Senator Sykes Applauds Passage of Payday Lending Reform Bill
July 10, 2018
Vernon Sykes News
Today, state Senator Vernon Sykes (D-Akron) voted to protect Ohio consumers from predatory payday lenders by supporting Substitute House Bill 123.
“Today, the Ohio Senate chose consumers over special interests,” said Senator Sykes. “Too many Ohioans, including people in my district, have fallen victim to these predatory lending tactics. Hidden fees, bloated rates and loan terms designed to confuse consumers have been common practice for these lenders and I am pleased to see the Ohio legislature take action in halting this abusive business model. The Ohioans for Payday Loan Reform coalition deserves credit for keeping the legislature focused on this issue and fighting for necessary consumer protections.”
Sub. HB 123 is based on a Colorado law that has saved consumers in the state more than $250 million while still maintaining an active short-term credit market. Payday reform advocates have pointed to the Colorado law as a model that put an end to the industry’s predatory practices and protects consumers.
According to the Pew Charitable Trusts, one in 10 Ohioans have taken out a payday loan, the fourth highest rate in the nation. The average Ohio borrower is charged an annual percentage rate of 591%, the highest rate in the country.
In 2008, Ohio voters overwhelmingly approved the Short-Term Loan Act, which was meant to reform Ohio’s payday lending laws. However, payday lenders have been operating within a loophole of that law that allowed them to function as mortgage lenders and charge unlimited fees, often trapping borrowers in a cycle of debt, forcing them to take out new loans to pay off old debt.
“Today, the Ohio Senate chose consumers over special interests,” said Senator Sykes. “Too many Ohioans, including people in my district, have fallen victim to these predatory lending tactics. Hidden fees, bloated rates and loan terms designed to confuse consumers have been common practice for these lenders and I am pleased to see the Ohio legislature take action in halting this abusive business model. The Ohioans for Payday Loan Reform coalition deserves credit for keeping the legislature focused on this issue and fighting for necessary consumer protections.”
Sub. HB 123 is based on a Colorado law that has saved consumers in the state more than $250 million while still maintaining an active short-term credit market. Payday reform advocates have pointed to the Colorado law as a model that put an end to the industry’s predatory practices and protects consumers.
According to the Pew Charitable Trusts, one in 10 Ohioans have taken out a payday loan, the fourth highest rate in the nation. The average Ohio borrower is charged an annual percentage rate of 591%, the highest rate in the country.
In 2008, Ohio voters overwhelmingly approved the Short-Term Loan Act, which was meant to reform Ohio’s payday lending laws. However, payday lenders have been operating within a loophole of that law that allowed them to function as mortgage lenders and charge unlimited fees, often trapping borrowers in a cycle of debt, forcing them to take out new loans to pay off old debt.