the state's consumer loan cap of 36 percent and allow them to charge 400 percent interest permanently, will go unexplained as voters mark their ballots on election day.

Judge Myers said that the description of the ballot measure drafted by Secretary Brewer was technically accurate, and that with only 50 words to explain complex issues, choices have to be made.

However, the fact that voters will be choosing between 400 percent interest and 36 percent interest should have been made clear in the official language, said Senator Debbie McCune Davis, chair of Arizonans for Responsible Lending, No on 200. (Interest rate chart follows release.)

"We are disappointed the Secretary of State will not be required to give voters the crucial piece of information they will need to make an informed choice," said Davis.

The committee pushing the ballot measure is fully funded by the payday lending industry, which has spent $8.75 million to push their initiative, according to a report filed with the Secretary of State's office on August 21. The official title on the ballot, the Payday Loan Reform Act, also threatens to mislead voters.

"The payday lending ballot measure is no reform at all. It threatens our pocketbooks, the health of our economy, and the integrity of our ballot initiative process," said Senator McCune Davis.

Federal regulators clarified that the Truth in Lending Act covers payday lenders soon after the 2000 law granting them an exemption fromArizona's 36 percent interest rate cap was passed. Since then, payday lenders have been required to disclose that their interest rates are 391 percent on a typical 2- week loan.

"The Truth in Lending Act, the law of the land for forty years, requires that the cost of credit be stated as both a dollar finance charge and as an annual percentage rate," said Jean Ann Fox, the director of financial services for the Consumer Federation of America, a resident ofPrescott, Arizona and a steering committee member of Arizonans for Responsible Lending, No on 200.

"The purpose of the Truth in Lending Act is to enable consumers to make informed choices about credit based on an apples-to-apples comparison, regardless of the mix of fees and interest used by lenders to hide the true cost of loans," said Fox. "Lenders from pawn shops to mortgage brokers are required to clearly disclose the APR to inform consumers."

"It's now up toArizona citizens to inform themselves about what this ballot measure really means," said Ken Clark, campaign manager for Arizonans for Responsible Lending, No on 200. "I think they will, given the independence and critical thinking that is characteristic of our state. It's just a shame that the Secretary of State didn't put the interest rate right there on the ballot, as our coalition requested weeks ago."

Dozens ofArizona groups have joined the Vote No on 200 coalition, and will urge their members to reject the false reform and let the 2000 law sunset as scheduled in 2010.

"Payday lenders will be legally allowed to operate inArizona after the interest rate exemption expires in 2010 as long as they keep their interest rates under 36 percent, as other lenders already must do, or they can close up shop if they can't survive on that - the choice is theirs," said Senator McCune Davis. "The point is, 400 percent interest rates must end, and voters should reject Prop 200."



            THE APR FOR PAYDAY LOANS SHOULD PROP 200 BE APPROVED,
                       BASED ON FEE CAP OF $15 PER $100
           (APR varies according to loan term, 14 days is typical)


                Loan Term (in days)      APR

                                5       1095%
                                6        913%
                                7        782%
                                8        684%
                                9        608%
                                10        548%
                                11        498%
                                12        456%
                                13        421%
                                14        391%
                                15        365%
                                16        342%
                                17        322%
                                18        304%
                                19        288%
                                20        274%
                                21        261%
                                22        249%
                                23        238%
                                24        228%
                                25        219%
                                26        211%
                                27        203%
                                28        196%
                                29        189%
                                30        183%
                                31        177%
                                32        171%
                                33        166%
                                34        161%
                                35        156%


  Paid for by Arizonans for Responsible Lending, No on 200.  Senator Debbie
                             McCune Davis, Chair
  Major Funding by United Food and Commercial Workers Local 99, Phoenix AZ,
  Center for Responsible Lending, Durham NC, Service Employees International
   Union, Washington DC, and Strategic Issues Management Group, Tucson AZ;
                     Additional Support from Arizona AARP
                    www.200isNoReform.com * (602) 561-5881

SOURCE Arizonans for Responsible Lending

Tags: ,FIN,POL,STP,LAW,AZ-ballot-summary

_ _

Is your favorite bookmark site missing? Ask for it.