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Columbia Missourian

Missouri payday loan petition sparks controversy

By Jake Kreinberg
May 7, 2012 | 9:51 p.m. CDT

COLUMBIA — Organizers collected enough signatures to submit a controversial payday loan petition to the Secretary of State's office Sunday, but roadblocks remain before it can be placed on the November ballot.

Approximately 180,000 signatures were collected for a petition capping annual interest rates that payday loan companies can charge at 36 percent. Currently, limits are determined based on the principal amount of the loan, its duration and the number of times it has been rolled over, said Edward Greim, an attorney with Graves Bartle Marcus & Garrett LLC.

A timeline of events

Aug. 9: Official ballot title certified by the secretary of state.

Aug. 18: Lawsuit filed against the petition in Cole County Circuit Court.

April 5: Cole County Circuit Judge Daniel Green ruled both the summary and fiscal statements of the petition to be "insufficient, unfair, (and) likely to deceive petition signers and voters."

May 6: Petition submitted to the secretary of state for inclusion on November ballot.

State Rep. Mary Still, D-Columbia, praised the efforts of the petition's supporters, who far surpassed the roughly 100,000 signatures needed by the 5 p.m. deadline on Sunday. Still said the cap would help "working people — people who are lower income and can take out loans with the intent of paying back within two weeks."

While designed to be short-term loans secured against a customer's next paycheck, payday loans often take months to pay back, propelling borrowers further into debt.

"If you only have two weeks to pay back the loan, you don't have enough time to pay back the loan," Still said. "If you don't have $300 on Tuesday, you're not going to have $345 two weeks from Tuesday. That's what we've learned. People pay so much and get stuck in financial quicksand."

Active military families already benefit from the 36 percent cap and "that should be extended to regular, hardworking Missouri families," Still said.

Missourians for Equal Credit Opportunity opposes the petition, claiming lending fees are cheaper alternatives to missing payments to credit card companies or utilities. More than 90 percent of borrowers repay on time, and the industry supports upwards of 9,000 people and contributes nearly $150 million in taxes, according to its website.

Lost in translation

A lawsuit was filed Aug. 18 against the petition by opponents of the ballot measure. On April 5, Cole County Circuit Judge Daniel Green ruled the summary statement of the petition to be "insufficient, unfair, (and) likely to deceive petition signers and voters."

In his explanation, Green wrote that the summary must mention the 36 percent cap, which includes all interest, fees and finance charges.

Greim, an attorney for a plaintiff whose employer would be affected by the initiative, said the petition's fiscal statement was also ruled ineligible because it failed to calculate the loss of state revenues from installment lenders, or "510 lenders," who could go out of business. Such lenders allow payments on loans to be paid over time instead of all at once.

The Missouri attorney general's office has appealed the decision on behalf of Secretary of State Robin Carnahan, according to The Associated Press. Spence Jackson, Media Director for the Missouri State Auditor, said the state is awaiting a court date for the appeal and that the language of the petition has not been altered since Green's decision.

If Green's ruling is upheld, the official ballot title is vacated, and the signatures might not be counted. The signatures are not invalidated automatically, however, as the secretary of state needs to look at the title and decide whether to include the signatures. Whichever decision Carnahan makes, it can be challenged, furthering the process.

A bitter fight

Supporters of the petition were forced to re-collect nearly 2,000 signatures in Springfield after they were stolen from an organizer's car.

On April 25, Matt Patterson, executive director of Missouri ProVote, left his car unattended outside his office for about 10 minutes while he ran inside to retrieve his phone. He left a box of signatures in his car that he was going to send to St. Louis the following day. When he returned to his car, he found his passenger window smashed and the box stolen. No other items were taken.

"It has really done a disservice to democracy," Patterson said. "Everyone has a right to the initiative petition process in Missouri. It allows people to put things on the ballot that the legislature is not addressing."

Other petitioners reported being blocked access to registered voters and harassed by people opposed to the initiative.

"In Springfield this weekend, all sorts of folks around us in yellow shirts that would say petition official and yell at us and accuse us for being on the Republican campaign or part of the payday loan industry," Progress Missouri's Executive Director Sean Nicholson said. "They ran ads in Springfield saying, 'Don't sign anything.' People would get yelled at and that would make more people interested in signing with us."

Missourians for Responsible Lending has been leading the campaign for the petition and has a YouTube video showing one of its paid petitioners being harassed by people intentionally trying to surround him.

For its part, Missourians for Equal Credit Opportunity claim petitioners are defrauding voters in addition to the language of the petition declared deceitful last month, saying they allow non-registered voters to sign their petition, use petition passers not registered with Carnahan's office and bus in out-of-town signature-for-hire gatherers.

"While we have confidence the Court's decision that invalidated their petition will be upheld on appeal, we also know in the meantime an active challenge to their signatures is needed due to a pattern of abuse of the electoral process that has already been documented," MECO spokesman Eric Banks said.

Supervising editor is Scott Swafford.