Ohio’s Coalition for Responsible Lending (“OCRL”) has issued a press release filled with deceptive information and fabrications. They should be held accountable and asked to back up their irresponsible claims with facts. It is important that people see through the hype surrounding the issue and consider the facts.

CRL Claims: A “compromise” is threatening the payday lending legislation and “outraging” advocates.

• The Truth: The industry has not put forward language for a compromise bill, but has talked to legislators that are interested in preserving some version of small loan choice for consumers and not putting thousands of people out of work. Our goal has always been to be part of a solution that addresses the concerns of policymakers and provides responsible protections for consumers. This type of scaremongering by OCRL underscores the fact that they do not want to help consumers. They refuse to support legislation that would actually help consumers by addressing issues such as cycle-of-debt. Their goal is not reform, it is an outright ban.

CRL Claims: The industry tapped into an almost never-used provision in Ohio Revised Code that allows credit unions to charge fees of $10 per $100 on top of the 18% APR allowed. Credit unions never took advantage of the provision because it was predatory.

• The Truth: This is misleading. Credit Unions asked for the provision in HB 81, sponsored by Geoff Smith and enacted in April 2006. In fact, the two credit union alternatives frequently referenced by the Bill Faith and OCRL charge more for a first time borrower than payday loan companies do.

For example:

The “Stretch Pay” payday loan alternative, offered by credit unions across Ohio and championed by OCRL and others as a better choice for consumers, comes with an 18% APR plus an annual fee of $35 (for a $100 advance) or $70 (for a $500 advance).

“Grace” Payday Loan offered by Faith Community United Credit Union- Cuyahoga County, OH is 17% APR plus a $15 application fee per loan.

CRL Claims: The industry wants borrowers to pay for industry’s taxes

• The Truth: Like any other product ot service, the costs associated with providing a payday loan dictates the pricing for consumers. Due to their not-for-profit status, credit unions are exempt from federal and state income taxes. And they do not have to pursue a profit. They are, therefore, able to offer payday loan alternatives at break-even or less. Credit Unions do not have the resources or the infrastructure to handle the loan volume after payday lenders leave. In order to continue offering payday loans in Ohio, for-profit payday lenders would need to not only break-even, but pay taxes and make a reasonable profit. The industry welcomes credit unions and any other financial service providers into this market. We believe consumers should have more choices, not fewer, and select the one that best suits their needs.

CRL Claims: First-time emergency borrowers would pay 469% APR…Currently, payday lenders charge $15 per $100, or 391% APR.

• The Truth: The numbers don’t add up. The fee per $100 will go down from $15 to $10.00, the truth is that the only additional fees discussed were for tax liability obligations, but CRL claims the APR will go up from 391% to 469%. This is blatantly false.

The “he” is Bill Faith, head of the Ohio Coalition for Responsible Lending.   He was speaking to State Sen. Tom Niehaus.   Here’s the entire piece.    

I don’t know what it is with the Wall Street Journal, but they seem to have it in for the payday lending industry.   An article today about Rent-A-Center says the company asked a charity it supports not to endorse an effort to ban payday loans.  Rent-A-Center put out this reply.  

The Wall Street Journal wrongly reported this morning that Rent-A-Center threatened to end its financial support of America’s Second Harvest unless the endorsement was withdrawn. In reality, the company asked that, if the Ohio food banks were going to be members of the Ohio Coalition for Responsible Lending, then Rent-A-Center wanted its donation to be redirected to the other 49 states “where fighting hunger was their sole purpose.”

Rent-A-Center, like any other contributor to a charitable organization, wants its donation be used for its intended purpose, not to support a group completely unrelated to the charity’s mission. According to Gus Whitcomb, VP of public affairs for Rent-A-Center, “We made a commitment to help put food on people’s tables. We don’t want our money spent on anything else.” A reasonable request.

Good for Rent-A-Center to respond so quickly and so toughly.   Wall Street Journal reporters, like most journalists, love to listen to anti-business advocacy groups and do their dirty work for them.