Arizona Cash Advance Reform, Idea 200 (2008)

Arizona idea 200, also referred to as the pay day loan Reform work, is from the November ballot in Arizona being a citizen-initiated amendment that is constitutional. It had been beaten.

The payday-loan effort ended up being mainly supported by the payday-loan company when you look at the continuing state, and is less limiting compared to the avoid Payday Loans effort, sponsored by Rep. Marion McClure, D-30, and Sen. Debbie McCune Davis, D-14. That measure was withdrawn in early June whenever maybe not sufficient signatures had been being accumulated to qualify it for the ballot. [1]

Text regarding the effort

The 100-word definition filed with all the Arizona Secretary of State’s workplace because of this initiated state statute reads:

Arizonans incorporate payday lending service each and every day to satisfy unforeseen costs and emergencies that are financial. The payday financing markets is scheduled become eradicated in addition to Arizona Legislature will not enact reforms to profit borrowers while preserving this essential monetary choice. This measure provides dramatic reform that is pro-consumer payday financing and protect customer preference. It offers a significant price cut, removes rolling-over major to extend that loan, creates a payment arrange free of charge to clients that can not satisfy their responsibilities, and inhibits a borrower’s capacity to get one or more loan at any given time. [3] [4]


The lending that is payday ended up being an $85 billion markets providing you with short-term loans, that have been usually guaranteed with a check postdated towards the debtor’s next payday. The attention rates within the lack of legislation have typically worked off to on average $15 per $100 lent for a loan that is two-week. The interest that is high had been exactly exactly what have resulted in legislative tries to control the markets. The training had been unlawful in fifteen states during the right time of idea 200. In 2008, along with Prop 200, Ohioans voted on payday financing in Ohio problems 5. In Ohio and Arizona together, the true wide range of payday-lending branches outnumbers the Starbucks and McDonald’s outlets combined. [5]

Details of the proposition

Under this proposition:

  • The payday-loan markets, which faces removal in 2010 when an enabling law expires, might have their directly to exercise into the continuing state stretched indefinitely.
  • Charges payday loan providers is allowed to fee would drop from $17.65 to $15 on a $100, two-week loan.
  • Loan providers wouldn’t be allowed to move on the principal into longer loans and would need to provide customers payment methods.


“Arizonans for Financial Reform” is supporting this effort. It had been filed in reaction to your end payday advances effort, which will eradicate all loans that are payday.

In line with the websites of some other support that is affiliated, “Reform Arizona payday advances,” [6] , tens and thousands of Arizonans usage pay day loans responsibly to pay for unforeseen day-to-day costs. But, the website warns, the avoid pay day loans effort would remove this easy economic choice in Arizona. Supporters for this measure argued that eliminating loans that are payday would harm numerous families financially, through greater banking costs, charge card belated charges, and utility reconnect charges. [6]

Stan Barnes, a lobbyist and consultant to People in america for Financial Reform, a committee funded by the payday-loan business, supported this measure and stated the presssing problem boils down to customer choice.

“Payday-lending shops occur because clients within the world that is real logical choices about borrowing cash short-term, plus in numerous circumstances, payday advances will be the most inexpensive selection for somebody that has a crisis or unexpected cost they should cope with,” Barnes stated.

Supporters included that closing all loans that are payday Arizona would also remove significantly more than 2,500 Arizona employment. [6]

Supporting arguments

Principal arguments submit to get idea 200 included:

  • Prop. 200 would mandate a significant cut in loan charges
  • Establishes a versatile payment arrange
  • Needs internet loan providers to become certified when you look at the state
  • Enacts tough latest laws to break down on unscrupulous operators
  • “About 5 % of Us citizens took down a payday loan. There’s scant proof that their great deal could have been best if rejected that chance. A research by two economists because of the ny government book Bank unearthed that after Georgia and new york abolished lending that is payday bounced checks and Chapter 7 bankruptcies increasing.” [7]

Donors to Idea 200

By the conclusion of July, supporters of Prop. 200 have offered about $8.7 million up to a campaign committee arranged to market the effort. The Arizona Republic stated that “nearly every cent. happens to be donated by – guess whom? – a trade team representing payday loan providers: the Arizona Community Financial service relationship.” [8]


The no that is website 200 : It is No Reform At All is created in opposition for this effort.

Rep. Marian McClure (R-Tucson), chairwoman associated with the avoid Payday Loans effort campaign, said that cash advance reform, like this pay day loan Reform work]], try absolutely nothing significantly more than “window dressing.” [9]

The Party that is democratic of endorsed the end payday advances initiative and argued that pay day loans is “by definition predatory and benefit from economically susceptible Arizona families by trapping them in unending rounds of financial obligation.”

Opposing arguments

Principal arguments proposed versus idea 200 included:

  • Prop. 200 does not lengthen the minimal loan term of five times, therefore maintaining cash advance goods at 391% APR or worse
  • Electronic use of debtor accounts provides payday lenders unfettered debit access to consumer bank records and facilitates overcharging
  • The payment arrange supply limitations customers’ straight to request a repayment intend to as soon as per 12 months.
  • “The argument that shutting loan that is payday could be a blow into the economy are similarly spurious. It could assist the economy on the street, but that doesn’t mean it would make our lives any better if we legalized the sale of heroin and let merchants hawk it. A business that thrives on keeping people bad doesn’t assist the economy.” [10]


Pay check loan providers didn’t payday loans in Ellicott City disappear completely therefore effortlessly after the measure’s defeat, because they attempted to persuade lawmakers to allow them remain in company through the autumn of 2009. Relating to states, the markets hired previous state lawyer General give forests to express them within their efforts. Relating to forest, after learning a proposition because of the markets, he was convinced there is an accepted destination when you look at the state of payday lenders. [11]

Road to the ballot

On 23, its supporters turned in more than 265,000 signatures to the Arizona Secretary of State june.

Ballot title lawsuit

Arizonans for accountable Lending filed case on the ballot language. In line with the lawsuit, voters might unwittingly accept a limit of 400 percentage rates of interest for payday advances in the event that Secretary of State failed to explain the language that is descriptive of 200 from the November’s ballot.

Superior Court Judge Sam Myers ruled Aug. 27, 2008, that Secretary of State Janice Brewer would not have actually to make clear the language. Judge Myers said that the description for the ballot measure drafted by assistant Brewer had been technically accurate, and that with best 50 terms to spell out complex problems, selection need to be made.