Thursday, November 8th, 2007...11:17 am
Payday Loan Industry Catches a Case of Turf Toe
A brand new “grass roots” organization has hit the streets called Arizonans for Financial Reform. These community oriented Arizonans are demanding that the legislature get off its collective rear-end and reform the payday loan industry. From their website and their mailer:
For too long, the Arizona State Legislature has debated the issue of payday loans without concrete action. It is time to reform the payday loan industry in Arizona!
Huzzah! Bully to them!
Let us see what more they have to say. Ah, here is the very next paragraph:
Payday lending provides access to short-term credit products for working families that need help making ends meet.
Tell them brother…hold on…wait a sec…who are these guys again?
Well, that’s the funny part. The domain name for Arizonans for Financial Reform is registered to the same lobbyist that represents the Arizona Community Financial Services Association, the payday loan trade group. Yep, the very same people who have been fighting against any sort of reform for years.
Arizonans for Financial Reform is another of these sham “astroturf” groups, one designed to look like a warm and fuzzy grassroots organization but is instead a front for a buisiness organization. One big clue on this one is there is no list of who these “Arizonans” are that are so for “Financial Reform” on the group’s website. Instead, they have a short video with testimonials from customers they have cornered.
The site is putting forward industry claims that they are just trying to help people out who need some quick cash. They don’t tell you that many of these customers, including probably the ones they have interviewed, end up in a “debt trap” cycle. In fact, they count on it. The Center for Responsible Lending reports that 90% of the revenue of these companies comes from people who are “trapped.” They also don’t tell you that because of the way payments and fees are structured, interest rates amount to between 390% and 460%. Illegal for a bank, but legal under the exemption to the law that they got the legislature to pass seven years ago.
So, these guys are making noise now because their special exemption is scheduled to expire in 2010. They are also quaking because Rep. Marian McClure is working on an initiative to end the exemption at the ballot next year. Look for more disinformation from the industry hitting your mailbox soon!
4 Comments
November 8th, 2007 at 2:28 pm
Here’s my prediction: The payday loan industry knows McClure’s initiative would pass - so they’ll try to confuse the issue by putting a “competing” issue on the 2008 ballot.
In the best of worlds - from their view - competing issues split the support for pay lending reform and neither one passes. Second-best, if they outspend McClure, and throw up enough confusion, people will vote for THEIR measure either because they think it’s the real deal, or because they’ll sell it as a “more reasonable” reform.
Third, they can hope that they can get more votes than McClure’s proposal, in which case they win.
Either one of three ways, they can throw piles of money at the problem and, they hope, get their way.
Sometimes it works. Sometimes, not so much. Remember the tobacco initiative in ‘06 that Fife Symington’s PR group ran? They spent millions on their “alternative,” and people realized it was a scam and soundly rejected it.
Let’s hope.
November 8th, 2007 at 9:16 pm
I’m onboard with you on this one.
This group’s idea of “reform” giving their customers drink chits at local casinos along with their cash so they would need to borrow more money even sooner. They don’t follow their own rules already and no payday lending reform law has ever worked anywhere in this country.
Star reported today (story from Howie Fischer) that they’re going to push a “self reform” bill that would nix the sunset clause. Would the legislature please show some spine and squash this? They caused this problem, they should end it and not force the voters to shag signatures for an initiative.
November 9th, 2007 at 8:59 am
The industry proposed a “self reform” bill last year that similarly repealed and/or delayed the sunset date. It stalled somewhere on the way to a conference committee when it became clear that the Governor was not going to sign a bill extending the sunset. I think that this is still the case.
Interestingly enough, one of the many goofy arguments put forward by the “industry” is that payday lenders can continue to operate after the sunset, but they will be unregulated. In other words, they claimed that the sunset would repeal the laws that govern payday lenders, but not the law that allows them to do business. This turned out to be barracks-lawyer hokum, and begged the question of why the “industry” was so animated about the subject of the sunset date if this was the case.
I will have to admit some initial skepticism about the initiative at first. It seemed a waste of time given that payday lending was set to expire in 2010 if my coleagues continued to do nothing, but it quickly became clear to me that this issue will continue to clutter the agenda in the legislature for the next decade unless it was put to the ballot and passed with the blessing of voter protection. Only after we kill this industry outright can we start discussing other options for small-scale lending and real economic development.
May 15th, 2008 at 10:09 am
I am trying to find a local rep that can help me fight a friends payday loan issue? I spoke to someone in virginia that helps but I guess it is governed by state law…Does anyone know someone local.
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