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Missouri Payday Loan Initiative (2012)

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The Missouri Payday Loan Initiative may appear on the November 2012 ballot in the state of Missouri as an initiated state statute.

The proposed measure is sponsored by a group called Missourian's for Responsible Living.[1]

A total of 3 initiative petitions have been approved for petition circulation.[2]

Text of measure

The ballot title for the petition reads:[2]

Shall Missouri law be amended to limit the annual rate of interest, fees, and finance charges for payday, title, installment, and consumer credit loans, unless the parties agree otherwise in writing, and prohibit such lenders from using other transactions to avoid the rate limit?



The proposal is estimated to result in no direct costs or savings to state and local governmental entities.

Background

Payday loans are generally a low, single payment loan that customers repay when their next paycheck is received. According to reports, loan amounts usually range from $100-$500.[3]

The Missouri Division of Finance reports that in 2010 there were an estimated 1,040 payday loan stores and 2.43 million payday loans in the state of Missouri.[3]

A 2007 study by the state division found that of 3,700 borrowers, the average age was 43 and the average income was about $24,000.[3]

Support

The measure is supported by religious groups and civic organizations according to news reports. The PAC in support of the measure is called Missourians for Responsible Lending. According to news reports, the PAC has raised $50,000 and spent $10,000.[4]

Tactics and strategies

On January 28, 2012 Missourians for Responsible Lending and Give Missourians A Raise, a group circulating petitions for a 2012 initiative to increase the state's minimum wage, kicked off the two initiative petition campaigns at a joint event at the Boone County Commission Chambers.[5]

Opposition

The measure is opposed by a Kansas City nonprofit called Missourians for Responsible Government. According to news reports, the group has contributed $600,000 to a committee in opposition of the measure.[4]

Stand Up Missouri, a non-partisan coalition which represents consumers, businesses, civic groups, and faith-based organizations, launched a campaign effort in opposition of the proposed initiative on December 7, 2011. "Missourians are being asked to sign a petition for a ballot initiative that would cap lending rates. While the initiative is being reported as an effort to protect consumers from payday loans, it would actually restrict access to all small loans, including beneficial traditional consumer installment loans. These traditional loans help individuals and families get access to safe and transparent credit in a way that enables them to preserve their financial security," said Tom Hudgins, CEO and Chairman of Stand Up Missouri.[6]

Lawsuits

See also:List of ballot measure lawsuits in 2012 and 2012 ballot measure litigation
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A lawsuit was filed on August 18, 2011 in Cole County Circuit Court. The lawsuit argues that the ballot summary is "inadequate and unfair." Additionally, the suit notes that the cost estimate does not address all possible costs.[7]

According to reports, the plaintiff is John Prentzler, director of auto operations at AutoStart USA. Prentzler is represented by Kansas City attorney Todd Graves and Jefferson City attorney Chuck Hatfield.[8]

Specifically the lawsuit highlights that the lengthier fiscal note attached the the measure outlines a gloomier economic impact than what is outlined in the ballot language. State estimates say that the measure could cost the state between $2.5 - $3.5 million, however, plaintiffs point to a report by a University of Missouri economics professor and former director of the Show-Me Institute that argues that the impact could be approximately $57 million in the first year should the measure be approved.[8]

A second lawsuit was filed on August 19, 2011 in Cole County Circuit Court. Contrary to the lawsuit filed by critics of the measure, the second lawsuit was filed by proponents. They argue that the fiscal note ignores testimony by state and local agencies that found that the proposed measure would have no cost on their budgets. Additionally, the suit notes that the fiscal note relies on the expertise of a someone who has testified against the regulations in the past.[9]

Path to the ballot

See also: Missouri signature requirements

To qualify for the ballot, the initiative requires signatures from registered voters equal to 5% of the total votes cast in the 2008 governor's election from six of the state's nine congressional districts. Signatures on behalf of all initiative petitions for the 2012 ballot are due to the secretary of state’s office by no later than 5 p.m. on May 6, 2012.

A total of 3 initiatives have been certified for petition circulation by the Missouri Secretary of State. One initiative was certified on August 9, 2011 and two were certified on February 1, 2012.[10][2]

See also

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