Oh Gee! Why Ever Would Arizona Payday Lenders Want To Ban Minimum Wage Increases?
Some people have trouble advocating for what they want in life. They don't want to look pushy, or greedy — they don't want to inconvenience others.
Those people are not payday lenders in Arizona.
Well. Technically nobody's a payday lender in Arizona. The predatory practice has been illegal in the state since 2010, when the law allowing it to exist expired. In 2008, payday lenders got a proposition on the ballot to allow the practice to continue, and it was soundly defeated, 60-40. Since then, instead of payday loans, these creeps have switched over to "title loans," which is basically the same thing except that it means that poor people people put their car titles up as collateral for a short term, high interest loan — up to 204% APR.
This grossness pushed a group called Arizonans for Fair Lending to put a new measure on the ballot for 2020 — one that would place restrictions on this type of loan as well. And you might well guess what happened next!
According to figures from Arizonans for Fair Lending, one in three state borrowers end up extending their auto title loan, creating a cycle of debt. One in five wind up having their vehicle repossessed. Title loan borrowers spend $254 million per year in interest, an analysis from the Center for Responsible Lending found.
After years of work, Arizonans for Fair Lending filed a ballot measure for the November 2020 election that would restrict car title loans in the state, reducing the permitted APR from 204 percent to 36 percent, making it equal to the maximum interest rate for other consumer loans in the state. "Usury is always wrong," said Stephany Brown, president of the Society of St. Vincent de Paul in Tucson, in a statement after the announcement of the ballot measure.
This, obviously, would be a very good thing for everyone. Studies have shown that eliminating these types of short-term, high interest loans tends to result in less shady operations stepping up with safer, lower interest, alternatives.
One Arkansas study was conducted seven years after the state Supreme Court made payday loans illegal, in late 2008. It showed that borrowers believed they were "better off" without accessible payday loans and that they now use "safe," better alternatives when financial hardships hit. The study stated that "payday lending is a high-priced convenience," and that, without them, borrowers worked more, received loans from friends or banks, or used credit cards instead of payday loans.
North Carolina made payday loans illegal in 2001. While industry advocates said it would create a void for those with few credit options, one study showed that in North Carolina "small loans from consumer finance companies, credit unions, and other financial institutions have flourished while charging rates at or below the rate cap."
That is pretty great if you're a consumer, but if you're on the other end and you would prefer to make money off of scamming people, it's not so good for you. So short-term lenders in Arizona are now banding together, trying to push a constitutional amendment called the Arizona Economic Freedom Act, which is basically the "Make All The Dreams Of Predatory Lenders Come True Act."
So much bullshit!
Naturally, they're presenting it as something that is good for all parties involved, as if they are standing up for the rights of the little people, who just might really want to take out a short term loan with a 200% interest rate. For fun! They just want people to be allowed to make any business agreement they want without interference from the state. They love freedom!
The thing is, not only would it bring back payday loans and ban the state from regulating the interest on those loans, it would also prevent the state from raising the minimum wage. You know, because people not being poor hurts the business of people who make money off of people being poor. They put it in a real sneaky way, too, writing that the act will have no effect on "laws or regulations prescribing a minimum wage for employees, if in effect as of December 2019."
Does it get even more gross? It sure does. The proposed amendment could also undo a recently passed law guaranteeing employees in the state at least a week of sick leave.
In order to make the ballot, the Economic Freedom Act will need 356,467 signatures by July of 2020 — and those in favor of the proposed amendment are going around telling people that it would prevent the government from forcing payday lenders to raise interest rates. Right, because that's a thing that happens in real life all of the time.
It takes a whole lot of chutzpah to request an amendment to a state constitution enabling you to not only to screw people over, but to keep your supply of people to screw over steady. If this weren't so evil, it would almost be impressive.
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Robyn Pennacchia is a brilliant, fabulously talented and visually stunning angel of a human being, who shrugged off what she is pretty sure would have been a Tony Award-winning career in musical theater in order to write about stuff on the internet. Follow her on Twitter at @RobynElyse