Arizona Cash Advance Reform, Proposition 200 (2008)

Arizona Cash Advance Reform, Proposition 200 (2008)


  • 1 Election results
  • 2 Text associated with effort
  • 3 Back Ground
  • 4 information on the proposition
  • 5 Supporters
    • 5.1 Supporting arguments
    • 5.2 Donors to Proposition 200
  • 6 Opposition
    • 6.1 arguments that are opposing
  • 7 Aftermath
  • 8 way to the ballot
    • 8.1 Ballot name lawsuit
  • 9 See also
  • 10 exterior links
    • 10.1 fundamental information
    • 10.2 Supporters
    • 10.3 Opponents
  • 11 Footnotes
Arizona Constitution
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Arizona Proposition 200, also called the cash advance Reform Act, ended up being in the November ballot in Arizona as a citizen-initiated constitutional amendment. It had been beaten.

The payday-loan initiative had been primarily supported by the payday-loan company into the state, and ended up being less limiting compared to the avoid payday advances Initiative, sponsored by Rep. Marion McClure, D-30, and Sen. Debbie McCune Davis, D-14. That measure ended up being withdrawn during the early June if not signatures that are enough being gathered to qualify it for the ballot. 1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 associated with effort

The description that is 100-word with all the Arizona Secretary of State’s workplace because of this initiated state statute checks out:

Arizonans use payday lending services each and every day to generally meet unexpected expenses and emergencies that are financial. The payday financing industry is scheduled become eradicated therefore the Arizona Legislature does not want to enact reforms to profit borrowers while preserving this crucial monetary choice. This measure provides dramatic pro-consumer reform to payday lending and preserve customer option. It offers a significant price cut, removes rolling-over major to extend that loan, produces a payment plan free of charge to clients that can not satisfy their responsibilities, and inhibits a debtor’s capacity to get one or more loan at any given time. 3 4


The payday financing industry had been an $85 billion industry that delivers short-term loans, that have been often guaranteed with a check postdated to your debtor’s next payday. The attention price into the lack of legislation had typically worked off to on average $15 per $100 lent for a loan that is two-week. The high rates of interest had been exactly exactly just what had resulted in legislative tries to manage the industry. The practice had been unlawful in fifteen states during the time of Proposition 200. In 2008, as well as Prop 200, Ohioans voted on payday financing in Ohio Issue 5. In Ohio and Arizona together, the true quantity of payday-lending branches outnumbers the Starbucks and McDonald’s outlets combined. 5

Information on the proposition

Under this proposition:

  • The payday-loan industry, which faces removal this season when an enabling law expires, might have its straight to exercise into the state stretched indefinitely.
  • Charges payday loan providers are permitted to fee would drop from $17.65 to $15 for a $100, two-week loan.
  • Loan providers wouldn’t be allowed to move within the principal into extensive loans and will have to provide customers payment plans.


“Arizonans for Financial Reform” had been supporting this effort. It absolutely was filed as a result towards the avoid payday advances Initiative, which may expel all payday advances.

In line with the internet site of some other affiliated help organization, “Reform Arizona pay day loans,” 6 , lots and lots of Arizonans usage payday advances responsibly to pay for unanticipated day-to-day costs. But, the website warns, the avoid payday advances Initiative would remove this easy option that is financial Arizona. Supporters with this measure argued that eliminating payday advances completely would harm numerous families economically, through higher banking fees, bank card belated charges, and energy reconnect fees. 6

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

“Payday-lending shops occur because clients when you look at the real life make logical choices about borrowing cash short-term, as well as in many circumstances, payday advances will be the most inexpensive choice for somebody that has a crisis or unexpected cost they need to cope with,” Barnes stated.

Supporters included that closing all pay day loans in 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 significant cut in loan costs
  • Establishes a versatile payment plan
  • Needs lenders that are internet be certified into the state
  • Enacts tough regulations that are new crack straight straight straight down on unscrupulous operators
  • “About 5 % of People in america took down an online payday loan. There’s scant proof that their lot will have been better if rejected that possibility. A research by two economists using the ny Federal Reserve Bank discovered that after Georgia and new york abolished lending that is payday bounced checks and Chapter 7 bankruptcies increased.” 7

Donors to Proposition 200

By the end of July, supporters of Prop. 200 had offered about $8.7 million 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 payday lenders: the Arizona Community Financial solutions Association.” 8


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

Rep. Marian McClure (R-Tucson), chairwoman regarding the avoid Payday Loans Initiative campaign, stated that payday loan reform, similar to this cash advance Reform Act]], is nothing but “window dressing.” 9

The Party that is democratic of endorsed the avoid payday advances effort and argued that pay day loans are “by definition predatory and benefit from economically susceptible Arizona families by trapping them in unending cycles of debt.”

Opposing arguments

Main arguments proposed versus Proposition 200 included:

  • Prop. 200 does not lengthen the minimum loan term of five times, hence maintaining loan that is payday at 391% APR or worse
  • Electronic use of debtor accounts provides payday lenders unfettered debit access to consumer bank reports and facilitates overcharging
  • The payment plan supply limits customers’ directly to request a payment want to as soon as per 12 months.
  • “The argument that shutting loan that is payday could be a blow to your economy is similarly spurious. It may assist the economy when we legalized the purchase of heroin and allow merchants hawk it from the road, but it doesn’t suggest it could make our life any benefit. A market that thrives on keeping customers bad will not assist the economy.” 10


Pay check loan providers failed to disappear therefore effortlessly after the measure’s defeat, them stay in business during the fall of 2009 as they tried to convince lawmakers to let. In accordance with reports, the industry hired previous state Attorney General give Woods to express them within their efforts. Based on Woods, after learning a proposal by the industry, he was convinced there clearly was spot when you look at the state of payday loan providers. 11

Road to the ballot

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

Ballot name lawsuit

Arizonans for Responsible Lending filed case throughout the ballot language. Based on the lawsuit, voters might unwittingly accept a limit of 400 per cent rates of interest for pay day loans 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 didn’t have to make clear the language. Judge Myers stated that the description for the ballot measure drafted by Secretary Brewer had been theoretically accurate, and that with just 50 terms to spell out complex problems, alternatives need to be made.