Advocate

---

6.2.08 - Governor Signs House Bill 545

Columbus, Ohio – Governor Ted Strickland today signed House Bill 545, which establishes stricter regulations for short-term lending practices (payday lending) in Ohio.

"The bipartisan legislation signed today takes a major step toward protecting Ohio consumers who are already struggling with debt by strictly regulating payday lenders and lowering the maximum interest rate for short-term loans," Strickland said.

Sponsored by State Representative Chris Widener, HB 545 caps the interest rate for payday loans at 28 percent, reduced from the current annual interest rate of 391 percent.

The bill also sets a $500 borrowing limit for consumers and restricts borrowers to four loans per year. Additionally, the legislation extends loan terms to 31 days from 14 days.

To the Editor: 

On June 2^nd, Ohio Governor Ted Strickland signed House Bill 545. While some consider this bill controversial, in essence it holds payday lending institutions to the same standards regarding interest rates as traditional financial institutions. 

To summarize, House Bill 545:

  Caps the interest rate for payday loans at 28%, reduced from the current annual interest rate of 391%

• Sets a $500 borrowing limit

   

• Restricts borrowers to four loans per year

   

• Extends loan terms to 31 days from 14 days

   

There has been a lot of discussion and letters to the editor in Muskingum County regarding how detrimental the signing of this bill will be to our community.  I would like to point out some facts that few members of our community know regarding payday lending.

According to the Ohio Coalition for Responsible Lending, 2,870 Muskingum County payday borrowers were trapped in a cycle of debt in 2006 – meaning they each had five or more payday loans in that year. In addition, Muskingum County borrowers paid $2,871,978 in payday loan fees in 2006. 

That’s $2,871,978 that was not spent on paying down credit card debt, opening a savings account, investing in a retirement plan, or more importantly, covering basic needs like food, shelter and healthcare. 

Yes, as House Bill 545 goes into effect, some individuals may lose jobs and that is truly unfortunate. However as a community, perhaps we should focus on why individuals are turning to payday lenders and devise alternative solutions, such as better-paying jobs and low or no-fee savings accounts. 

For example, the average payday loan amount is $328 with fees of approximately $49. If every individual had an emergency savings fund with a minimum of $500 in it, the funds would be available and taking out a payday loan would not be necessary.

As a community, we are already working on alternatives to payday loans. Members of the 

Financial Stability Partnership are studying this problem and proposed solutions. If you would like to know more about the Financial Stability Partnership go online to www.unitedwayofmpm.org. 

Amy Davis

Coordinator, Financial Stability Partnership

United Way of Muskingum, Perry & Morgan Counties

 526 Putnam Avenue, Zanesville

 Phone: 740.454.6872

Sources: www.governor.ohio.gov & Ohio Coalition for Responsible Lending

Ohioans should collect what they're due from TransUnion

Written by Office of Ohio Treasurer of State Richard Cordray

Wednesday, 04 June 2008

(Columbus, Ohio) – Most Ohioans are now owed more than $100 each in credit reporting services from TransUnion Corporation as the result of the largest class action lawsuit in U.S. history.

According to a preliminary agreement, entered May 28 in a Chicago federal court, any person who was a credit card holder from 1987 through last Wednesday is eligible to receive free credit reporting services from TransUnion.

Under the proposed settlement, card holders can select one of two options: Basic Relief which provides free credit monitoring for six months with daily access to a personal credit report and score in addition to 24-hour credit monitoring service. Or Enhanced Relief which includes nine months of credit monitoring, a suite of insurance scores and TransUnion’s "mortgage simulator service" which allows consumers to see whether improving their credit score would affect their mortgage rates and how much they could save if it did.

A third option is Cash Payment, however the payments will not be issued for two years and only if there is money remaining out of the $75 million fund TransUnion has set up.

For nearly ten years the credit reporting giant has been tied up in multiple lawsuits accused of selling confidential credit information to marketers through its now defunct list-making business. Federal law bars the sale of a person’s private credit information except under certain circumstances such as loan applications.

The lawsuits were recently combined into one class action suit and TransUnion and the plaintiffs agreed to the settlement expected to be finalized in September.