Nick Bourke, Director, The Pew Charitable Trusts consumer finance project:
“The payday loan proposal outlined by Speaker Pro Tem Kirk Schuring would not change the status quo in Ohio. The credit services organization (CSO) loophole would remain open, and loans would continue to have APRs over 300%. The proposal all but ignores a bipartisan bill, HB 123, which includes proven protections that would save Ohioans more than $75 million per year while promoting widespread access to safe small-dollar credit.
“(The) proposal from House leadership does not reflect the fundamental input provided by Pew, civil rights groups, consumer advocates, veterans, small business leaders, clergy, or borrowers themselves who have met with House leadership in the past. It fails to close the legal loophole that payday lenders have used to charge Ohioans the highest prices in the country. Instead, Rep. Schuring has proposed vague payday lender-friendly ideas that evidence shows have harmed consumers in other states.
“Ohio residents pay the highest prices in the country for small loans. This proposal would legitimize harmful practices without putting meaningful protections in place. Similar bills were passed in other states like Utah and Louisiana to make cosmetic fixes and did not protect consumers. If it becomes law, Ohio residents will continue to be charged four times more than residents of other states for the same loans. Years of research make clear that this hollow proposal is not a step forward and would not fix the payday loan problem in Ohio.
HB 123 Schuring Proposal
Affordable, equal payments for all loans: Yes No
Reasonable loan lengths (not too short or long): Yes No
Achieves lower prices: Yes No
Based on evidence of effective policy from other states’ experiences: Yes No
Cost to borrow $500 for 6 months (fees + interest): $142 ?
“As explained in testimony provided to the House Government Accountability and Oversight Committee today (March 22), Pew cautions against accepting false remedies that benefit payday lenders and stifle competitive lending markets. Instead, we urge Ohio lawmakers to build on the sensible reform proposals reflected in HB 123.”