Over the summer, Sen. Skindell worked with colleagues in the Legislature to place much-needed regulation on the payday lending industry, and provide relief for consumers from astronomical fees and interest rates.
Over a decade ago, The Ohio Legislature worked to regulate the industry by capping interest rates and limiting the size of loans lenders could provide. The lenders took advantage of a loophole, registering under a different section of Ohio law so they did not have to cap interest rates or fees. After ten years, Ohio now has one of the highest average interest rates in the nation, coming in at a whopping five hundred and ninety one percent. With one in ten Ohioans having taken out a “payday” loan, these higher interest rates and fees total hundreds of millions of dollars each year leaving the state and padding the pockets of out-of-state lenders.
House Bill 123 originally started as a grassroots effort by faith leaders to help out members of their congregations. After over a year of work, and stall tactics by the lending industry, it was signed into law by Governor Kasich. With a few small amendments in the Senate Finance Committee, it passed with a majority of 21-9 on July 10. The Senate’s version of H.B.123, known as the Fairness in Lending Act, seeks to change the payday lending industry by limiting loan amounts and their terms, lowering fees and interest and prohibiting harassing calls by lenders.
With H.B.123 projected to save working families $75 million a year, this bipartisan legislation will bring much needed relief to those who are currently trapped in a cycle of crushing debt. It is time for the payday lending industry to play by the rules.