In Arizona, 'Greedy' Payday Loans at Issue

Tucson, Arizona -- A group of financial service providers called Arizonans for Financial Reform filed signatures last week with the Arizona Secretary of State's office to put a statutory initiative, the Payday Loan Reform Act, on the ballot. The initiative, if passed, will amend the law governing deferred presentment, more commonly known as payday loans.

An industry-sponsored alternative to state representative Marian McClure's failed Stop Payday Loans initiative, which would have banned deferred presentment altogether, the Payday Loan Reform Act extends the enabling law for payday lenders, set to expire in 2010, indefinitely, while at the same time forbidding some of the practices considered usurious. Among the changes made to regulations are:

* A requirement that the lender present the terms of the loan in Spanish if requested by the borrower.

* Requiring a one-day waiting period between the completion of one deferred-payment transaction and entering into another.

* Mandating that payday-loan businesses offer a four pay-period payment plan.

* Forbidding customers to enter into a deferred presentment transaction with another lender during the period of the payment plan.

Had Rep. McClure's measure made the ballot, chances of this measure passing would be slim; Arizona voters have tended in the past to look negatively on business-sponsored counter-initiatives such as 2006's Proposition 206, which would have banned smoking in all establishments except bars and tobacco shops. Without a rival, contradictory initiative, it would take a true fit of cynicism or spite for even ardent payday loan foes like McClure to oppose this one. Requiring a waiting period and repayment plans eliminates the "rollover" procedure many find abusive.