Payday Loans, 391% Interest, and Issue 5

I’ve concluded that I’ll vote “yes” on Issue 5.

Like so many of these statewide ballot issues, this one is confusing, especially if all you look at are advertising messages. That’s because virtually all the advertising has come from one side: the payday loan industry, which obviously has a stake in seeing this issue go down.

Issue 5 is a referendum on a provision of a state law (HB 545) that passed this spring with bipartisan support, capping the interest rates that payday lenders can charge. The 391% figure commonly cited by opponents reflects the most common way that these loans work: a two-week, $100 loan with a fee of $15. The payday loan industry worked hard and successfully to keep mention of the 391% figure out of the ballot language.

Once again, the language of this issue is confusing. A “yes” vote on the ballot is necessary to uphold the law. A “no” vote removes that portion of the law and permits the high-interest payday loans to continue.

Almost the only advertising you’ll see on TV consists of messages opposing Issue 5. That’s because the payday loan industry is the party that will lose money if the issue passes, so they spent plenty to get it on the ballot and they’ve invested heavily in encouraging people to vote against keeping the law. You can see a pretty good ad at

One of the most disturbing things about this campaign is the scare tactic in which opponents talk about the vast database of information that the state will supposedly have to develop in order to enforce HB 545. Enforcement of any law is pretty much impossible without a mechanism to monitor compliance; the same argument could be made regarding the enforcement of virtually any regulation. I don’t see anything special about this one, but this appeal probably works with voters who instinctively oppose all regulation.

All that said, there’s a legitimate argument to be made for a “no” vote: that banning high-interest payday loans removes a financial option that people should be able to choose for themselves. In general, I agree that the principle of caveat emptor should rule the marketplace. But taken to extreme, that principle would abolish virtually all consumer legislation, and experience suggests that people need some protections. The big question, I guess, is whether this provision of HB 545 is a protection that deserves to be repealed. I’m pretty skeptical of the wisdom of the present General Assembly, but on this issue I’m inclined to side with the legislators and not with the industry being regulated.

A website called “ballotpedia” provides some coverage of this issue at That coverage is, unfortunately, somewhat out of date, but some of the links are helpful. Especially unfortunate is that the website details the “no” option as “supporters of repealing BH 545,” confusing the yes-no question still more. A list of endorsements of a “yes” vote on Issue 5 appears at

Author: StgCoach

Retired teacher and public education leader. Pastoral musician, community activist, parliamentarian, and photographer.

One thought on “Payday Loans, 391% Interest, and Issue 5”

  1. There are a few things you fail to mention…One–your reason for wanting to eliminate a financial option? This is a choice for people when unexpected bills or emergencies arrive. I am a single mother, I haven’t used these services-but with the economy the way it is–my job isnt safe, my bills aren’t flat, gas isnt cheap and neither is food, I WANT an option if I need it.
    2. This issue requires the consumer pay to the government $250.00 after their second loan to take a financial literacy course in order to take out loans 3 and 4 in the year.
    Wow–this government has stepped in, said “This is how you should handle your money, and you will pay us more than if we didnt intervene so we can teach you.” WOW–their fee alone is 16 times more than a payday lender. Their audacious nanny mentality is offensive and disturbing. This is not a communist country–we have free markets for a reason. I can go to McDonalds and get a dollar burger or Ruby Tuesday and buy a $10 dollar burger. is the price difference fair? No–but its MY CHOICE.
    The government just borrowed 700 billion dollars that WE will pay for. I don’t think they ve set a great example on how to spend.
    This industry also has over 6,000 employees. With more than 10,000 left without jobs in the last couple months in Ohio–I’ll not add to the unemployment rate, foreclosure and bankruptcy rate, no sir. I’ll choose the FREEDOM to be free, I’ll choose the OPTION to remain, I’ll choose the CHOICE to CHOOSE, and the jobs that will employ, when I vote NO.

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