Arizona CUs Pushing for Defeat of Payday Referendum
PHOENIX -- Arizona credit unions, in league with the state attorney general and consumer groups, are hoping to defeat a well-financed referendum on the November ballot aimed at enacting new payday legislation.
Passage of the proposed Payday Loan Reform Act on the Nov. 4 ballot has been called "deceitful" by opponents because of its debt provisions and a clause that frees the payday firms from lawmaker review in charging predatory rates.
In an e-mail blitz rousing its members, the Arizona Credit Union League said it is "weighing in on Proposition 200--the Payday Loan Reform Act--by urging the 1.6 million credit union members statewide to vote no" on the proposition.
In a $10 million TV and newspaper ad campaign, the payday lobby, Arizona Community Financial Services Association, has championed Proposition 200 as a reform issue. The claim was mocked by the opposition, including Scott Earl, the president/CEO of the league, who called it "a frightening prospect" that the payday group can "write its own law and pass it as reform and the legislature can't touch it."
"Payday lenders will charge astonishing interest rates, will have new electronic access to borrowers' checking accounts and will allow people to receive numerous payday loans at once, regardless of existing debt," said Earl.
According to the league, the law would repeal existing statutes that would put payday lenders out of business in 2010, when the 10-year exemption to the state's 36% interest cap they enjoy expires.
Earl said the Arizona league is looking out for members and consumers "to protect them from a deceitful and harmful proposition."
In addition to the league, others joining opposition to Proposition 200 included the AARP, the Arizona Consumers Council, the United Way and State Attorney General Terry Goddard.
The payday lobby in news articles maintains the loans "are cheaper than bouncing a check or having overdraft charges or paying for re-hookup fee for a utility." Proposition 200 would also cap fees at $15 per $100 compared to the current $17.65 and would stop loan extensions. At the end of September there were 640 payday shops in the state, up from 212, eight years ago.
If the proposition passes, the league warned, "the most vulnerable people in our communities will become more susceptible to the three-digit interest rates and debt traps set by Arizona payday lenders."