By: Javi Calderon
Missouri Judge Shuts Down Payday Loan Petition
A Jefferson City, Missouri judge has invalidated a petition for a ballot initiative that would challenge the state’s payday loan lending laws.
Cole County Circuit Judge Dan Green ruled that the wording on the petition was unclear and likely to deceive the Missouri voters who were being asked to sign it. He went on to point out that the description of the initiative on the petition was insufficient; while stating that interest rates and fees would be capped, the description failed to include what that cap would be.
Green went on to rewrite the description, adding the 36% limit that is being proposed in the initiative, and ordered that Auditor Tom Schweich’s office calculate a new financial estimate. The original estimate concluded that the state government could expect to lose $2.5- to $3.5 million in tax revenues, but failed to add in a specific group of short-term lenders who would lose revenue from the interest rate cap.
According to Missouri law, the judge’s decision invalidates all signatures (over 100,000 according to the group in charge of canvassing) collected with the original wording. With no more than one month before the May 6th deadline, this might prove a fatal blow to the ballot initiative.
The group Missouri for Responsible Lending has said they will continue full-force with their canvassing efforts, while the Secretary of State’s office, which wrote the description, is considering appealing the decision.
In total 17 states across the U.S. have implemented a 36% interest rate cap on short-term loans. The rate has proven to effectively kill the payday lending industry, as it doesn’t provide enough revenue to even cover the costs of processing the loan.
This is the second time signatures have been collected for a ballot initiative aimed at curbing payday advance loans over the last two years. Consumer and public interest groups have allied on either side of this debate, and several legislators have penned legislation for amending the current law. Though the state’s payday loans laws have certainly taken heat, they have managed to survive the added attention. One thing is for sure, this certainly won’t be the end of the debate.