Arizona Cash Advance Reform, Proposition 200 (2008)

Arizona Cash Advance Reform, Proposition 200 (2008)


  • 1 Election results
  • 2 Text for the effort
  • 3 Background
  • 4 information on the proposition
  • 5 Supporters
    • 5.1 arguments that are supporting
    • 5.2 Donors to Proposition 200
  • 6 Opposition
    • 6.1 Opposing arguments
  • 7 Aftermath
  • 8 road to the ballot
    • 8.1 Ballot name lawsuit
  • 9 See also
  • 10 exterior links
    • 10.1 Basic information
    • 10.2 Supporters
    • 10.3 Opponents
  • 11 Footnotes
Arizona Constitution
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Arizona Proposition 200, also referred to as the cash advance Reform Act, ended up being from the November ballot in Arizona being a citizen-initiated amendment that is constitutional. It absolutely was beaten.

The payday-loan effort ended up being mainly supported by the payday-loan company when you look at the state, and ended up being less restrictive compared to the avoid payday advances Initiative, sponsored by Rep. Marion McClure, D-30, and Sen. Debbie McCune Davis, D-14. That measure had been withdrawn at the beginning of June if not sufficient signatures had been being collected to qualify it for the ballot. 1

Election results

Arizona Payday Loan Reform
Result Votes Percentage
d No 1,271,717 59.6%
Yes 860,607 40.4%

Text of this effort

The 100-word description filed with all the Arizona Secretary of State's workplace with this initiated state statute checks out:

Arizonans use payday lending services every day to meet up unexpected costs and emergencies that are financial. The payday financing industry is defined become eliminated while the Arizona Legislature does not want to enact reforms to profit borrowers while preserving this crucial option that is financial. This measure brings dramatic pro-consumer reform to payday lending and protect customer option. It provides a rate that is substantial, removes rolling-over major to extend that loan, produces a payment plan free of charge to clients that can not fulfill their obligations, and inhibits a borrower's capability to get several loan at the same time. 3 4


The payday financing industry ended up being an $85 billion industry that delivers short-term loans, that have been frequently guaranteed with a check postdated into the borrower's next payday. The attention price within the lack of legislation had typically worked off to on average $15 per $100 borrowed on a two-week loan. The interest that is high had been just exactly what had generated legislative tries to manage the industry. The training had been unlawful in fifteen states during the period of Proposition 200. In 2008, along with Prop 200, Ohioans voted on payday financing in Ohio Issue 5. In Ohio and Arizona together, the true amount of payday-lending branches outnumbers the Starbucks and McDonald's outlets combined. 5

Information on the proposition

Under this proposal:

  • The payday-loan industry, which faces eradication this season when an enabling law expires, could have its directly to exercise within the continuing state stretched indefinitely.
  • Charges payday loan providers are permitted 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 extensive loans and will have to provide customers payment plans.


"Arizonans for Financial Reform" had been supporting this effort. It had been filed in reaction towards the avoid payday advances Initiative, which may eradicate all pay day loans.

In line with the web site of some other support that is affiliated, "Reform Arizona payday advances," 6 , several thousand Arizonans usage payday advances responsibly to pay for unanticipated day-to-day costs. But, your website warns, the avoid payday advances Initiative would remove this easy option that is financial Arizona. Supporters for this measure argued that eliminating pay day loans completely would harm many families economically, through higher banking fees, charge card belated costs, and energy reconnect fees. 6

Stan Barnes, a lobbyist and consultant to Americans for Financial Reform, a committee funded because of the payday-loan industry, supported this measure and stated the problem boils down to customer option.

"Payday-lending shops occur because clients when you look at the real life make logical decisions about borrowing cash short-term, as well as in numerous circumstances, pay day loans will be the most affordable choice for somebody that has a crisis or unexpected cost they need to cope with," Barnes stated.

Supporters included that closing all loans that are payday Arizona would also expel a lot more than 2,500 Arizona jobs. 6

Supporting arguments

Main arguments submit to get Proposition 200 included:

  • Prop. 200 would mandate a cut that is substantial loan costs
  • Establishes a repayment plan that is flexible
  • Needs internet lenders to be certified into the state
  • Enacts tough regulations that are new break straight straight down on unscrupulous operators
  • "About 5 per cent of Us americans have taken out an online payday loan. There is scant evidence that their great deal will have been better if rejected that possibility. A report by two economists because of the ny Federal Reserve Bank unearthed that after Georgia and new york abolished lending that is payday bounced checks and Chapter 7 bankruptcies increased." 7

Donors to Proposition 200

Because of the end of July, supporters of Prop. 200 had provided about $8.7 million up to a campaign committee arranged to advertise the effort. The Arizona Republic stated that "nearly every cent. happens to be donated by - guess who? - a trade team representing lenders that are payday the Arizona Community Financial solutions Association." 8


The website No On 200 : It is No Reform At All had been created in opposition to the effort.

Rep. Marian McClure (R-Tucson), chairwoman regarding the avoid Payday Loans Initiative campaign, said that cash advance reform, like this cash advance Reform Act]], is absolutely nothing significantly more than "window dressing." 9

The Party that is democratic of endorsed the avoid payday advances effort and argued that payday advances are "by definition predatory and make money from financially susceptible Arizona families by trapping them in unending rounds of financial obligation."

Opposing arguments

Main arguments proposed versus Proposition 200 included:

  • Prop. 200 does not lengthen the minimum loan term of five times, therefore maintaining loan that is payday at 391% APR or worse
  • Electronic access to debtor accounts offers payday lenders debit that is unfettered to consumer bank records and facilitates overcharging
  • The payment plan supply limits customers' directly to request a repayment intend to when per 12 months.
  • "The argument that shutting cash advance shops could be a blow towards the economy is similarly spurious. It could assist the economy when we legalized the sale of heroin and allow merchants hawk it in the road, but that does not suggest it might make our everyday lives any benefit. A market that thrives on keeping customers poor will not assist the economy." 10


Pay check loan providers failed to disappear completely therefore effortlessly after the measure’s beat, them stay in business during the fall of 2009 as they tried to convince lawmakers to let. Based on reports, the industry hired state that is former General give Woods to express them within their efforts. Relating to Woods, after learning a proposition by the industry, he was convinced there was clearly destination within the state of payday loan providers. 11

Way to the ballot

On June 23, its supporters switched much more than 265,000 signatures into the Arizona Secretary of State.

Ballot name lawsuit

Arizonans for Responsible Lending filed case on the ballot language. In line with the lawsuit, voters might unwittingly accept a limit of 400 % rates of interest for payday advances in the event that Secretary of State would not make clear the descriptive language of Proposition 200 regarding the November's ballot.

Superior Court Judge Sam Myers ruled Aug. 27, 2008, that Secretary of State Janice Brewer would not have to make clear the language. Judge Myers stated that the description for the ballot measure drafted by Secretary Brewer ended up being theoretically accurate, and therefore with just 50 words to describe complex dilemmas, alternatives need to be made.