Ohio voters will likely vote on state payday lending legislation after a committee to reject the law submitted nearly 219,000 signatures yesterday to put the issue on the ballot.
The Committee to Reject House Bill 545, also known as Ohioans for Financial Freedom, needed to file 55,635 valid signatures to put Issue 5 on the November ballot after a controversial petition process in which thousands of signatures were invalidated.
At the end of August, Ohioans for Financial Freedom submitted more than 422,000 signatures to Secretary of State Jennifer Brunner's office, well over the 241,366 needed to put the issue on the ballot. But because of a paperwork omission by a contracted political consultant and other problems, thousands of signatures were invalidated and the petition fell short of the required number of valid signatures. Under Ohio law, the committee had a 10-day period to collect additional signatures, which ended Thursday.
House Bill 545 was passed last spring and set new restrictions on short-term lending. The law, which went into effect Sept. 1, caps interest rates on short-term loans at 28 percent, sets a maximum loan amount at $500 and limits borrowers to four loans per year, among other stipulations. A "yes" vote on Issue 5 would keep the law and a "no" vote would repeal it.
Kim Norris, spokesperson for Ohioans for Financial Freedom, said the law takes away an important lending option for Ohioans. "We just want the option to take out a loan, pay $15 on a $100 loan, and pay it back in two weeks," Norris said. She also said the law will force payday lenders out of business, destroying 6,000 Ohio jobs.
"I don't ever like to lose any jobs," said Rep. William Batchelder (R), who first introduced payday legislation in Ohio. "But there are some jobs that really aren't very helpful to the economy, and taking this kind of money from the consumers certainly isn't very good for the economy."
According to a report by the Ohio Coalition for Responsible Lending, a group that supports the law, payday lending is a $2.1 billion industry in Ohio that charges more than $318 annually in fees and offers loans at an average annual interest rate of 391 percent.
Recently, Ohioans for Financial Freedom has been accused of using misleading tactics to gather signatures. In an online video, Bexley resident Peder Johanson and other Ohioans complain that petition gatherers told them their signature would help lower interest rates. Rep. Matt Lundy said he encountered a circulator downtown who told him the same thing.
"I took off my sunglasses and I looked him in the eyes and said, 'you know that's not true,'" Lundy said. "You shouldn't be lying to people - if you're going to collect signatures, tell them the truth."
In some counties there have been accusations of voter fraud, a charge that is under investigation in Montgomery County. "If there has been any allegation of any inaccuracy, that should be pursued completely and fully," Norris said. "They should bring that forward for prosecution."
Norris said short-term loans are a necessary option for college students, who need an available source of funds in case of emergencies. Matt Roberson, a senior political science major, said he used short-term loans to pay tuition during his first year in college in West Virginia. "I wasn't receiving FAFSA aid, so without it I wouldn't have been able to go to school," Roberson said. "It's only destructive if you borrow irresponsibly, just like a credit card or a student loan or a car loan."
Senior Franklin Davis said he agrees that students need a source for short-term loans, but said payday lenders aren't the solution. "Because of the high interest rate, the people who go to the payday lenders have no payday," Davis said. "It creates a vicious cycle of them constantly needing payday advances."
Along with the more than 55,000 valid signatures needed, Ohioans for Financial Freedom need to gather signatures that total at least 3% of the ballots cast in the 2006 gubernatorial election in at least 33 of Ohio's 88 counties. County boards of election are responsible for validating the signatures, and submit their results to Brunner's office.
Collin Binkley can be reached at binkley.44@osu.edu.
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