Lupe Solis, associate director of advocacy for AARP Arizona

Ohio and Arizona voters sent a strong message to the payday industry Tuesday when they used the ballot box to reject abusive payday lending practices in their states. The thumbs-down vote in both states against predatory interest rates of 391 percent came despite a multimillion-dollar ad campaign by the payday industry intended to misinform and mislead the public.

Ballot propositions in the two states were initiated by the industry and funded by over $30 million from the payday industry's trade association. By contrast, grass roots campaigners working to defeat the propositions had less than $475,000 to spend. In the end, voters saw through the industry's ad blitz: Payday lenders lost in Ohio by a 2 to 1 margin and in Arizona by a 3 to 2 margin.

"These two citizens' ballots are really a mandate for cracking down on payday lending throughout the nation," said Uriah King, policy associate for Center for Responsible Lending. "You can get no clearer message than a huge majority of voters rejecting 400 percent interest loans. A reasonable two-digit cap is sensible, fair, and it works to keep bad apples out of the consumer lending arena."

Though out-monied, grassroots campaigners in each state took on the national payday industry, which depends on making high-interest loans repeatedly to customers who cannot afford to pay the debt off for good. Payday loans are systematically converted into long-term, high-cost debt for working families. The average payday borrower has more than eight transactions per year that in the end cost them more in interest than the original loan.

Congress passed a 36 percent cap protecting military from this practice, and 15 states plus the District of Columbia also have chosen to control predatory lending by enforcing interest rates in that range.

Ohio was one of those states, but as soon as it passed a new law earlier this year capping interest rates at 28 percent, the industry initiated a ballot measure to repeal it. In Arizona the industry backed a ballot initiative to try to make permanent a temporary measure to exempt payday loans from the state's 36 percent cap. Payday lenders knew lawmakers were unlikely to renew that exemption when it expired in 2010, but thought they could trick voters into doing it. They were wrong.

The conventional wisdom for ballot measures is that when voters are in doubt they vote "no." That means the payday industry had a big advantage in Ohio because it needed a "no" vote to win. Still it lost overwhelmingly. This is only the second time since Ohio began allowing voter referenda in 1856 that a "yes" vote has won.

In Arizona, payday lenders backed a ballot proposition that to the unsuspecting could appear to "reform" unethical payday practices. Community groups, business leaders, elected officials from both parties, faith-based groups, and military and consumer advocates weren't fooled. Neither were voters.

The failure of the payday industry to circumvent these state lawmakers shows citizens favor a crack-down on irresponsible lending practices. It also shows citizens are catching on to the deceptive marketing practices of payday lenders. These ballot victories send a message to policymakers everywhere: The 36 percent interest-rate cap that's good for citizens in 15-plus states and for military families nationwide makes sense for everyone everywhere.

Learn more about payday lending.

For more information: Kathleen Day at (202) 349-1871 or; Chris Kukla at (919) 313-8520 or; or Ginna Green at (510) 379-5513 or