NEWS RELEASE

DEMOCRATIC CAUCUS · ARIZONA HOUSE OF REPRESENTATIVES

Rep. Ken Clark, District 15 FOR IMMEDIATE RELEASE

(602) 542- 5058

Freshman Pushes Through Pay Day Loan Regulation Bill

PHOENIX, AZ (February 25, 2003) – Despite a history of organized opposition by the House to regulation of the “payday loan” industry, Rep. Ken Clark (District 15, Phoenix) shepherded his payday lender bill (House Bill 2363) through its last major committee hurdle Monday (Feb. 24). The bill will be heard by the full House this week.

“The Legislature has seen bills to regulate payday lenders before, but with this one we worked out a compromise with the lenders that will move us toward a better process and offer some protection to people who are getting into serious financial problems with these types of loans,” Rep. Clark said.

Current law regulates and licenses deferred presentment companies, commonly known as payday lenders, who offer short-term loans of up to $500 for a period of less than 30 days. The customer writes a post-dated personal check for the loan amount, plus fees that can often run 60 percent or more of the original loan. At the end of the loan period, the lender presents the check for payment, as previously agreed, and the customers may roll over or extend their loan terms.

“This bill is basically an information bill. It strengthens disclosure requirements to better educate customers about the actual costs associated with deferred presentment loans, requires that the statements and postings be in both English and Spanish and requires that the lender provide written information in both English and Spanish regarding community credit counseling and financial education services. It also reduces the rollover limit from three to two.”

He added, “Payday loans are a $16 billion industry in America. It is incomprehensible that we don’t require the kind of basic information that is available in other sectors of the financial services industry. This bill takes an important step toward getting that information into the consumer’s hands and helps dampen the negative behavior in the financial services market.”

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Media Contact: Brian Lawson (602) 542-5848 blawson@azleg.state.az.us

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