Ohio justices: Payday loans unaffected by 2008 law
6/11/2014COLUMBUS -- The Ohio Supreme Court today upheld the ability of payday lenders to avoid a law reforming short-term loans and, under another section of state law, continue making what critics denounce as predatory loans to low-income Ohioans.
A 2008 law restricted payday-loan interest rates to 28 percent and imposed a $500 maximum loan limit and minimum 31-day payback period to curb what consumer advocates attacked as abuses.
Payday lenders then began making short-term loans under another section of law, the Mortgage Loan Act, that contains no cap on interest rates and in which loan repayment can be demanded in a single lump sum.
An appeals court then ruled that the loan law does not permit single-installment loans and that Ohio lawmakers intended to prohibit short-term loans that did not comply with the 2008 law, the Short Term Loan Act.
In a unanimous decision, the Ohio Supreme Court today reversed the appellate court ruling, finding that the mortgage-related loan law does not prohibit what is effectively payday lending.
The court’s ruling came in an appeal from Ohio Neighborhood Finance Inc., doing business as Cashland, in a case in which it sued an Elyria man for failing to repay a $500, two-week loan with an annual-interest rate of 235 percent.
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