COLUMBUS — Ohio’s battle over payday lending is officially on.
The issue has qualified for the ballot, and opponents of a law that puts tough restrictions on the payday loan industry have raised $15 million in their campaign to repeal it. They say the law will kill 6,000 jobs statewide and rob economically strapped Ohioans of a viable financial choice.
Supporters of the crackdown, who see themselves in a David vs. Goliath battle, will try to reach voters with testimonials from loan recipients and former employees who say the industry traps customers in a cycle of debt. They have collected only a fraction of the cash.
Issue 5 on the Nov. 4 ballot asks voters whether they want to keep restrictions on the industry. A “yes” vote on Issue 5 would uphold the law, which reduces annual interest rates on loans from 391 percent to 28 percent and limits Ohioans to four such loans a year.
The law was passed by the Republican-led Legislature and signed by Gov. Ted Strickland, a Democrat — and their defense of the law is the strongest force in its favor. A host of county officials and former and would-be attorneys general have also said the law is good for the state.
In campaign finance filings released this week, the Vote Yes On 5 Committee reported raising just $266,000 — most of that from the advocacy group for the homeless that championed the original law.
There’s been creativity on both sides, though.
Ohioans for Financial Freedom, the industry-backed coalition behind the ballot issue, has produced a series of snappy TV ads making breezy fun of the most serious complaint against their industry: that it is gouging customers with high interest rates.
“Have you heard that a short term or emergency loan will cost you 391 percent in annual interest rate charges?” an announcer asks as he holds a plastic man figurine in front of the camera. “That’s just bananas — enough to make your head spin!” Then he spins the doll’s head.
The industry has argued that while loan rates multiply out to 391 percent over a year’s time, that doesn’t represent the percentage on a single loan — which is generally $15 for every $100.
Other advertisements say the payday lending law infringes on personal privacy, because it requires tracking the number of loans each person gets in a year.
However, that provision will be unaffected by the outcome of the ballot issue.
“We are fighting to keep 10,000 good paying jobs in the state, credit options for Ohioans and the ability for consumers to keep their names out of a creepy government database,” said Kim Norris, a spokeswoman for the lenders.
The Vote Yes committee, meanwhile, reported in its filings that it received one miscellaneous donation of a $76 shark costume, which has been worn by their campaign mascot: Shady Shark. Their press release says Shady is a “reformed loan shark” who now spends his days campaigning for their cause. Shady briefly appeared on his own Facebook.com page, until the social networking site balked.
Nicole Newman of Chillicothe doesn’t care much for all the imagery.
She formerly managed a payday lending store and says the “loan shark” image of the industry has hampered her career as an accountant.
But she’s even more irked by industry ads that say voters should vote “no” on the interest rate caps to keep good-paying jobs in the state. Newman contends she lost her job for saying she supported the limits on the industry.
“I believed in the bill because I think it will help people,” Newman said in an interview with The Associated Press. “Because they get in and they can’t get out. I’ve seen it for six years.”
She spent those years in the cash advance business, she says, and struggles now to find work because other financial institutions don’t want to hire someone from the payday industry.
The 33-year-old mother of two said she knew most of her customers well, because most returned again and again.
“They’d come in, pay off a loan on a Friday, (but) I wouldn’t even put their folder away because I knew they’d be back,” she said. “They gave me all their money, they didn’t have any left.”
Newman wrestled with her conscience when handing out loans, she said.
“A lot of people that had never done a cash advance before, they’d come in to get money to fix their car or pay the bills. They’d say, ‘Gosh, this is so easy. I’ve never done this before,’ ” she recalled. “I’d be thinking in my head, ‘You have no idea what you’ve gotten into.’ ”
To bolster their financial choice argument, payday lenders have cited a Federal Reserve Bank of New York report that found bankruptcy filings increased in states where payday lending is banned.
Ohio’s law is not a ban.