The Ohio House voted in favor of a controversial bill that will make significant changes to the payday and auto title lending industry.
“The time for reform is now,” said State Representative Kyle Koehler (R-Springfield), who introduced the bill in March 2017, according to Dayton Daily News.
The legislation — House Bill 123 — now goes to the Ohio Senate. The bill had been delayed until the House chose a replacement for former House Speaker Cliff Rosenberger, who resigned in mid-April after the FBI started investigating a 2017 trip to London that he took with lobbyists from the short-term loan industry.
In addition to closing loopholes, the bill aims to limit monthly payments to no more than 5 percent of the borrower’s gross monthly income; limit fees to $20 per month or no more than 5 percent of the principal up to $400; require clear disclosures for consumers; and cap fees and interest at 50 percent of the original loan amount.
Koehler added that Ohio has 650 lenders, and about one in 10 Ohioans take out a payday loan.
State Representative Bill Seitz (R-Cincinnati) opposed the bill, claiming that customers are happy with the industry and the bill doesn’t address the root problem: financial literacy. However, co-sponsor State Representative Michael Ashford (D-Toledo) said financial education isn’t going to fix the issue. “The bottom line is they’re still poor people.”
Last month, consumer advocates in Ohio were granted permission to begin collecting signatures to place a constitutional amendment regarding payday loan reform on the ballot. The coalition will need to collect more than 300,000 signatures to get the measure on the statewide ballot. The deadline for this year’s ballot is July 4.
This new proposed amendment closely resembles House Bill 123, so it’s not surprising that payday and auto title lenders aren’t in support of the bill, warning that it could force storefronts to close and leave many Ohioans without a way to borrow cash.
“The Ohio Consumer Lenders Association favors reform that curbs excesses without ending access to credit,” association spokesman Patrick Crowley said in a statement. “This extreme ballot proposal will cause major economic hardships for hundreds of thousands of Ohioans who are unable to get loans from banks or credit unions.”