Groups rally to support stiffening payday loan regulations - KCTV5

Groups rally to support stiffening payday loan regulations

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Justin Schmidt/KCTV Justin Schmidt/KCTV
Andy Sherer/KCTV Andy Sherer/KCTV
KANSAS CITY, MO (KCTV) -

A KCTV5 News Investigation exposed the high interest rates payday loan lenders were able to charge. In July 2011 KCTV5 showed viewers it was common for lenders to charge 445 percent, but could charge up to nearly 2,000 percent.

One month later Missourians for Responsible Lending announced a campaign to put a measure on the ballot that would cap interest rates at 36 percent. The group gathered the needed 90,000 signatures In May 2012.

But then, Secretary of State Robin Carnahan announced the measure couldn't appear on the November ballot because too many voters' signatures were invalid. Lawyers wrangled over the issue until Missourians for Responsible Lending announced on Monday it would drop its bid.

Supporters of the measure said they still believe they collected enough signatures, but they've decided to drop their lawsuit challenging Carnahan's ruling.

"While we are very disappointed that the measures to Cap the Rate and Raise the Wage will not be on the ballot this November as Missourians demanded, we are not deterred in the fight for economic justice in Missouri," Communities Creating Opportunity and Missouri Jobs with Justice said in a news release. "The out-of-state payday lenders and corporations who have spent so much to protect their 400 percent interest rates and poverty wages are hoping this setback means we will quit our fight. But they will not have that satisfaction. Polling has consistently shown that more than 60 percent of Missouri voters support both measures, and the pressure to Cap the Rate and Raise the Wage by legislation or ballot measure will not go away."

Missourians for Equal Credit Opportunity said in a statement they were happy with Missourians for Responsible Lending's decision to stop trying to get their issue on the ballot.

We were pleased to hear that Missourians for Responsible Lending has dropped their legal challenge to place the "cap the rate" initiative on the November ballot. The Missouri Secretary of State properly determined that the proponents fell short of valid signatures required in the 1st Congressional district. The real winners today are the thousands of Missouri families who will continue to have access to valuable credit options.

People outraged at the decision to drop the measure from the ballot gathered in Kansas City Wednesday.

The people who gathered outside Speedy Cash Payday Loans are just a few of the volunteers who collected all the signatures and they're saying the payday loan industry's legal maneuvering kept the issue of rate capping off the November ballot.

"It wasn't the will of the people we know if it had gone to a vote we would have won," Rev. Susan McCann with the Grace Episcopal Church said.

McCann said 60 percent of Missourians believe payday lenders should have limits on what they can charge.

"We have no desire to shut down the payday loan industry, all we desire is a fair equitable interest rate," she said.

KCTV5's Justin Schmidt spoke with a payday loan customer. She didn't want her name used, but said she would have liked to see rate caps.

"They're high, interest rates are very high. A lot of us are there because we need the money. Kind of low till next payday," the customer said.

The groups pushing for those regulations wanted to stop the cycle many payday loan customers fall into, of using a loan to pay off the last one. McCann said it's part of her job as a church leader to fight this fight.

"I'm a person of faith, I believe it's a gospel imperative, I think it's a mandate," she said.

McCann said more than 100 churches across the metro worked to take rate caps to a vote in Missouri. She said the current setback won't be the end of the fight.

"We will absolutely not give up until we have achieved economic dignity for all people of Missouri," she said.

Organizers put a lot of thought into where to hold the rally. They decided on Main Street between 39th and 40th, just a few hundred feet from St. Paul's Episcopal Church and just a few hundred feet from three payday loan shops.

The Speedy Cash corporate offices released the following response about the group Communities Creating Opportunities decision to protest outside of their payday loan business.

We welcome representative from Communities Creating Opportunities to our Kansas City branch and hope that they will conduct any demonstration in a peaceful and lawful fashion and not create any disruption to our business and our valued customers. While we fundamentally disagree with their attempt to enact a cap on interest rates on short-term loans—a cap which would eliminate short term loans as an option for our Missouri customers—we respect their right to attempt to make their case in public.

The basis for our disagreement is simple: Imposing an interest rate cap on short term loans is bad for consumers. Their poorly-conceived initiative would have eliminated all short term lending and driven borrowers to more expensive and credit-damaging alternatives such as bounced check and late bill payment penalty fees. Government and university studies show that short term lending is beneficial to consumers and saves them from higher bank fees, bankruptcy and collection agency abuse.

In addition to preserving short-term loans, the failure of the initiative also protects an estimated 10,000 Missouri jobs paying $378 million in annual wages, $147 million in tax revenue and $596 million in Gross State Product—all of which the initiative would have eliminated.

We encourage all organizations to support more options for consumer credit in Missouri and the nation. Short term lending is heavily regulated by the state and federal authorities and we support a number "best practice" initiatives by national and state trade associations. We are always available to meet with interested advocacy groups to find common ground to support consumer choice and responsible business practices.

Click here for previous coverage on this story.

KCTV5 investigated payday loan interest rates in Missouri last year. Click here and click here to watch the pieces.

Copyright 2012 KCTV (Meredith Corp.)  All rights reserved.

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