Major reform of the payday lending industry appears to have gone by the wayside this session, as a bill to restrict how such lenders interact with military members will not be amended in the House to add sweeping regulations and changes.
Reps. Marian McClure, R-30, and John Nelson, R-12, were prepared last month to heavily amend S1006 when it came up for floor debate in the House, but opted not to out of professional courtesy.
“If I amend it,” Ms. McClure said, “the sponsor of the bill is put under intense pressure to accept the amendments, whether he liked them or not.
“I would not like that if it were me, in reverse.”
Among other things, the bill will prohibit payday lenders from garnishing the wages of military members and it was amended in a House committee to prohibit loan rollovers for servicemen and women. A rollover is when a loan term is extended at an additional charge to the consumer.
Ms. McClure and Mr. Nelson each had a pair of amendments for the bill.
Mr. Nelson had intended to include provisions that would have:
Limited the returned-check charges a payday loan company could impose on consumers if the check bounces or if there is a stop-payment on the check.
Fined payday loan companies $250 if they opened a new loan for a client within 24 hours of that client paying off a loan with the same company.
Prevented payday loan companies from using a provision in state statute that allows merchants to sue consumers in civil court for double the face value of a check if the check bounces.
Ms. McClure wanted to alter the bill to expand the loan-rollover prohibition from military members to all consumers. She also wanted to reduce the interest rate for a payday loan to 14 percent of the amount borrowed from the current level of 15 percent of the face value of the post-dated check written by the borrower.
“Would I have loved putting those on there≠ Oh, you bet,” she said. “I just don’t think that it’s the right thing to do.”
Lobbyist: Lenders are pleased
Lee Miller, a lobbyist representing the Arizona Community Financial Services Association, an organization of payday lenders, said he was pleased the bill would be moving forward without the floor amendments. He said the industry was in favor of the underlying bill but opposed the changes Ms. McClure and Mr. Nelson wanted to make.
Many of the provisions the pair of lawmakers had intended for S1006 were included in H2498, which was supported by the lenders. That bill, which was never heard on the House floor, also removed a 2010 repeal of the payday loan industry from statute, allowing the lenders to operate in perpetuity, albeit with more stringent regulation.
Ms. McClure said she is preparing to tackle the issue next session, if she is re-elected in the fall.
“I would suspect that next year you will have some serious, meaningful reform on the payday loan industry,” she said.
Mr. Miller agreed and said the industry is “ready, willing and able” to work with lawmakers and the governor to find a solution that works for everybody.
“We certainly have no intention of going backwards from H2498,” he said. “We’ll see what needs to be revised, certainly, within that context, and get something we can send to the governor.”