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Payday Lenders’ petitions riddled with deceptive statements; Consumers Advocates urge OH Attorney General to withhold certification

Posted by Stephen on June 18, 2008

The payday loan industry is using false and misleading statements in its efforts to overturn a new law designed to protect consumers from abusive lending, said Bill Faith, Executive Director of the Coalition on Homelessness and Housing in Ohio (COHHIO).

The deceptive statements appear in the summary contained on petitions the industry is circulating to seek a referendum on a new law that cracks down on payday lenders. To qualify for the November ballot, the group needs 241,365 valid signatures from registered voters across the state.

But before the official signature tally can begin, Attorney General Nancy Rogers must certify that the petitions contain a summary that accurately characterizes the changes contained in House Bill 545. The deadline for the certification is Thursday, June 19.

In a sharply worded letter dated Tuesday, Faith asked Rogers to reject the summary, saying it is “unfair, inaccurate and fails to communicate the most significant changes contained in Ohio’s new payday lending reform law.” If Rogers does reject the summary, the payday lenders must draft a new, accurate one to proceed with their petition drive.

The centerpiece of the new law is a 28 percent annual interest rate cap that replaces the old system that allowed a 391 percent Annual Percentage Rate (APR). Despite the dramatic change, the summary does not tell voters that the new law lowers to 28 percent the maximum APR that lenders can charge, nor does it explain that a repeal of HB 545 would increase the interest rate charged on typical payday loans from 28 percent to 391 percent.

The summary’s only mention of a rate cap is a vague reference that the new law allows for “the imposition of caps on permissible loan fees and interest rates.” It makes no mention of a “28 percent” rate cap or a “391 percent” rate cap.

Even more offensive is what Faith termed “the outright lie contained in the summary. It states that the new law ‘prohibits credit unions from making short-term loans to their members.’ That statement is false and the industry knows it’s false,” Faith said. “Credit unions are predicting a sharp increase in their volume of short-term loans – and the industry knows that, too.”

For more information call:
Sandy Theis, COHHIO referendum spokeeswoman Suzanne Gravette Acker, 614-280-1984 Bill Faith, 614-579-6108

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