Payday loan customers cry foul

[cashlenders]

Borrowing quick cash just became more difficult.

Gov. Ted Strickland signed legislation Monday to establish stricter regulations for payday lending in Ohio -- angering many borrowers who say they've been left without a safety net to get from one paycheck to the next.

"This is a godsend for people trying to get their bills paid, basically make ends meet," Dan Schardt, 48, said while exiting Cashland, 223 W. Perkins Ave.

The Sandusky electric technician, who uses a payday loan about once a month and said he always pays them back on time, believes people like him are being punished for the actions of those who may not use the loans responsibly. With new restrictions preventing him from taking out loans as needed, he said he will likely be forced to tap into his retirement account to avoid the more restrictive penalties that accompany bounced checks and bank overdraft fees.

"This is the first instance where the government just shuts down a business arbitrarily," Schardt said. "They're not considering the people who will be out of work, the property owners who lease to them and the public -- it's a big disappointment."
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Sponsored by State Rep. Chris Widener, R-Springfield, House Bill 545 caps the interest rate for payday loans at 28 percent -- reduced from the current annual interest rate of 391 percent.

The bill also sets a $500 borrowing limit for consumers, restricts borrowers to four loans per year and extends loan terms from 14 days to 31 days.

In a news release Monday, the governor called the legislation a "major step toward protecting Ohio consumers who are already struggling with debt."

Advocates agreed, saying the potential loss of approximately 6,000 jobs in Ohio needs to be weighed against the dangers of trapping people into multiple loans.

"We are thrilled beyond words with the signing of this bill," Ohio Coalition for Responsible Lending chairman Tom Allio said. "Ohio now has landmark legislation of historic proportions -- it's a model for legislation that will soon be replicated by other states around the nation."

Allio said the industry has "no one to blame but themselves" for being unwilling to compromise with legislators, who he said tried to balance the loss of jobs with the desire to protect the approximately $318 million Ohioans lose each year to payday lending.

The average borrower takes out between 11 and 12 loans each year, he said.

Most payday lenders and their employees aren't discussing specifics right now, releasing general press statements while they evaluate plans for the future. They say their business simply cannot operate under a 28 percent interest cap, which would require them to reduce their $15-per-$100 loan fee to a little more than $1.

Lynn DeVault, president of the Community Financial Services Association, a payday lending industry group, issued a statement saying that lawmakers "chose to turn their backs on their constituents and play politics."

"It is a sad day when the opinions of editorial writers and so-called consumer groups count for more than the opinions of the people responsible for putting lawmakers in office," DeVault wrote.

Fast Cash of America president and CEO Mike Steele is expressing his concerns through letters to legislators and media outlets.

His company already closed 18 of its 24 locations and terminated 59 employees.

In his letter, he calls for the resignation of Strickland and all legislators who voted for the bill.

"The interest of the Ohioans was not served by the passage of this bill," Steele said. "This bill was nothing short of a statement of power ... most importantly, it was not an issue that the Ohioans wanted (legislators) to spend time on."

Steele said he's already witnessed customers crying and hinting suicide because they have no other way to pay their bills.

Check 'n Go spokesman Jeff Kursman said his company is still exploring options that would allow him to retain its 72 Ohio stores and 150 employees.

"The law doesn't go into effect for 90 days, so we have no immediate plans to close businesses," he said.

In the meantime, local residents like Esther Viock and her father, Lyle, say they're left wondering what their next move will be.

"It's not fair," said Lyle Viock, 49, who uses occasional payday loans to pay bills while waiting on the $800 he receives each month in spousal support after the death of his wife. "What are people supposed to do?"

Esther Viock, 20, said she often works 12-hour days at a fast food restaurant but still doesn't earn enough to make ends meet.

"This is supposed to be a free country," Viock said. "It doesn't feel free when they're telling you what to do with your money ... it seems like (the government) is taking from the poor to make the rich richer."