State Rep. Matt Lundy is working to close payday lending loopholes that have allowed companies to operate around a voter-approved measure that sought to cap interest rates for short-term loans.
The Small Loan Consumer Protection Act sponsored by Lundy, D-Elyria, was introduced Friday with Rep. Ron Maag, R-Lebanon, serving as the co-sponsor of the bi-partisan bill.
Maag is joining Lundy, who began pushing to put laws in place to prevent Ohio residents from being subjected to short-term loans with outrageous interest rates.
“We have been working for over a year to address this issue, and I’m optimistic that this new approach will garner broad bipartisan support,” Lundy said. “I’m hopeful we can move forward quickly to address the excessive rates charged by payday lenders.”
Lundy said thenew legislation is much simpler than a law already in place and will focus on three core areas of concern.
First, it would prohibit lenders licensed under all small loan and mortgage lending statutes from charging fees for cashing their own checks. Second, it would stop lenders from charging an origination fee or a credit check fee more than once in a 90-day period on loans of $1,000 or less. And third, it would prohibit lenders from charging a fee to broker loans from another organization; or a fee to act as a credit service organization on behalf of the borrower.
“This simplified approach should streamline the legislative process and finally close the loopholes that payday lenders have been using since voters overwhelming approved a 28 percent interest cap in 2008,” Lundy said.
After voters overwhelmingly approved a law to restructure the payday lending industry’s practice in Ohio, payday lenders quickly used other lending practices that legally allowed them to charge additional fees.
Contact Lisa Roberson at 329-7121 or firstname.lastname@example.org.