By Matthew Mayer
This article isn’t about the pros and cons of payday loans. For that discussion, just read this or this or this. The facts about payday loans are clear.  They work. They’re needed. They need some reform, but not run out of the state.
So this article is directed at the self-serving, self-dealing politicians that comprise most of the Ohio Legislature.
Because they have voted for a de facto ban of payday loans in Ohio. They did this despite:
1) Receiving 30,000 letters from payday loan borrowers telling them not to vote for this bill;
2) 2,500 payday loan employees chanting outside the Capitol telling them not to vote for this bill;
3) Multiple hours of testimony from the nation’s top economists, top policy analysts, payday lenders, borrowers, and mom-and-pop entrepreneurs telling them not to vote for this bill;
4) The fact that the bill will cost 6000 Ohioans their jobs during a recession;
5) The fact that the bill will cost Ohio millions in unemployment compensation as well as tax revenue
6) That the bill will cost associated vendors countless millions.
What these politicians did was simply to ignore what everyone had to say. They ignored what their constituents said. They ignored what some really, really smart people said.
They told 6000 Ohioans, in an open forum, “We do not care that you are going to lose your jobâ€.
They told thousands of Ohioans, “We do not care if your grandmother needs emergency medicine, that your car needs repairs so can get to your job, or that you just need to make ends meet this week and are a little short.â€
They told dozens of small businessmen who put everything they had into their stores, “We do not care if you go bankruptâ€.
They told everyone even remotely involved in the payday loan industry in Ohio, “We do not care that we are taking away your choicesâ€.
What they told all these people, and even those Ohioans who had never heard of a payday loan, “We only care about being re-elected or holding another elected officeâ€.
“We only care about ourselvesâ€.
In other words, the politicians who were voted in to allegedly represent the people of Ohio and act in their best interest have totally and utterly betrayed their voters.  They put in earplugs as their fellow human beings desperately begged for their jobs, or to hold onto the one outlet that gave them a loan on nothing more than a promise to repay.
How cynical. How shameful. How sad.
For the legislative process. For Ohio.  For America.
So here’s the deal: If you want to keep payday loans in the state, call or Email the Speaker of the House, Senate President, and the Governor (contact info below), and respectfully tell them you want real reform. You want the reasoned, middle road. You want payday lenders to earn their $15 per hundred borrowed, you want a two-week loan period with one 60-day payment plan per calendar year, and you want a database so people can only have one loan out at a time.
No threats to these gentlemen. Give them a chance to do the right thing. They know in their hearts it’s the right thing, but once something becomes political, facts don’t matter anymore.
If they do the right thing, Ohioans will rejoice. Literally. The politicians will realize they have served the will of the people and that can never be taken away from them. They can stand up before anybody and say, “I did the right thing. I made a mistake, but I realized it was wrong and fixed it. That should be enough for you to re-elect me.â€
That’s a stand I’d be proud of my representative for taking.
But if they don’t do the right thing…
If they let this go through….
There’s going to be Hell to pay. Literally. The politicians will realize that by betraying the people’s trust that they have reaped the whirlwind.
How so?
The people of Ohio will strike back. Hard. The politicians who rammed this legislation through will be made to recognize that if you betray the people’s trust, it comes with a hefty price.
They’ll be hit where it hurts. They took something from us. They took our trust and threw it in the crapper. They took our votes, said, “Thank you!â€, and proceeded to defile them by acting against our best interest even though we were screaming in their face that we didn’t want them to do anything of the kind.
So if they don’t do what’s right, we will take something from them and show them how it feels.
We will engage in civil disobedience. It’ll be targeted at those members of Ohio Assembly who voted for HB 545, as well as those in the Senate, who are up for elected office. In this day and age, it’s easy to make life miserable for those who are in office and those seeking to stay in office. And we will.
It’s not a pleasant course of action, but let’s remember….
They started it.
Because if they screwed over the folks on this one, what are they going to do for an encore?
Senate President Bill Harris
Statehouse
Room #201, Second Floor
Columbus, Ohio 43215
Telephone: 614/466-8086
Email: SD19@mailr.sen.state.oh.us
Speaker Jon Husted
77 S. High St
14th Floor
Columbus, OH 43215-6111
Telephone: (614) 644-6008
Fax : (614) 719-3591
Email Address: district37@ohr.state.oh.us
Gov. Ted Strickland
Governor’s Office
Riffe Center, 30th Floor
77 South High Street
Columbus, OH 43215-6108
Phone/Fax
Fax: (614) 466-9354
The phone number to call is 614-466-2000.Tell the operator you want to weigh in on House Bill 545 and you will be given instructions
62 users commented in " You Can Still Save Payday Loans in Ohio "
Follow-up comment rss or Leave a TrackbackHi Matthew,
I do have inquires in with the folks you mention, looking for an interview. But I suspect they think of me as being a somewhat hostile reporter, so I am not holding my breath for them to pick up the phone.
Simon Barrett
What about the 2,500 (not paid) church members who gathered at Vets Memorial in Columbus Monday May 5th night to speak against payday lending? None of them where bussed in form out of town.
What about the hours of testimony speaking about the dangers of payday lending?
What about the facts showing that the vast majority of former North Carolina payday users saying they were better off without payday lending? What about the facts showing that there is no lack of short-term credit even with payday lending gone?
What about the unity of the faith community against payday lenders? I would hardly call that community “elitist.” Catholics, Methodists, Lutherans, Episcopals, Evangelicals, Black Apostolics, Jews, Muslims, Unitarians. All united on this issue.
Finally, what about the testimony of many, many former payday lending “customers” telling of their experience? Taking out one loan for an emergency, and, given the extremely short term of the loan, having to re-borrow to pay it off. Even the industry admits that the average borrower takes about 11 loans a year. How is that simply for “emergencies?” If someone doesn’t have $300 today, how will they have $345 in two weeks? This product is designed to take advantage of people and create long-term borrowing. Thank God it will be gone.
Thank you, Representative Widener.
Thank you, Representatives Koziura, Batchelder, Budish, Stewart, D., Boyd, DeBose, Driehaus, Dyer, Foley, Garrison, Gerberry, Hagan, R., Letson, Luckie, Lundy, Newcomb, Peterson, Skindell, Stebelton, Sykes, Wagner, Widowfield, and Yates.
Thank you, Senators Jacobson, Cafaro, Roberts, Miller, D., Fedor, Miller, R.
The people of Ohio spoke and you responded.
My kneejerk reaction was to respond directly to Mathew Mayer’s childish and rather threatening article. However, I will choose to take the high road and thank the government of Ohio for a job well done. The day that this bill is presented to Governor Strickland and signed into law should be declared an official Ohio holiday. We will finally be rid of these scum sucking leaches. And not one bounced check fee, garnished paycheck, or bankruptcy too soon.
In response to Jeff’s comments, those who oppose the industry need to take a much closer look at payday loan borrowers’ true alternatives to get an idea of what a ban on payday loans will mean to them. I understand that opponents believe they are acting in the best interest of the borrower, but a careful review of these alternatives refutes their approach.
For an individual who is facing the prospect of bouncing a check or missing an important bill payment, their option is to pay the fee associated with that or borrow enough money to cover the check or pay the bill. If you want to ban payday loans then you need to understand the dynamics of this choice that payday borrowers face and be able to justify taking the payday loan option away.
The cost of bouncing a check has been well documented by Marc Anthony Fusaro, a professor of economics at East Carolina University. In a recent blog entry MotherJones commented on Fusaro’s findings: “the overdraft loans given by banks these days make payday lenders look like a bargain.”
To summarize, Fusaro found that “the median implicit interest paid by consumers is over 4,000%.” So if a payday loan customer finds him/herself at risk of bouncing a check, even if they are in this situation 11 times in a year, they can pay the bank 4,000% (the equivalent of paying $153.42 for a $100 loan for 14 days) or pay a payday lender $15 per $100.
There is also data out of the UK to suggest that borrowers in that country who have access to payday loans pay £26 for a £100 loan while those who do not have access to these loans pay £200 per £100 borrowed.
Those who lobby against payday loans need to get past the sticker shock of high APR’s and understand the dollar cost of the product compared to the dollar cost of the alternatives that payday loan borrowers face.
I would also like to make a brief comment on the North Carolina study sited by Jeff: of the 400 residents who participated, only 23 were former payday loan users. In a survey where 94% of the participants have never used a payday loan, it should come as no revelation that this group would not be affected by a ban on the product. It also goes without saying that 23 respondents cannot be considered a representative sample for evaluating the attitudes of former payday loan users in a State with a population of almost 9 million.
To Jeff:
Okay, so you got 2500 folks to speak out against payday lenders, so the rally turnout is a wash.
The hours of testimony about those hurt by payday lenders was smaller than the testimony in favor of it. But you forget one thing: the people who spoke out against payday lending have 1) A financial interest in seeing it banned.
Visit this link for more information on that:
http://www.consumersrightsleague.org/UploadedFiles/PredatoryCharity.pdf
Those who spoke of the dangers are also people who used the product irresponsibly. That is mostly their fault. The lenders must shoulder some blame because they are able to track how many loans a person has out at one time. But real reform, such as the inclusion of a database, would solve that problem. Banning it, as one supporter declared, is the same as treating dandruff by decapitation.
The study about NC citizens being “better off” is a biased study funded by the CRL, the same group mentioned above as having a financial interest in seeing payday loans fail. In point of fact, a NON-biased study by the NY Federal Reserve showed exactly the opposite. Here’s the link:
http://www.newyorkfed.org/research/staff_reports/sr309.pdf
The ‘Unity of Faith Based Leaders” who oppose payday loans have no more moral credibility than those who support payday loans. So that is a fallacious argument. They also have no economic credibility whatsoever, certainly less than Dr. Thomas Lehmann, whose economic analysis can be found in the first link in my article.
For every person harmed by payday loans, I can march out 13 people who have been helped. The data is plain. 93% of borrowers pay back on time. A visit to Advance America’s Annual Report shows this statistic. A visit to ANY mom-and-pop store and a discussion with their owners will also yield the same result.
Who are YOU to say how many emergencies a person has in any one year? Who are YOU to say that 11 loans are too many or too little?
But you, Jeff, are like all other opponents to payday loans. You have never needed one, so you cannot speak to its usefulness. You have never stepped foot inside a store, so you cannot judge any lender’s moral character. You have never needed emergency cash.
So now the rebuttal is in your court. Unlike yourself, who has laid out generalities with regards to your opposition, I have posted clear cut facts.
Some more questions for you, the same ones that opponents never have an answer to:
If you ban payday loans, where will you send people who need short term credit? Name any other alternative that is LESS expensive that does not already exist.
Do you believe a person should be allowed to make their own choices?
If not, do you believe we should also ban liquor stores, fast food outlets, and prevent people who have had a car accident from being sold a car?
Indigo Moon:
Given that the sum total of your argument is the usual ad hominem attack against payday lenders, it need not be taken seriously.
When you would like to discuss the issue, with facts to support your side of the argument, please re-post. Otherwise, join the rest of the people who speak without knowledge on the subject. They are over there, labeled “Ideologue”.
I would like to know the source of Jeff’s claim: “Even the industry admits that the average borrower takes about 11 loans a year.”
The Community Financial Services Association of America’s webpage “Myths vs. Reality of Payday Loans” – at http://www.cfsa.net/myth_vs_reality.html – says:
“Researchers and state regulators consistently report that 70-80% of customers use payday advances between once a year and about once a month. People who bounce checks and use overdraft protection often do so at a higher frequency. The fact is that a payday advance is more economical than other options.”
and
“While customers may not have the ability to repay when taking out the advance, the allegation that lenders do not consider a customer’s ability to pay is completely false. All reputable payday lenders have underwriting criteria, in addition to the requirements of a steady income and checking account. More than 90 percent of payday loans are repaid when due, a fact confirmed by numerous state regulatory reports. It simply would not make good business sense to loan money to people who can’t pay you back.”
There’s a lot of data at the CFSA website at http://www.cfsa.net/get_the_facts.html
If you click on “Customer Demand, Demographics and Satisfaction” you will see the “North Carolina Payday Advance Customer Study” from September 2002, which states:
“400 North Carolina residents participated in the survey. All of the respondents had recently obtained a payday advance from a sampling of CFSA member businesses”
and
“87% said that payday advance companies provide a useful service. Only 10% said these companies do not provide a useful service.”
and when asked, “Should the government make it harder to get payday advances by limiting how many payday advances you can get in a year?” the conclusion was, “Payday advance customers do not want government regulations aimed at limiting the number of annual payday advances. 74% of respondents said that the government should not limit the number of payday advances a person could get in a year. In the Georgetown Study, 69% said that the number of annual payday advances should not be limited.”
Thank you for your insightful passionate knowledgable blog Matt!!!
So many people don’t understand nor seek to understand the facts about the Payday Industry. They are horribly uninformed and uneducated. Instead they carelessly spew out myth upon myth.
The bottom line is all Ohioans deserve to make their own financial decisions!!
First, I would hardly call the rally turnout a “wash,” seeing as the payday lenders had to bus in people from the entire state, the vast majority employees who were paid to be there. Columbus had about 2,500 local, unpaid people gather. Dayton had about 800. Springfield had about 500. Those are just gatherings that I’m aware of.
Second, if we wanted to match testimony hour-for-hour, we could still be having testimony today. It’s not very hard to find charitable organizations, religious institutions, and payday lending victims to speak out against the payday lending process.
Third, none of the statewide leaders who originally gathered to formulate a response to payday lending has a “financial stake” in this process. I doubt that the Ohio Conference of Bishops has anything to gain financially by ending payday lending.
Fourth, I don’t dispute that the vast majority of payday loans are paid off on time. A post-dated check is a very powerful instrument. However, again, the industry, in their own testimony in front of the FIRES Committee admitted that the typical user takes out 11 loans a year. This hardly seems like a “one-time, emergency use” product to me. The vast majority of these loans are being used to recover from the financial situation that the first loan put them in. Even the CEO of Cash America is on record saying that, in order to be profitable, the industry has to turn a borrower into a long-term, repeat user. How is this the “one time, emergency-use” product that the industry claims it to be?
I do agree that something should be done about bounced-check fees. However, since that is regulated on a federal level, that will take a much larger effort than what has been put together up to this point. Just because it’s not possible to eliminate all sorts of predatory and usurious practices right now doesn’t mean that the ones that can be fixed shouldn’t be.
Now, I did not question Matt’s reasons for his blog or his post. I find it somewhat disturbing that Matt decided to generalize who I am or why I am against payday lending. It is not just “elitists” or “liberals” standing up against payday lending. It is, for all intents and purposes, the entire faith community. The faith community is not united in issues of prayer in school, gay rights, abortion, or many, many other issues. The faith community is united against this practice. I am not here to say that Ohio should be run as a religious state. I am going to say that, when the faith community unites around an issue as strongly as they have the payday lending issue, then there is good reason to pay attention.
Finally, I don’t believe we should ban liquor stores (I enjoy a good drink every now and then) fast food restaurants (I eat on the go) or cars to people who have been in accidents (as I have been). That doesn’t mean that government shouldn’t regulate certain industries. I believe that prostitution should not be legal. I believe that drugs should not be legalized. And I believe that it’s the government role to provide regulations to make sure that businesses are not taking advantage of citizens. Government regulates the prices that utilities can charge, they regulate what information insurance companies are able to use to underwrite their policies, and they strictly regulate what interest rates lenders can charge. It’s time to put the payday lending industry on the same footing as all other lenders in the state instead of allowing them to charge over 15 times the rate of any other lender in Ohio.
I was a manager for both Advance America and National Cash Advance (Advance America’s sister company) collectively for about a year. Prior to that, I had 15+ years experience managing upscale restaurants and hotels. I left hospitality management due to health reasons. Do not question my knowledge of the business.
I was drawn to PDL’s because of the work schedule and insurance benefits. I left because my conscience could no longer handle what the business really was. I was working again within a month of leaving. The job that I do now makes a real positive different. I do not hurt anyone. Quite to the contrary, my time is spent fighting for people’s rights.
Do not try to make this about the people losing jobs. This is solely based on an industry that cares nothing about anything or anyone other than their own bottom line. Keep those numbers up. Keep your held checks high and your bad checks low.
The real question is, does this business truly help or hurt people? Just how much time in any given day do they spend on the phone chasing down people who owe them money? How many times in one week do they run to the bank to collect on an NSF check before another PDL gets their first or even worse, the customer gets to it first?
At the end of the day, I may not own the latest vehicle or the biggest house. However, I can still look myself in the mirror and sleep with a clear conscience. Can you?
It is not who we are that defines us.
It is what we do that defines who we are.
I just HAVE to respond to this one, Jeff…the government DOES regulate the payday loan industry! All the “unfair” practices a payday lender uses are strictly set forth by laws and regulations.
The CFSA is a joke too. The Community Financial Services Association (CFSA) was created in 1999. They are to encourage accountability within the cash advance payday loan industry. They promote regulations and legislation that provide cash advance payday loan customers with consumer protection.
Looks great on paper, doesn’t it? Except for one thing, the CFSA Board of Directors is in reality comprised of the cash advance payday loan industry leaders.
http://www.cfsa.net/board_of_directors.html
The irony here is this: The Community Financial Services Association’s job is to act in the best interest of the consumers who are doing business with cash advance payday loan companies. The CFSA is run by the same cash advance payday loan companies that the consumers are being protected from.
The proposed bill may be over the top and harsh. Unfortunately, had the greed of the industry not gotten out of control, it never would have been necessary.
I understand exactly what the 28 percent will do. In this business, the P&L is built around how much is collected in fees. I even completely agree that 391 percent is an inaccurate comparison. However, because it is a lending institution and governed under the FDIC and they have to use the TILA. By law it has to be represented as an APR. I understand that in reality it is $15 per every hundred.
The payday loan business model is self-serving. The fact that their P&L is built around the fees that they collect is self-serving. The fact that employee bonuses are directly connected to what they collect in fees is self-serving. The fact that the CFSA parades itself as an advocacy group for the customers of payday loan establishments is self-serving. The fact that the CFSA board of directors is in fact comprised of the payday loan industry leaders is self-serving.
At minimum, 75 percent of the job is collections because they know upfront that the majority of their customers will default on their loan at some point. For the most part it is a question of when; not a question of if.
The payday loan industry in Ohio knew in March of 2007 that these proposed bills were in the works, if not sooner. They chose to wait and see whether or not Ohio would call their bluff instead of making the choice to be pro-active when they had the chance. Now they are all taken aback because Ohio did call their bluff. When the dust settles, who do you think will be left standing strong?
I sure can look in the mirror and sleep with a clear conscience and here’s why:
First, Advance America’s practices, or those of SOME other lenders, may not be as stellar and they can or should be. That’s why the restrictions I have suggested will remedy any possible abuses by the lender. So why ban the product when a middle road that solves all the problems is available?
Second, while Advance America’s lending practices may have contributed to a borrower’s ongoing problem, you have not admitted that the BORROWER has SOME responsibility here also. A person should not take out a loan unless they are 100% certain it can be paid back. THEY must use the product RESPONSIBLY.
You say, “I left because my conscience could no longer handle what the business really was. I was working again within a month of leaving. The job that I do now makes a real positive different. I do not hurt anyone. Quite to the contrary, my time is spent fighting for people’s rights.”
No. you left because you could no longer handle what Advance America’s business really was. You cannot extend that to be a general statement, because I doubt you know how some mom-and-pop stores operate. Case in point: http://www.youtube.com/watch?v=HTucrlciIk4
If you tell me what you do, I guarantee that I can demonstrate that somehow or someway what you do directly or indirectly hurts someone, somewhere.
You say, “Do not try to make this about the people losing jobs.”
Indigo, the entire issue is not about losing jobs. But banning the industry will cause a loss of 6000 jobs. What is your response to those people who will be put out of work?
You say, “This is solely based on an industry that cares nothing about anything or anyone other than their own bottom line. ”
Once again, this is fallacious logic. In this case, it is called the Hasty Generalization. This fallacy is committed when a person draws a conclusion about a population based on a sample that is not large enough. Your experience at Advance America certainly shows the downside of the business.
But why ban it? Why not impose the restrictions I have posted about?
You say, “The real question is, does this business truly help or hurt people? ”
Once again, I point you to Dr. Lehmann’s analysis in the link provided in my article. Here’s another unbiased study as well:
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=921844
Finally, chew on this: When a child touches something hot for the first time, the child pulls their hand away. Lesson learned: don’t touch hot things. If this lesson went unlearned and the child repeatedly touched something hot, then we would rightly conclude that the child is mentally damaged in some way.
If payday loans harmed far more people than have been helped, then why do they continually return to them?
What is your objection to placing appropriate protections as I have outlined onto the product?
Jennifer,
Yes, they currently regulate the industry. I never said that they didn’t. I said that the current regulations allow the industry to charge over 15 times what any other lending institution is able to charge. I don’t understand why any industry should be exempt from typical regulations to that extent. Small-dollar loans should be subject with the same rules and regulations that other loans.
Jeff,
You say, “I don’t understand why any industry should be exempt from typical regulations to that extent”
You need a lesson in the economics of the credit industry.
First, your statement, “current regulations allow the industry to charge over 15 times what any other lending institution is able to charge” is FALSE.
In Ohio, as in most states, there are rate caps on person-to-person loans. Banks are not capped on loans by statute. Commercial loans are generally not capped in most states, although some minimums on the loan size exist. Ohio has a $100,000 limit. Credit card companies are located in states without usury ceilings and take advantage of banking laws allowing them to import that open-ended ceiling into any state.
All of these institutions enjoy large economies of scale. But if you notice, they are not in the payday loan business, despite the fees they could charge. Gee, you’d think they’d be doing those loans all day given the great fees. Why not? Because small loans require a lot of overhead and time.
The reason PDLs get to charge the fees they do is because the overhead and default rate make it impossible to do business otherwise. Please educate yourself by having a look at the profit and loss statement of any payday lender. Here’s one:
http://yahoo.brand.edgar-online.com/displayfilinginfo.aspx?FilingID=5921283-16038-19907&type=sect&dcn=0001047469-08-006297
Now cut that revenue line by 90%., which is what Ohio is proposing and you tell me if they can stay in business.
So get off the tired argument about the “high fees” and get on to solutions. Here’s some fair restrictions. You tell me why you have a problem with them:
Limited to one loan at a time
24 hour cooling off period before getting a new loan
Limited to one extended repayment plan per year
After 5 loans, mandatory financial literacy course before another loan can be taken out.
More to Jeff:
We can argue back and forth uselessly about how many people came to a rally, how many sent letters to the Capitol, etc. It distracts from the issue and real solutions.
I never said statewide leaders who oppose PDLs have a financial stake. I said the CRL did, and these leaders foolishly got in bed with the CRL.
You say, ” I don’t dispute that the vast majority of payday loans are paid off on time”.
Good. Now you have established that payday loan issues are limited to a tiny minority. Therefore, why are you calling for a ban and punishing the vast majority who use it responsibly? Seems unfair.
You say, “This hardly seems like a “one-time, emergency use” product to me.”
The industry does not claim it to be for “one time”. Please source that statement.
You say, “The vast majority of these loans are being used to recover from the financial situation that the first loan put them in”
FALSE. This demonstrates a fundamental misunderstanding of the entire situation. You should read:
http://mises.org/freemarket_detail.aspx?control=454&sortorder=articledate
Excerpt (edited for space): “The allegation that payday lending “causes” chronic or habitual borrowing may ignore the old adage that “correlation does not equal causation.” PDLs appeal to a clientele that face numerous financial difficulties (many of them self-induced), independent of the payday lending industry itself. Most of these households have failed to establish good credit, frequently bounce checks, and frequently change jobs. They will frequently be short of cash and l borrow “chronically” when given the opportunity. Because payday lending institutions provide them with this opportunity does not mean that payday lenders cause this behavior. They simply provide an opportunity for this behavior to be exhibited more often than otherwise.”
Jeff:
You say, “Even the CEO of Cash America is on record saying that, in order to be profitable, the industry has to turn a borrower into a long-term, repeat user. ”
Name one consumable product that does NOT have to be used long-term and repeatedly for it to remain in the market. Why single out payday loans when so many other products cause worse damage when used irresponsibly?
You say, “I do agree that something should be done about bounced-check fees. However, since that is regulated on a federal level, that will take a much larger effort than what has been put together up to this point. Just because it’s not possible to eliminate all sorts of predatory and usurious practices right now doesn’t mean that the ones that can be fixed shouldn’t be.”
So what you are saying to borrowers is, “We are going to throw you into that lion pit down there. It’s regulated by someone else and we haven’t figured out yet how to get rid of them. So until we do, in you go!”.
So you take away a borrowers cheaper alternative, leave him to the most expensive option possible until you can figure out what to do about it? Ridiculous. Try doing it the other way around, Jeff. If you cared about the consumer, you’d figure out a way to provide them with a cheaper alternative FIRST.
You say, ” I find it somewhat disturbing that Matt decided to generalize who I am or why I am against payday lending.”
I find it equally disturbing that you advocate having government FORCIBLY and AGAINST THE PEOPLE’S WILL take away something the “vast majority” use responsibly.
You say, “I am going to say that, when the faith community unites around an issue as strongly as they have the payday lending issue, then there is good reason to pay attention.”
Another fallacious argument known as “Appeal to Popularity”. Here are two other statements that were popular at the time: “The earth is flat”, and “The sun rotates around the Earth”. Those turned out to be wrong. The latter, in fact, was widely supported by the faith community. This same community persecuted and imprisoned Gallileo for his “heretical heliocentric arguments”.
Furthermore, the faith community has no more moral authority, or is economically educated, to dictate policy on this matter than anyone else. Given the faith community’s own inherent scandals (need I mention it?), I hardly see why they should be listened to when they cannot keep their own house in order.
You say, ” I don’t believe we should ban liquor stores (I enjoy a good drink every now and then) fast food restaurants (I eat on the go) or cars to people who have been in accidents (as I have been).”
Because you use those products responsibly, Jeff!!!! That’s my point. The damage done by those who don’t is far worse and reaches farther into society than payday loans. Why aren’t you attacking those other products? Because YOU use them?
You say drugs and prostitution should not be legalized. Of course they shouldn’t. Neither provides anyone real benefit even when used responsibly. But both cause significant damage when used irresponsibly.
You say, “Government regulates the prices that utilities can charge”
Totally different. Utilities are a required resource for all citizens. WIthout regulation, these businesses could hold literally hold society hostage and charge whatever they wanted.
“However, again, the industry, in their own testimony in front of the FIRES Committee admitted that the typical user takes out 11 loans a year. This hardly seems like a “one-time, emergency use” product to me. The vast majority of these loans are being used to recover from the financial situation that the first loan put them in.”
You should be more specific in whose testimony you are referring to. It might have been someone who did not represent the entire industry and/or they may have simply made a mistake. But even if they didn’t and 11 loans a year is accurate, that could be 11 times a year that the product saves people money in bounced-check and credit-card-late-and-overlimit fees. That is no basis for a claim that the product, on average, does more harm than good or that “the vast majority of these loans are being used to recover from the financial situation that the first loan put them in.” The fact that a consumer uses a product frequently is more testimony to its usefulness than to any detrimental effect.
And don’t forget that those people who do get themselves into a bind by their own misuse of payday loans are people who take out a loan promising to pay it back in full on their next payday and who then, when payday comes around, not only don’t pay it back in full but don’t make any payment whatsoever towards the principle – and then don’t make any payment towards the principle payday after payday while in many cases also going to other payday lenders and taking loans from them which they also promise to pay back in two weeks. Then they hear from people like you that they have been ripped off because of some nonsensical idea about “usurious triple-digit interest rates” – when they couldn’t have qualified for any cheaper type of loan – and get paraded in front of legislators by you people, claiming that they are the victims. And then you claim that you are the moral ones…
I’m sorry, Jeff, but usury laws are a theocratic, authoritarian tradition which should be abolished just as the tradition of slavery was abolished. The exemption given to payday lenders was a crack in the ice which should be expanded, not sealed. Only a free market in loans will guarantee that consumers have access to the type of loan which is best for them, at the cheapest price possible. If the free market should work anywhere, it’s in the field of small loans because so many people can enter the business with so little expertise or start-up capital. Usury laws which outlaw a free market in loans, based on religious ideas, in fact create loan sharking, where gangsters use violence to collect on illegal loans. Usury originally meant the “sin” of charging any interest whatsoever on a loan and is a religious concept which should have no place in government. Proper regulation of lending should involve curbing deceptive advertising – loans which are presented in such a way that the borrower doesn’t really understand what he is getting himself into (which is rarely the case with payday loans) – and violations of debt collection legislation which should apply equally to all types of loans.
It is right for the government to regulate prices charged by businesses which have received government assistance or which make use of limited public resources, i.e. utility companies, but not otherwise. If the government can tell a lender how much he can charge, then why can’t it tell every doctor, lawyer, and free-lance secretary how much he or she can charge as well? Then we have a state where politicians govern every aspect of our lives based on all kinds of dubious motivations. That is why the founders of this country talked about the importance of “inalienable rights.” If I want to put my used underwear up for sale at $10,000 a pair (with full pathogen-transmission disclosure, of course) I should have a right to do so, just as the Supreme Court decided that Larry Flynt should have a right to publish a cartoon of the Reverend Jerry Falwell having sex with his mother in an outhouse. And if someone wants to buy a pair then he should have a right to, even if he uses up all his savings and then has to go begging on the streets for food.
Freedom can be a dangerous thing, buddy, but life without it sucks.
Indigo Moon:
You say, “I understand exactly what the 28 percent will do”.
Then you can also share with us your plan for providing short-term credit to those who need it, and can find it in a manner that costs the same or less. Please share with us. Otherwise, you are harming the very consumers you purport to be helping because you are pushing them to bouncing checks.
You say, “In this business, the P&L is built around how much is collected in fees.”
Uh….hello? EVERY business is built around how much revenue is collected. So what?
You say, “The payday loan business model is self-serving. The fact that their P&L is built around the fees that they collect is self-serving. The fact that employee bonuses are directly connected to what they collect in fees is self-serving. The fact that the CFSA parades itself as an advocacy group for the customers of payday loan establishments is self-serving. The fact that the CFSA board of directors is in fact comprised of the payday loan industry leaders is self-serving.”
Name me one business not built around the concept that it is self-serving. Of course they are. How else can they stay in business? A business is not a charity. Lest we forget even Goodwill Industries (charity) cannot break even when charging $10 per hundred.
And, by the way, you are wrong. Payday loans provide a desperately needed service to the customer!!!! If they didn’t, they wouldn’t have any customers.
You say, “At minimum, 75 percent of the job is collections because they know upfront that the majority of their customers will default on their loan at some point. For the most part it is a question of when; not a question of if.”
Again, I say, “so what”? The responsibility of default, as Jon Schultz point out above, rests with the consumer. If they think they won’t be able to pay back a loan, they shouldn’t take it out in the first place.
You say, “The payday loan industry in Ohio knew in March of 2007 that these proposed bills were in the works, if not sooner. They chose to wait and see whether or not Ohio would call their bluff instead of making the choice to be pro-active when they had the chance. Now they are all taken aback because Ohio did call their bluff.”
No, they did what any business would wisely do. They waited (gambled, perhaps) because they didn’t want to self-limit their revenue. Ohio legislation may have been discussed, but it was never considered a serious threat until POLITICS entered the equation.
And while we’re discussing who is being “Self-serving”, didja read my column way up there?
You say, “When the dust settles, who do you think will be left standing strong?
The politicians, or so they believe. Here’s who won’t be:
Consumers: Will now have to resort to bouncing checks which cost more, or using unregulated offshore lenders which also cost more.
Result: Weaker
Lenders: 6000 Ohioans forced out of their job.
Result: Weaker
Average Citizen: Will have personal freedoms stripped away by the Legislature. Result: Weaker
CRL (a corrupt charity): Stronger.
Answer these direct questions, Indigo Moon:
What will you have consumers do now that you’ve taken away payday loans and they need short term credit?
Will you lend them money? If so, at what interest rate?
What will tell the 6000 people who have just lost their job?
Those consumers will do whatever they did before payday loans ever existed.
They will pack their lunch for work instead of eating out. They will use public transportation if they cannot put gas in their car. They will learn to sale shop and use coupons. They will have to learn to live within their means.
Payday loans did not exist before and the world did not stop spinning. I doubt that it will when they are gone.
As far as the 6000 jobs, they were looking for a job when they found that one.
Indigo Moon:
The callousness you show towards consumers and folks who will lose a job has destroyed your credibility.
Demand will not be altered by the elimination of supply.
This is basic economics.
What these folks did before payday loans will be to bounce checks, at 4 times the cost of a payday loan.
They may be have been looking for a job when they found that one, but your argument uses fallacious logic. Their skill set will limit whatever jobs they can find, and those jobs will be harder to find in the current recession.
You utterly lack credibility and should be ashamed of yourself for the contradictory positions you present here.
I very much doubt that a majority of payday loan borrowers default on a loan at some point. I don’t think the figure is anywhere near that.
I listened to a conference call with Jamie Fulmer of Advance America, about a year ago I think it was, and he said that up until that year the company never did any collections, just letting people who defaulted on their loans go.
And now all CFSA member companies are required to offer an Extended Payment Plan to borrowers who can’t pay back their loan, which gives them four additional paydays to pay it back with no additional interest accruing. See http://www.cfsa.net/industry_best_practices.html
There are many facets to the PDL problem. Those of you who feel the buyback rates are outrageous or that those of us who work in the industry are predatory need to listen to some facts. Of course I can’t speak for all companies out there, but as far as mine goes, we do not “prey” on the poor. Yes, the rates are the same no matter where you go, but the company I work for does not give loans to just anybody for any amount. I don’t know how many times I’ve had people refuse a loan because I tell them they only qualify for $150 and they tell me they can get $500 from Checksmart. We give loans to less than 1/4 of the applicants because we are cautious.
Example: There is a system out there to help us keep track of who has current or defaulted loans. We use it, but places like Advance America and Checksmart don’t. Others that also use it refuse to say if the applicant has a loan out for “privacy” issues. For those that do share information, we are able to determine if the customer is over-extended based on their pay. Whether they share info or not, we can look at the history. Have they gone to 3 places in a couple days? Is it 2 weeks since they went to one (using us to pay off another)? Did they default on loans due to stopped payments or closed accounts? Automatic turn-downs to them. The Bankruptcy Hotline is another resouce. Have they ever filed for Chapter 13 or 7?
Our loan customers, like so many of us out there, live paycheck to paycheck. When something goes wrong, we are there to try to help. Yes, they are usually returning customers, but not because our fees did that to them. It’s because they did not have that $200 to spare for that bill or repair or whatever and they won’t on the next paycheck either.
I have always worked with my customers. While some lenders strictly adhere to that 2 week loan, we are willing to push the loan out a few days or so to make sure the due date falls on or after a payday. Our customers know the first time they come in that the only way to pay the loan off permanantly for some will be when they get their tax refund or some other “windfall”, but in the meantime we try to work with them. We tell them to try to work their way down. If they need $200 this time, maybe they can figure out a way to only borrow $150 the next, and so on till it’s paid off in full. My store has a high rate of payback, even with those whose checks have come back returned. Not because of a vulture waiting to snatch the money from their account (although that can happen if you try to avoid paying) but because the customers know that we will work with them. Bring us $20 a paycheck or anything you can afford, just to show you are trying. Most of our customers truly care about our business and us and understand we need to collect and they willingly pay off their debt.
As far as bad debt goes, if you want to speak of unscrupulous practices, how about the bankruptcy attorneys who send their clients out to all the payday lenders to get as much as they can, use that money to pay their attorney’s fees, and then add the lenders to their bankruptcies when they file the next day. We have had customers call us and tell us what their attorney said but refuse to do it.
I actually want some of the bill to pass. I think all workers in the field should have a background check. I think there should be a state database that doesn’t give some companies the option to not use it or not share info. I think there should be a $500 limit to loans and they should be for a month. I also think, above all else, that borrowers should only be allowed one loan at a time…period. Those reforms would do wonders for the businesses and help keep those that abuse the loan industry by slipping through the cracks in the system from slipping further into debt.
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. 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. Legislators do not understand the impact of what they have done.
What will you do if your car breaks down and payday is 10 days away? What if your hot-water heater breaks and your payday is 7 days away? You need to go to the emergency room and don’t have insurance?
These have never been concerns for any government official I’m sure. But for the average blue collar, low to middle class citizen living paycheck to paycheck, these are frequent concerns.
Taking away payday loans will force thousands of people to declare bankruptcy. You think that payday loan companies are scum sucking leaches but it’s because you’ve never needed our services and you don’t know the real facts about what we do.
Is it fair to look at the APR of a loan when it’s generally a 14-30 day loan?
I think Ohio is mad because they are not making money on these loans. The banks and credit unions will have total control now.
Way to go!
I am deeply saddened by all of this, I am an employee of one of the largest lending facilities in Ohio and I can not believe that there are americans out there that support this. I am not a bad person, I help people that need a quick solution to a problem. A solution that is a lot cheaper than bouncing a check in your account, which most of us know can be 35-45 dollars, and you usually dont bounce only one, so theres several fees and then if you can not fix the problem you are feed more for being in the negative, everday usually untill you fix your account. So you come to me before you bounce your check and you pay a smaller fee to save a bank fee of x amount. If used wisely and correctly and of course responsibly a payday loan can be a life saver. If you take this option away from us what happens to the hundreds of people who count on this? Get a bank loan? Or a credit card? have you checked the intrest rates on those lately? HA! and these options are not always an OPTION for someone, so what are they suppose to ?? for those of you who have never had to use this service, NEVER say NEVER you dont know when life is going to throw you a curve ball.
So those of you who want to pass it, thanks because I will be out of a job, a job that pays me benefits. My son thanks you, and my bank will thank you when I have to foreclose on my home. We are not talking about a couple of hundred jobs lost here, we are talking over 7000 LOST jobs in the great state of Ohio. Here we come unemployment!!! Why dont we try to focus on some of the worlds bigger problems? like the rising gas prices and the rising cost of food? we live in a sad world. lets get our priorities straight!
p.s. thank you Matthew Mayer and all others for your support!! continue to call your senator or email him every chance you get and let your voice be heard, now is the time, we are running out of it QUICKLY
Kudos do you Mathew Mayer for writing this article. Indigo moon…you have no clue what you are saying. None. I can almost bet you have never been in a situation where you needed emergency money. The people who have money to spare or in their pocket for emergencies are the people who are again payday loans. I have worked for a payday company for 6 years. We help people, if the people get themselves in a bind with lending from us, then that’s something they can control, we have no control over that. If they pass this bill, where will the little people go? Where else can you go without a credit rating? Nowhere. What happened to freedom of choice?
I am truly disappointed in government. When the government can tell a consumer where to go to borrow money, how many times they can borrow and if they can borrow, it’s a sad day for all of us. I am a 57 year old employee of one of the largest payday lenders in Ohio. Previously, I’ve worked for over 30 years in the banking and credit union industry. I left there because I was sick of telling my customers and members that I could not help them when they applied for a loan, over-draft protection or even a credit card. Why? Because they either had no credit or questionable credit. When those who stood up at the hearings in protest against the payday advance industry, were asked by the senators, where they would go to borrow money if they didn’t have payday lenders, not one of them had a good answer. Yes, some have family that can help, but not all of us do. Those people made a conscious choice to walk in that door. No one forced them. No one forced them to come back. Payday lenders were not responsible for their financial woes. They were already in that position before they came to us. I agree that some changes to the process are needed but to put 7000 people out of work, not to mention those who will be affected by the trickle down effect, because a group of self-centered, egotistical, ill-informed morons decided that we as consumers are idiots, is unconscionable. 7000+ people will be voting for you, senators.
I’m sure that no government official has ever had the need for a payday loan so of course they don’t understand the business.
I have worked for the largest PDL company in Ohio for 7 years, so you can say I am biased. We are not loan sharks or scum sucking leaches.
We offer short term loans for short term needs. Try to go to your bank or credit union to get a $500 loan, they won’t do it. Our services are meant to be used as a band aid. If you get caught up in the cycle then it can be devastating. If you get caught up in the cycle of credit cards it too can be devastating, but no one is trying to shut down Discover Card.
I agree we need regulation across the board, but elimination is ridiculous. The state of Ohio will be paying for all of our unemployment and public assistance, all because the governor wants to set a precedent in Ohio.
It’s sad that there will be thousands of people without jobs and nobody seems concerned.
I think that alot of PDL companies have made a bad name for all of us. The company I work for abides by all rules and regulations in tact, an will continue to if we are able to stay afloat.
Is it fair to punish the PDL companies and their employees for consumers taking advantage of a flawed system?
The loss of 6000 jobs is only the beginning. How many closed payday lending business will leave their empty carcasses on the Ohio commercial real estate market? How many cleaning companies, office suppliers, contractors, maintenance personnel, etc counted payday lenders as their clients?
To All PDL Supporters:
If you have not yet written these same words you posted here to the Governor, hurry up and do so!
How about this! All of you people who are opposed to having payday loans in Ohio, and who dont use them. Mind your own damn business. We dont look down on you because you have a million credit cards, or own 3 houses because your mommy and daddy were millionaires. Dont look down on us because we are hard working and always broke because we work harder than you and dont get paid what we are worth. We mind our own business. All of the people who are opposed have CREDIT. Our customers in the payday loan industry arent fortunate enough to have been rich their whole lives, they might not have been taught to manage money because they’ve never had any to manage. None of my customers are Retarded, or Stupid. They can fend for themselves and if they need to borrow money, im glad to give it to them!!! Because I was brought up in poverty and I wish there were payday loans around when I was a kid, so that my mother could at least put food on the table once a week. But instead I had to live off of Ramen noodles and cheap hot dogs because thats all we could afford. We had to walk everywhere because we either didnt have a car, or when we did it was broke down and my mom couldnt afford the $50 bucks to fix it because her jackass of a husband left her with 3 kids and a part time job! So, i’ll say it again. If you have plenty of money and you dont NEED PAYDAY LOANS. Mind your own business because “Us Normal Folk” who all of you opposers think are stupid, or foolish, or retarded because we need payday loans, We dont care what you think, because if you dont use it, its none of your business. You just worry about your Golf Club memberships, and your Glamorous Balls and Parties.
i think that u are correct and that payday lending is a choice. For the people that have never used a payday lender.. how dare you pass judgement of people like me, this is my only choice sometimes and there is no one there to help me are you going to? no. is the government going to? no. all you people care about is yourselfs, and i think that people who choose to call us scums i think that u are scum your self. you think that you are too good for places like payday lenders what are you going to do when u are in the same situation that i have been in and there is no where for you to turn and that you have to try to get money so that bounced check fees dont add up. what are you going to do when you need money to feed your kids or help paying your mortages? and to top it all off that is not going to stop collections it is going to add to collections and more money out of the consumers pockets because if they dont pay there will be small claims fee and court cost added onto the loan. collections are not going to stop if this bill is passed it is only going to add to peoples problems, because im will be on the other end and if you think that i dont sound frendly with this commet just think how u would feel if u were on the other end and u wanted me to understand why u cannot pay back your loan. Until you have been there do not pass judgement on people like me and the lenders in ohio. we pay our bills just like you do and we need to make the money to pay them the same as you.
Matthew~
I give you “KUDOS” I have been very impressed not only with your article but, also in the way you have handled all of your responses. The point of matter is that you brought up truethful “FACTS” the greatest force to help spread the trueth, was the news, and could they remain biased?? Not in my opinion,
that myself as a consumer, and registered voter hope the politicians look at for the sake of Ohio but in the same text they need to remember who voted them in office, and sleep at night well yes, I am sure they do, but will they come up for election time again, who’s money will they use to get relected, and most important who’s votes will they count on? I don’t mean for that to come off in a threatening way, but Matthew did make a point, we voted our politicians into office with the great hope they would keep our “best interest in mind” sadly those positive thoughts have been snuffed out, not to mention for those who didn’t get to see how our Senators voted, hmmm maybe this link should be posted for all to see and hear, and shame on the Senator I won’t mention the name..but for Payday lenders to be put into the same category as “prostitution” hmm that not only set me back a bit, but made me wonder what that Senator considers the credit card companies, and oil companies? and shall we talk about the banks? And yes, like many have made mentioned. Thousands in my position as a consumer know for a fact that you haven’t had to use a payday advance just for a means to get by, for whatever the reason..if you are a elderly person and your medication was changed and need extra cash just to save your life, or a single parent just to make it to the next pay check, to have food on the table. I come from a very well to do family, but haven’t been blessed with a “Silver spoon in my mouth!”
A very good point that “shannonk”brought up, I re-lived some of my past by reading that persons post. Sadly I found myself reading part of my life, and wouldn’t change a thing other than the hunger, it amazes me that America can go fight other wars in the name sake of the United States and give other countries food, money and weapons, as we sit back and allow our country to tell us what we can and can’t do with our money.
I ask this..why wasn’t it put into the consumers hand to vote how they wish to use their money? My answer is this…the money hungry, politicians that can fly in their private jets just to have lunch, and use that for a tax write off at the end of the day. Who is loading their pockets and paying their wages? WE ARE AS TAX PAYERS! WHO VOTED THEM INTO OFFICE? WE DID, WHO will VOTE for them again?? NOT I!!!! Simple answer, the politicians knew for a fact that the consumer would vote this bill down, no question!
“Indigo Moon” is nothing but a disgruntled ex employee and I can be willing to bet when he\she was employed with the payday lenders he/she didn’t have a bad thing to say, but went out of his/her way to make sure he/she helped the customer, and felt good at the end of the day. At least I would hope. I am, myself a single mother and have had to struggle, I refuse to let my children go without food. I am hardly a uneducated person, I did go to medical school and can manage my “OWN” money, whichever my circumstance, is it my own, and if I wish to get help from a paydayloan company that should be my “RIGHT AS AN AMERICAN CITIZEN”, last I checked we didn’t live in a communist country!
Many have made mention about the rally, well I agree with you and others…it certainly wasn’t a “bust” to know that there were way more than the news disclosed, is beyond me. If I were to take a guess of how many people were at the Capitol I will say at least 4000, whichever the number the “FACTS” were right there, the consumer, payday lenders, from every walk of life. I do know that most companies didn’t bus people in from a far, persay..most drove to Columbus from every part of Ohio, it wasn’t until they reached Columbus they were bussed, so for the reader that posted the remarks on that one, “FACTS” “FACTS” those are very important, and I also know for a fact that there were many many there that went willing, no pay as far as being on the clock or otherwise, this is a very important issue, and I am honored that the people I know went willing just to try to get the Senate to hear the voice of the consumer, and the middle class.
It didn’t matter if you were a payday lender from another company, nor a customer, yellow, purple or green, we were all walks of life trying to get our government to listen. And most of all we are all AMERICANS, and all put our pants on the same way each day, “ONE LEG AT A TIME.” I do hope that Governor Strickland thinks long and hard on his descision on signing this bill.
The bill went to the House today. Keep calling the governor to let him know you oppose his signing it!
Against American Ideals
Cash Plus #159 – A family owned business.
Cincinnati, Ohio
The Payday Loan Bill that the Governor is planning to sign, stands against all American ideals.
From a consumer perspective, it is against Freedom of Choice. It is against Freedom of Responsibility.
From a business perspective, it is against the Free Market. It is against Competition. It is against Capitalism. It is against American Pro-Business ideals.
The Payday Loan Bill that the Governor is planning to sign, is an act of Socialism.
To impose a rate cap on a competitive industry makes no sense. The market determines that rate and customers choose the product or service based on the value they perceive. The Senators and Representatives of Ohio did not realize that Payday Loan companies do not charge more than 15%. They do not charge interest. They charge a flat fee of 15% of the principle borrowed. A customer who borrows $100 does not pay more than $15, if they follow the terms of the contract.
The customers who use the Payday Loan service, actually love the service. They choose it because it helps them in a time of need. No other business has been able to compete with the Payday Loan industry. The Payday Loan businesses all compete with each other to create a competitive marketplace. The competition within the industry has been good for consumers.
You are trying to help people who are not asking for help. Our customers do not have a problem with the service, why do you? Our customers are angry at their Ohio Representatives and Senators for assuming that they are too stupid to make decisions for themselves. Our customers are angry that you want to take this service away from them that they rely on. Our customers are smarter than you realize.
A lack of common sense has been shown by our Senators and House in Oho. The demand for short-term loans is out there. A prohibition on loans will make customers turn to the Internet for payday loans. The government is not able to stop that. Internet Payday Loans are not regulated, are not secure, are not accountable, and will create tremendous problems for Ohio consumers in the form of identity theft and wiped out bank accounts.
The congress claims that they are not trying to drive out the Payday Loan industry from Ohio. They claim that they are not tying to eliminate 6000 jobs when the economy is already struggling. This in another example of a lack of common sense by our congress. The rate cap imposed by the bill is so oppressive that no Payday Loan store will offer such risky loans for $2.33. The 28% APR is an arbitrary number which makes no sense for loans 1 month or 2 weeks long. 28% divided by 12 months is 2.33%. A customer borrows $100 for a month and only pays $2.33? What if one customer decides not to pay back this loan? How many customers will need to make up for this one loss? The answer is 43. Have you done the math?
In theory, lowering a price will create more demand. If you don’t want people to use payday loans, you should make it more expensive and tax it The Governor needs to realize that this bill will create a lot of unintended problems for Ohio. The people will still get loans. The will go to the internet, border states, and the dangerous street.
The economy is struggling. You are not solving problem with this bill. You are creating problems for your state.
Please focus on the real problems of Ohio.
Cash Plus #159.
7428 Montgomery Road
Cincinnati, OH 45236
513-245-2274 work
In the beginning, Crom created the PDL and gave its gift to his loyal follower, Conan, as it was written in the scrolls. Many centuries later, Thulsa Doom was defeated by Conan in 1995, which brought forth the PDL to Ohio. Many welcomed the PDL with open arms, but little did they know there was sorcery at work.
In the halls of Campbell Hill, Sauron crafted the One Ring to enslave the people of Ohio by keeping them in the Cycle of Debt. For almost 12 years, the Free Peoples of Ohio suffered under the wrath of the ring…or was this tyranny just a web of lies to destroy the PDL? In order to combat this myth of the Cycle of Debt, William Wallace rose forth to meet his enemies head on at the Battle of I-75. In the words of Wallace “…you can take our PDLs, but you can’t take our freedom!” His words won the day, but in 2008, a sinister plot was unfolding in the Republic Senate. Who would stand up to meet this menace?
It was Frodo Baggins that joined forces with a Jedi Knight called Obi-Wan Kenobi. Together, they would make a voyage to Columbus to reveal the true evil threatening the PDL. When they arrived there, the Cycle of Debt myth had worked its way into the Senate. Also, the Ohio Statehouse had been transformed into the ultimate power in Ohio: A fully-operational battle station that could destroy the PDL.
The time had come for Kenobi to again meet his old apprentice, Darth Faith. Both became locked in a lightsaber duel, but it would be Kenobi that would be defeated. Upon seeing the death of his friend, Frodo returned to his hobbit hole in Canal Fulton. Meanwhile, in the Senate, the votes had been cast against the PDL and soon Darth Faith could sweep the remnants of the PDL away. In a quote to the Republic Senate, he said: “This will be a day long remembered…it has seen the end of Kenobi and will soon see the end of the PDL”. The final decision is in the hands of Grand Moff Strickland.
Eventually, Conan, William Wallace, and Frodo would return to each claim a kingdom by their own hands.
But that is another story…
DMX. weighs in on the PDL situation in Ohio by re-writing the lyrics to the Ruff Ryder’s Anthem. Here is an excerpt:
Stop. Drop. Shut ‘em down. Close the PDL shop. Oh, No. That’s how the CRL rolls.
Stop. Drop. Shut ‘em down. Close the PDL shop. Oh, No. That’s how the CRL rolls.
Lenders wanna try (what).
Lenders wanna try (what).
The borrowers wonder why (what).
PDLs will die (what).
All I know is greed (what).
While all my clients bleed (what).
How will they maintain? (what).
When the APR’s insane. (what).
To the payday lenders and their customers: WAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAH!
You ideeots!
Yoda:
You’re mixing your metaphors (or myths, or whatever), but it’s still a good story.
How does a $100 payday loan compare?
$100 payday advance with a $15 fee = 391% APR
$100 bounced check with $54 NSF/merchant fees = 1,409% APR
$100 credit card balance with a $37 late fee = 965% APR
$100 utility bill with $46 late/reconnect fees = 1,203% APR.
Hey, we’ve been screwed by the Republicans-now the Democratic Governor-Now who the hell are we going to have as leaders?
These poseurs are stabbing the little guy in the back-they’d rather gut our economy even further just to pretend to be sticking up for a guy who will now have to beg on the street to get his car fixed-or pay multiple times more that a payday lending fee in bounced check fees. What a joke! What a bunch of self-serving, citizen-hating leeches we have running our state into the ground!
As is the case with most political issues, you have people who are for or against the issue who have never researched it. They go along with whatever trend in society “feels” appropriate to them. They take sound bites and run with them, offering little experience or knowledge of their own. These people are collectively called SHEEP. Research takes work, so why do it when you can just form your opinions based on what you’ve heard. In this election year, these are the same people who will decide their votes based on political ads or straight down the party lines, never taking the time or effort to take the spin out and find out the true facts of a case.
There are some who want HB 545 to pass because they (or someone they know) found themselves in a pickle they created by going to more than one lender. That is not how these loans are supposed to operate, so I am for limiting the number of loans to one at a time and creating a database to prevent people from getting more than that. Passing an amendment to current legislation to include these items would cut the amount of bad debt almost completely for both the lender and the consumer.
Others want this bill to pass because they hear 391% APR and, face it, freak out. They look at their high interest on credit cards (maybe 24%) and can’t imagine these “poor people” being “swindled” out of what must be multiple times what they borrowed. Most of these people fall into the “I have options and would NEVER walk into a payday lender business” category.
If anyone is interested in the CURRENT law in Ohio regulating payday lending fees, it breaks down like this:
There is 5% interest (flat, not APR) on the principle.
There is a Loan Origination Fee of $5.00 per $50.00 borrowed up to $500, and $3.75 per $50.00 from $501.00 to $800.00.
Easy math: .05 x $100.00 = $5.00…….$5.00 x 2 = $10.00. So….a $100.00 loan costs $115.00 to pay back. Period. The only way you pay back more is if your check goes to the bank and is returned, just like any other business you bounce a check with.
The majority of these loan consumers are people who make a decent living. They are usually college educated. They are paralegals, bank tellers, nurses, mechanics, cahiers, or factory workers. Your neighbor who works at Lexis-Nexis was here to get a loan. A lot of them are people who are forced by employers to have direct deposit. They wake up on payday and find out they have a negative balance or most of their check has been eaten away because they were hit by a lot of bank fees. Contrary to popular belief people cannot just call the bank and have the fees removed. It depends on the banks policies if they will remove some or all of the fees, and it also depends on if you have had NSF fees before. Just because you are left with practically nothing to feed your family with for the next two weeks won’t budge the bank who’s response is, “Sorry for your luck.” This is an age of over-extended credit. Too many have 2nd mortgages, multiple credit cards, 2 car payments, etc. Payday lenders have boomed in the last several years because of demand. Face it…this isn’t the ’90’s anymore. The economy stinks and is getting worse. Our pay does not reflect a cost of living increase that matches inflation, therefore we all still have the same debts that we used to be able to handle that are now costing us several hundred per month (if not per week) more. We are a society that suffers from Glutony and Jealousy and the competion of materialism and gadgetry. Yes, people live above their means. Credit card companies throw lines of credit to unemployed college students and to those who have a poor credit history in hopes they will be able to collect off the increased APR’s and late fees and over the limit fees. They can do this because we are a Capitalist society that lives under a Constitution and Bill of Rights giving us Free Choice. Those of you who say that credit card companies and such aren’t to blame for the poor credit history of the individual need to take a step back and listen to what you are saying.
Anyone remember Goofus and Gallant from Highlights magazine? Here’s a scenario. Goofus and Gallant each get a credit card. Gallant only uses his when he needs to and pays it back promptly. Goofus charged items just short of his limit and forgot to pay his bill on time. Gallant is rewarded with low interest rates on any line of credit he wishes to open while Goofus is penalized with high interest and a lot of turn downs for credit.
This scenario is okay to accept for those who believe in capitalism. The consumer who made poor choices has to live with the consequences.
Goofus and Gallant both get a loan from a payday lender. Gallant gets no more than he needs and pays it back on time. Goofus got more than he needed and wanted more so he went to another place to get more money. Gallant is able to get himself out of the loan while Goofus finds his paycheck doesn’t cover paying back both loans so he gets a third one. Gallant is able to get another loan in the future if he ever finds that he needs to use the service again. Goofus, as is the case with the credit card company has defaulted on his payments and has a mess on his hands.
(Disclaimer: These are just 2 examples of what could happen, and are not meant to reflect the circumstances of every consumer of credit cards or payday loans.)
The people of this state should have the right to decide what options work best for them in their own circumstances. For those who agree the bill should pass, why not put it to a REAL vote. Put it on the ballot in November. Let the citizens decide like we did with the smoking ban and minimum wage. My guess is they won’t let it go to a popular vote because they already know the result. The vast majority of citizens in this state are against this bill.
some credit unions in ohio offer stretch pay, similar to cash advance, but with much lower repayments. check it out!
it is very sad that our government of which we the people of ohio,even have to go through this pathetic stuff.these people used our votes to do whatever once they got into office.if you really dont care about the people of ohio,then maybe you have the wrong job.look at your job title some time and remember this:without these people that you are trying to hurt, you are nobody.
i just wanted to say we can’t smoke anywhere in ohio sometimes even in our own cars so now they are telling us how to spend our money where will it end
WOW!!! There’s really a lot to take in and I thought I knew all the answers. I am a manager of a pdl store, I hit bonus every quarter, I was in Columbus, and my customers love me. I see both sides of the story, and I don’t see the whole story from either side. I like indago moon came into this position from the hospitality business for health reasons. I have 32 years in customer service and have been doing this for 5years with the same company. Before I started I looked down my nose at this industry and I was ashamed to take this job, but the pay was good,benifits were good, and I have a wife and 4 children to take care of. I have a moderate house, expensive car, an extra car, my wife and children have cars.. I am doing okay! my customers know me well and I them. but I do feel we can do more for the customer,educate them, wien them down, control how many loans they have, cut the fees, and still make a profit. There are a lot of people that loan responsible and a lot that don’t. My company is nation wide and they are demanding. They expect and I deliver, but they have never asked or even suggested that I do anything I wouldn’t do to my own mom. I know by looking at all these comments, I don’t have all the answers, but I don’t think either side is looking for the answer, they’re looking for thier side to win. it looks like I will lose my job soon, but I will be okay. I know God will take care of me and that’s kid of funny because my church “the Catholic Church” is one that’s trying to close us. Another side not trying to find the answer, because my priest knows where I work and what I do and yet, they cash my check from the offering every week!!!! again everybody wanting thiers…. Just had to speak my mind.
I am one of those people who has had use payday loans. Instead of arguing about who is right and who is wrong. This comment is coming to you from someone who has NEEDED this. My husband lost his job right after the first of the year. We lost our home, our insurance, and one of our vehicles because of such a loss. I work full time, go to school and we have three children. I couldn’t even keep us hanging on. My youngest has a lung condition which he has to take medicine daily. We lost our insurance, we had no money. Payday loans help keep us going and provide my son with the medicine he needed. Which by the way is not cheap. So all of you out there who don’t agree with this method of borrowing are telling me that, I should of just, what let my son go without being treated. He would have died without his medicine. We have since bounced back from this incident. But how dare you judge people for needing help. Because there is a small percentage that abuses it. What about the people that don’t? People abuse welfare. Let’s get rid of that. People abuse alcohol, lets ban all the bars in ohio. You see what I am getting at here. Do we not have any rights anymore as Americans. I am utterly appauled at the judgement you people throw around. There are people out there who truly need help getting back on their feet. My family was one of them. I owe payday for helping through that tough period. You people have no idea what its like to lose it all, if you are the ones saying we don’t need paydays in Ohio. Shame on you for taking that right away from the people.
Where are you Jeff?
Funny you disappeared like a ghost.
Kudos to Matthew Mayer for providing facts and sound logics.
But so often we have seen disgusting things our elected politicians have done. How do we know that there are different kind of, truth-speaking, willing-to-reform politicians out there?
Does anyone have answer?
Funny how people like Jeff just VANISH when the tough questions get put to them, backed by hard evidence….
They are legalized loan sharks. You only get charged 5 points by a bookie. These places have screwed alot of people, but I also know people who work at them. Its a no win for anyone, but this industry has been screwing alot of people out of money and making things much worse for some. There is also plenty of other ways to get money than a payday loan shop so don’t be naive and say there the only way you can get money….Thats a weak argument
Okay, “Jo Job” —
Please tell us exactly how many people have been “screwed” and source your information.
If the loans are “no win for anyone”, then why are there over 24,000 stores in the US alone?
And most of all, please tell us the “plenty of other ways to get money than a payday loan shop”.
Somehow, I don’t expect an answer…
It’s time to put this blog to bed. Strickland signed 545. Thank you, Governor Strickland.
That doesn’t mean the fight is over, IndigoMoon.
For starters, there’s still the little injunction that’s going to filed shortly challenging the law’s constitutionality.
Second, it’s easy for you — who sits and remains unaffected by this move — to play cheerleader. However, your arguments have been repeatedly dismantled and you (naturally) vanished when you had no rebuttal.
Opponents like you are all the same. You run and hide when the facts are trotted out.
This blog will continue, as will further posts.
Were there “behind-the-scene-lobbyist” folks representing banks and credit card companies that promoted this bill?
Otherwise the hoopla does not make sense to me. Even the hoopla made by people that say they were past users of PayDay Loan services. If they used the services and were a responsible user, then they have paid back the loan and moved on. The loan served fulfilled a need that they obviously could not have fulfilled else where, or they would not have used a PayDay Loan service.
Do they want to remove this same opportunity from others who would like to pay back their loans and someday move on too? Is this fair that the option was there for them and they get to decide to use it again/or not, but others have not the option?
To those that have never used the service, and say they are concerned and want and end to the PayDay loan service, my question would be “what process have you set in place to help people buy medicine, put gas in their car until Friday, make that emergency trip to the doctor that you must pay up front to be seen, or those shoes little Cathy has on have a broken fastener, and she need a new pair NOW!” The list goes on and on, including running out of food because your kids are growing and seem to be eating more every day. Not only does the food not last any more but it is much higher.
If you are concerned about these things, and by concerned I mean literally. Which translates into action including “out-of-pocket” action, forming/participating in help organization etc.; then it stretches the imagination far to believe that you are concerned about your fellow human beings. The energy you have placed in getting this bill across has the earmarks of a Busybody, one that meddles in other men affairs. For as the adage goes, “If you are not part of the solution, then you are part of the problem.”
This in one Bill I hope and Pray they re-examine.
I’ve used a payday loan company RESPONSIBLY for years and have NEVER been ripped off! NOBODY will ever be able to convince me that these were not legitimate, legal, and ethical businesses, IF THEY ARE USED RESPONSIBLY! Now we are not even allowed to do this. I am so disgusted with the corrupt politicians in Ohio shutting down this entire industry, that I’ve decided to move out of Ohio as soon as I can. I’ve lived in this state for 56 years, (all my life), but now it’s time to get out, if the politicians are going to treat their constituents this way. GOOD RIDDANCE TO THE CORRUPT OHIO POLITITIANS! GOOD RIDDANCE TO OHIO’S LUDICROUS HB 545! GOOD RIDDANCE TO OHIO’S GOVERNMENT SCAM E-CHECK PROGRAM! GOOD RIDDANCE TO OHIO’S LOUSY ECONOMY AND HIGH TAXES! GOOD RIDDANCE TO OHIO’S CRAPPY WEATHER! GOOD RIDDANCE TO OHIO!
I’m still undecided on this issue. There are so many facets to this “Section 3 of HB 545” that it’s difficult to look at it wholly and objectively. For instance, I agree with lowering the annual percentage rate but not with limiting a borrower to only four loans per year. I like the idea of increasing the repayment period to 30 days, but not the lowering of maximum loan amount to $500 (after all, how much help could 2K for the entire year really provide an already struggling family). And what exactly is that statewide database for?
Personally, I couldn’t fathom entering into yet another bad debt situation by taking out a payday loan but I consider myself one of the lucky few that narrowly escaped the predatory lending when purchasing my first home back in 2005 (although I “did my homework” first, looked at loads of lenders and researched countless loan programs). Instead, I try make arrangements with my current debtors by changing my billing due dates, requesting forbearances, setting up payment plans, etc. Nevertheless, it’s still very difficult to “make ends meet” and I find myself living from paycheck-to-paycheck (and I don’t even have a family to feed).
That being said, I can see how a payday loan service might benefit someone with a lower income, larger household, less budgeting skills or limited financial know-how than myself…..but who am I to vote on their right to make their on choices? I wonder if a NO vote would prompt the lawmakers to rewrite the bill to “better” protect those in need of payday loans rather than further limiting them?
The arguments I have just read and the opinions submitted have changed my mind about PDL’s completely. Although I have never used a PDL I now understand why people need them and the logic behind the way they calculate fees. Economically PDL’s are an competitive alternative to bank fees which I can attest to are EXTREMELY high. I once erroneously bounced a single check and the bank charged me for several bounced checks. As explained to me they refused to pay any of the checks because all of the checks were dated for the same day and if they had cashed them it would have left me with a negative balance. The bank charged me $35 for each check and the merchants charged me $35 for each check. The amount I was short was 78 cents. I paid $350 in bounced check fees. One merchant called my house and threatened to have me arrested over a $175.00 bounced check unless I paid it by the end of the next day. I lost a day’s pay cleaning up the mess. I learned my lesson that day. Based on the fact that I had no credit history at that time I couldn’t get a bank loan so I had to endure alot of verbal abuse from my mother and then she refused to loan me the money to pay off the bounced check fees. I think she wanted me to go to jail to teach me a lesson. A good friend loaned me the money and I cleaned up the mess. From that point on I have kept a reserve in the bank so this would never happen again. The bank gets to keep $200 of my money each month for which I earn no interest each year. They charge me $35 dollars a month for that privilege. If I keep $500 in checking they will waive the checking account fees. If I do that I’m basically providing them a $500 loan for $35 a month. Does that make me a predatory lender?
What about grocery stores or drug stores? They suck up about 15% of my pay each month and their gross profit margin is about 20%. So for each $100.00 I spend there each week they are charging me $20 in profit. Are they also Ripping me off? What about the guy who put in my pool; did he rip me off also? I know he had about $18,000 in materials and labor invested in my pool but he charged me $27,000. He took a week to dig the hole and install the walls, floors, concrete walkway and liner and he thought it was worth $9,000 more then it cost him. Somehow the $15.00 per hundred the PDL’s charge just doesn’t seem that outragous when compared to what others make in gross profits. At least with the PDL’s I know what I’m being charged up front. With my bank I really don’t have a clue as to what it REALLY costs me to do business with them. Instead of going after the PDL’s maybe government’s need to make a law that limits how much people can charge for their products and services. I know, let’s set it at 28% per year or 2.25 cents per $1.00 they pay for a product (Don’t include their costs). That pool then would have cost me less then $21,000. How many companies will still be in business within a year?
It is hard for me but to feel anything but angst for these companies. My daughter got a small paycheck advance loan for about $125 and then lost her job. My daughter begged them to work with her she begged them to work with her and she wanted to sign an agreement to pay the balance back in 3 or 4 months, they told her to come in and sign the paperwork she did then they told her that because she doesn’t have a job that she couldn’t go on the repayment plan and the full balance was due. These companies are criminal in their collection tactics. They don’t care anything about your situation and make the person that gets the loan and anyone that is on the application go through hell. I was someone, without knowledge I was a reference, was used on my daughter application. I have gotten calls from Checksmart every day all day literally threatening me and telling me literally, on many answering machine messages that my daughter was a piece of crap and that I need to tell her to face up to her debts and pay them back and stop hiding. I work for a collection company that is in house collection and we wouldn’t ever think of treating people like this company does. I have answering machine message after answering machine message of truly messages that we could sue them for, especially me for harassment because I am not even the loan holder, I have told them not to ever call my house again and they continued to 3 or 4 times a day (she has the same telephone # as I do so they would call her also so they would leave messages each time which totaled up to 6 messages a day one right after the other.. all threatening.
I don’t feel sorry for any of the employees they are people without conscious and i rival in the thought that what comes around goes around. You don’t want to treat people terribly because you never know when you will be in the same position begging for someone to understand your situation and work with you. All of the scum bags that literally terrorize my daughter and me on a daily basis deserve to suffer for how they treated us. I understand there is a responsibility but when you don’t have a job there is no money what are you supposed to do. They finally stopped leaving messages because I told them I wanted them to continue to leave the messages they did because I was keeping all of them and will be happy to sue the company they get fined for each time they have left the type of messages they have.
They are loan sharks as proven in their collection tactics.
The big flipside, particularly evident in Thomas-Rasset, is that the legal mechanisms appear to be in place now for corporate copyright holders to exercise a power way beyond the spirit of the rights they are defending, and possibly even against the interests of their own artists if anger against their policies continues and spreads. ,
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