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Bill to reform Ohio's payday lending laws could be killed by State Senate

House Bill 123 would cap payday loans at $500 with a 28% annual percentage rate.

Columbus — Ohioans pay the highest rate in the country for payday loans at 591%.

However, a bill passed in the Ohio House earlier this month which put a number of consumer protections in place. Some say the measure could save us $75 million a year.

After a hearing Thursday in the State Senate, it seems the bill's future is at risk.

"I thought it was a quick easy fix but it was really just placing a band-aid over a bullet wound," said Sean Jackson.

He got caught up in the payday loan cycle when a $400 withdrawal turned into an $1,800 bill.

Stories like these are what prompted legislators to pass House Bill 123 earlier this month. It caps payday loans at $500 with a 28% annual percentage rate.

The bill limits monthly payments to a percentage of the borrower’s income and allows them to cancel the loan by 5 p.m. the next business day, without a penalty.

It was a bill that took 15 months to pass and only after former House Speaker Cliff Rosenberger resigned. He was being investigated by the FBI after taking a trip with payday lending lobbyists last year.

At a Senate Finance Committee hearing on the bill, which lasted a whopping three and a half hours, opponents of the bill, including Senator Matt Huffman, suggested raising the borrowing cap to more than $2,000 with interest rates between 300% to 350%.

"The current version of 123, you'd have to go here and get $500, here and get $500, here and get $500, rather than borrow one rate, one lender", said Senator Huffman.

It should be noted that the Senator has received more than $148,000 in contributions from organizations in the finance, insurance, and real estate industries, including nearly $11,000 from payday lenders, according to the non-profit FollowtheMoney.org

"I'm very concerned he is disregarding us who are at the center of this to fix the problems", expressed Carl Ruby of Central Christian Church.

The Senate Finance Committee could vote on the bill as early as next week.

The Ohio Consumer Lenders Association (OCLA) sent us a statement which says it “looks forward to reviewing the details of the bill draft. The OCLA is for sensible reform that provides consumer protections while at the same time preserving access to legal, safe and regulated credit for more than a million Ohioans who use our products. HB 123, as passed by the House, does not deliver sensible reform.“

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