COLUMBUS, OH- More than two thousand payday lending customers and industry employees took to the steps of the Capitol today to protest a ban on payday lending being considered this week in the Ohio Senate.

Holding signs reading, "28% APR=6,000 Lost Jobs" and "My life. My credit. My choice!", an estimated 2000 payday lending supporters voiced their concern for legislation that would close down the industry in the state, leaving more than 6,000 Ohio residents out of work and leaving hundreds of thousands of Ohioans to choose between less desirable, more costly credit alternatives.

The bill, H.B. 545, imposes a 28% annual interest rate cap on fees, allowing a fee of 8 cents a day, not enough for the lender to pay employee salaries and benefits, rent or other overhead costs.

Speaking at the rally, D. Lynn DeVault, president of the Community Financial Services Association of America, said, "Make no mistake about it: if this bill passes, more than 6,000 people will lose their jobs and a short-term credit option will be yanked away from the hard-working people of Ohio. Ohio's working families deserve better."

"It's easy for people who have nothing to lose to call for a ban. Their jobs aren't on the line and they have probably never needed a payday advance," said DeVault.

DeVault cited recent research by an economist at the Federal Reserve Bank of New York that found a ban on payday lending resulted in increased credit problems for consumers.

"No business, not a credit union, not a bank, not even a non-profit can lend money for less than 10 cents a day," said Jamie Frauenberg, President of the Ohio Association Financial Service Centers and Executive Vice President of Ohio-based Checksmart. "I am telling you today that my company would no longer be able to operate in Ohio. My employees would be let go and our doors would be shuttered. My customers would be forced to use alternatives they previously tried to avoid."

Referencing the GoodMoney payday loan product offered by the Goodwill, a non-profit, tax-exempt charity, Frauenberg said the $9.90 per $100 fee they charge to break-even equates to a 252% APR. Said Frauenberg, "Even the Goodwill could not offer payday loans in Ohio under a 28% APR cap."

"Twelve years ago I recognized the demand for short-term credit and sponsored legislation to create comprehensive protections for Ohio's consumers," said Senator Bob Schuler. "The law was, and continues to be, one of the strongest payday lending laws in the nation. After twelve years, additional reforms may be needed, but let's focus our efforts on saving jobs and making sure that hard-working Ohioans have access to credit," said Schuler.

Frauenberg said that in the past month, more than 50,000 letters, emails and phone calls have been sent to state legislators and the governor from industry employees and customers, urging policymakers to stand up and protect their jobs and their credit choices.

He said the industry has been working closely with interested legislators to support legislation that would offer consumer protections while allowing the industry to continue offering access to short-term, small-dollar credit.

Also speaking at the rally were: Gloria Hayter, Co-Owner Cash Pal; Karen Finley, Advance America employee; and David Davis, Check ‘n Go President and CEO.

The Community Financial Services Association of America (CFSA), is the national trade group of the payday advance industry. Representing 164 member companies with more than half of the payday advance outlets nationally, CFSA promotes laws and regulations that protect consumers and preserve their access to credit options. The association also works on behalf of members to support and encourage responsible industry practices. Membership is contingent upon compliance with CFSA’s mandatory "Best Practices."

WASHINGTON, D.C. – Payday loans are not predatory and may actually enhance the welfare of households, according to a new report issued by staff of the Federal Reserve Bank of New York concluding that payday lending "does not fit our definition of predatory.”

"This report gives clear and objective scholarly evidence that payday loans are not predatory,” Darrin Andersen, president, Community Financial Services Association of America (CFSA), said of the groundbreaking report, Defining and Detecting Predatory Lending, which was authored by Federal Reserve Bank of New York Research Officer Donald P. Morgan. "To the contrary, the report concludes that payday lenders may actually enhance the welfare of households by increasing the supply of credit.”

"By demonstrating that payday loans are not predatory, this report refutes the key criticism leveled against payday lenders,” Andersen said. "The media and critics of the industry should consider the conclusions made in this important study.” Payday advances have helped countless people pay their utility bills, make auto and household repairs and take care of other immediate family needs. "Our industry exists solely because we offer our customers a product that is more desirable than the alternatives,” said Andersen.

Pointing out that price does not make payday loans predatory, the report states, "Higher prices are neither necessary nor sufficient to conclude that a certain class of credit is predatory,” Andersen said. "As shown in this report, our customers are capable of looking at their financial options and making educated decisions as to how they can meet unexpected or unbudgeted expenses.”

Defining and Detecting Predatory Lending examined differences in household debt and delinquency across states that allow payday lending and those that do not and compared the change in those differences before and after the advent of payday lending. Particular attention was paid to those households that are generally perceived as more vulnerable to predation (those with income uncertainty or less education).

Key findings of the study:

• "[Credit]...delinquency rates were marginally lower for risky households in states with unlimited payday loans."
• "Households with uncertain income who live in states with unlimited payday loans are less likely to have missed a debt payment over the previous year…consistent with claims by defenders of payday lending that some households borrow from payday lenders to avoid missing other payments on debt."
• "Despite their alleged naiveté, payday borrowers appear sophisticated enough to shop for lower prices."
• "We find somewhat lower payday prices in cities with more payday stores per capita…The problem of high prices may reflect too few payday lenders, rather than too many."
• "In the end, the simple fact that payday lenders have triumphed over pawnshops suggests that payday lending raises household welfare by providing a preferable alternative."

The report can be found at http://www.newyorkfed.org/research/staff_reports/sr273.pdf

The Community Financial Services Association of America (CFSA), is the national trade group of the payday advance industry. Representing 164 member companies with more than half of the payday advance outlets nationally, CFSA promotes laws and regulations that protect consumers and preserve their access to credit options. The association also works on behalf of members to support and encourage responsible industry practices. Membership is contingent upon compliance with CFSA’s mandatory "Best Practices."