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Yet another state caps interest rates…

Posted by Stephen on May 19, 2008

The Ohio state legislature votes in a 28% APR cap on payday loans

The Virginia Partnership to Encourage Responsible Lending, VaPERL, applauds the state of Ohio for capping payday loans to 28% APR. Unlike the Virginia General Assembly, the Ohio legislature rejected payday lender efforts to tack additional fees onto the 28% APR limit.

Jay Speer , Executive Director for the Virginia Poverty Law Center points out “Unlike Virginia , several states have recently rejected well-funded efforts by payday lender lobbyists and returned to usury caps that make sense.”

Exploitation of loopholes and outright violations of states’ laws are helping to create an anti-payday lender backlash. The predatory nature of the industry caused a varied and wide-spread coalition to form in Ohio , similar to coalitions formed across the country to find solutions to the problems caused by payday lenders.

The Ohio legislature took this action despite the well-funded efforts of the nation’s second largest payday lender, Check ‘N Go, which is headquartered in Ohio. Check ‘N Go lobbied hard against the interest rate cap but in the end, legislators rejected their effort perhaps partially because of Check ‘ N Go’s tarnished reputation.

In Virginia , Check ‘N Go was fined $100,000, believed to be the largest fine ever levied on a financial institution in the state. Due to the maximum violation fine of $1000, at minimum, 100 violations were found. Last week, the state of Texas fined Check ‘N Go $200,000 for dumping borrowers’ personal and financial records in a dumpster without shredding them, putting those borrowers at risk for identity theft.

The VaPERL coalition applauds the success of advocacy groups and the Ohio state coalition which worked to reform the industry.

“This hard fought victory was won with the combined efforts of the Ohio responsible lending coalition that included numerous nonprofit advocacy groups working together with the Ohio Governor, the Attorney General, and legislators. It is amazing what can be accomplished when each of those entities comes together and stands up against the will of predatory lenders” said Dana Wiggins, Coordinator for the VaPERL Coalition.

Members of VaPERL continue to work towards simple, effective reform of the predatory lending industry that breaks the cycle of debt.

For more information contact Dana Wiggins , Responsible Lending Coordinator, VaPERL at 804.782.9430.

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