Proposition 200 – Payday Loan Reform Act
Proposition 200 – Payday Loan Reform Act would allow the Payday Loan industry to continue operating without renewed permission from the legislature, as the “deferred presentment licensing program,” commonly referred to as payday loans is otherwise set to terminate on July 1, 2010.
The ballot measure allows for an expansion to the scope of services to allow for electronic debit agreements.
It requires an applicant for a license to maintain a net worth in cash or cash equivalents of at least $50,000 per licensed location, up to a maximum required net worth of $1 million, which could be why one of the arguments supporting the measure submitted by Rep. Jonathan Patton, R-Tucson claims it would lead to fewer Payday Loan stores in Arizona.
Rep. Steve Gallardo, D-Phoenix, also supports the measure because “not everyone can walk into a bank and borrow money and not everyone has a credit card to use when unexpected bills arrive,” claiming “access to credit is a key issue in a down economy.”
There are 31 arguments supporting the measure and a dozen opposing the measure.
AARP opposes the measure as part of its national campaign to stop predatory lending practices that victimize customers.
The Arizona Education Association opposes the measure on grounds that the industry charges interest rates as high as 390 percent, citing the average Arizonan pays back nearly $1,300 on a $500 payday loan.
Gary Restaino of Phoenix defines payday loans as usury: “The act of lending money at an excessive interest rate,” and says it legalizes check-kiting.
Also urging a NO vote is WESTMARC, which for the past two years has supported legislative efforts to eliminate the payday loan industry “based on the premises that their services are usurious and that they are harmful to military employees and neighborhoods.”
Attorney General Terry Goddard says the Payday Loan Reform Act would give payday lenders free reign to charge triple-digit interest rates to Arizona consumers, citing the act would create an indefinite, voter-protected mandate for interest rates of 391 percent or more on small-dollar consumer loans.
There are also a couple of opposition statements from folks who tell about their personal experiences being “victimized” by what one described as “the payday loan debt trap.”