Whitehall Mayor Kim Maggard says she is pleased a new state law regulating short-term loans will better protect residents, but opponents of the new law say it will further harm those who rely on such loans.
Ohio Gov. John Kasich signed Ohio House Bill 123, a modification of Ohio's Short-Term Loan Act, into law July 29; the law became effective 90 days later, on Oct. 29.
Amendments in the new law prohibit the issuance of loans of more than $1,000 and for terms of more than 12 months, according to the legislation.
A new provision in the law also prohibits any short-term lender from extending loans to any individual in combinations that exceed $2,500, said Ohio Rep. Kyle Koehler (R-Springfield), the bill's co-sponsor with Ohio Rep. Mike Ashford (D-Toledo).
"This bill does not limit the number of loans (a lender can issue) ... it only limits the number of loans that can be made to the same individual," Koehler said.
The new law also requires providers of short-term loans to advise potential customers that loans with lower interest rates are available at banks and credit unions; grants customers the right to rescind or revoke a short-term loan by refunding the principal by 5 p.m. of the third business day after the loan is executed; prohibits the acceptance of a vehicle registration as security for a loan; and caps the annual interest rate of any loan at 28 percent.
"I support this legislation in that it lowers the ability of payday lenders to prey upon our residents, eliminates motor-vehicle-title lending and puts a cap on loans at $1,000," Maggard said.
Whitehall has a number of short-term-loan facilities that are subject to the new law, including National Check Cashers, 4775 E. Broad St.; Check$mart, 4100 E. Broad St.; CashMax, 853 S. Hamilton Road; and Cyber Check, 190 S. Hamilton Road.
Employees of several short-term-loan agencies in Whitehall said they were not authorized to speak about the new legislation, including those at National Check Cashers and Check$mart, and referred questions to the Ohio Consumer Lenders Association.
Patrick Crowley, a spokesman for the association, said he believes the new law will prove detrimental to consumers.
"A Republican governor signed a bill passed by the GOP-controlled House and Senate that was backed by a Washington, D.C.-based advocacy group over the protest of companies employing thousands of Ohioans and serving more than 1 million customers," Crowley said.
"House Bill 123 is an untested and unproven attempt to regulate to extinction an industry that is needed by Ohio's middle class," he said.
Efforts to change how short-term loans are administered are not new, Koehler said.
In 2008, Ohio voters approved a ballot referendum that capped interest rates on short-term loans at 28 percent and capped loan amounts at $500.
But lenders reorganized in such a fashion to use a "loophole" that allowed practices to generally continue as before, Koehler said.
The origins of House Bill 123 began at a meeting in June 2016, said Koehler, who responded to the request of a pastor in his district to meet.
Koehler said he learned about a woman who spent several years making payments that covered only the interest after taking out a short-term loan from one of multiple short-term lenders that dot U.S. Route 40 in Springfield.
"He told me about several people in his church congregation stuck in these kinds of loans," Koehler said.
House Bill 123 was introduced in March 2017 and referred to the Government Accountability and Oversight Committee.
The bill passed in the House by a 71-17 margin June 7 and was introduced June 11 in the Ohio Senate.
On July 10, it passed 21-9 in the Senate and was returned to the House as an amended bill, where it passed 61-24 on July 24.
Kasich signed the bill five days later, and it became effective after a 90-day waiting period.
Opponents say the new law will not perform as advertised and that ulterior motives were at hand.
"Time will show that this legislation is not real reform but an effort to eliminate the existing brick-and-mortar small-dollar loan industry, and like ill-conceived attempts of the past, consumers and workers in the industry will be hurt by the implementation of House Bill 123," Crowley said.