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Initiative backers tagged with violations

In 2010 | Efforts to pass payday loan cap ruled to have violated state law
2012-07-04T00:13:00Z 2012-07-04T00:36:09Z Initiative backers tagged with violationsBy CHARLES S. JOHNSON IR State Bureau Helena Independent Record

The state political practices commissioner Tuesday found sufficient evidence that some groups violated state law with their efforts to pass a 2010 ballot initiative that capped the interest rates on payday loans in Montana.

The ballot measure, Initiative 164, was overwhelmingly approved by voters. Its passage has wiped out the payday loan industry in Montana, former industry officials say.

Commissioner Jim Murry concluded that eight groups broke state campaign laws and rules while promoting I-164 — 400 Percent Interest Is Too High — Cap the Rate; Montana Women Vote; Montana Human Rights Network; AARP Montana; Rural Dynamics Inc.; NeighborWorks Montana; and Montana Community Foundation and its endowed fund, the Women’s Foundation of Montana.

Most of the violations involved the groups’ failure to put “paid for by” disclaimers on their websites and Facebook pages and their failure to

file financial-disclosure

reports on time.

The complaint was filed in May 2010 by Bernie Harrington of Billings, who owned six payday loan businesses.

Harrington said Tuesday that the decision “is rather moot at this point.”

“I think it confirms some of the stuff that we thought was going on,” he said. “The commissioner identified that the violations were rather technical in nature. There’s a lot of water under the bridge since that point.”

Since passage of the 2010 initiative, all of the more than 110 payday lending businesses in Montana have been shut down, eliminating 500-600 jobs, Harrington said.

Jonathan Motl, the Helena attorney for the Cap the Rate group that spearheaded the signature-gathering effort, criticized the findings.

“It is an extremely picky, unfortunate, I think, use of public resources,” Motl said. “There was no harm to the public. There is absolutely nothing in here where everything wasn’t fully disclosed. It was late in a couple of instances.”

I-164 capped at 36 percent the annual interest rate, fees and other charges that payday, title, retail installment lenders could charge.

The groups obtained enough signatures to qualify I-164 for the November 2010 ballot, and Montana voters approved it, 72 percent to 28 percent.

The commissioner’s recommendations will be sent to various county attorneys. If they decline to prosecute, Murry’s office will try to negotiate with the groups to reach settlements. If that fails, the commissioner can file a civil case in District Court.

The political practices commissioner’s staff made a preliminary calculation of the potential fines totaling $2,430. That’s the starting number for negotiations with the group, said Mary Baker, program supervisor in the political practices office.

Broken down by group, the potential fines are: Cap the Rate, $1,500; Montana Women Vote, $250; Rural Dynamics, $100; Montana Community Foundation and its endowed fund, the Women’s Foundation of Montana, $200; AARP Montana, $150; NeighborWorks, an insignificant amount; and Montana Human Rights Network, $230.

Copyright 2015 Helena Independent Record. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

(5) Comments

  1. Lindsay57
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    Lindsay57 - February 20, 2013 8:03 am
    I am sure that they should be strict regulations for payday loan lenders. Some of them set extremely high interest rates and charge hidden fees so consumers can’t get of debt. But I don’t understand people who complain that this service is expensive and still use it. These loans are intended for emergency situations and it’s not a secret that the interest rate is very high. But it easy to understand why, lenders take risks and want to get their profit for lending money so quickly and with minimum requirements. But I think that it will be hard to make payday loan lenders importantly reduce the rates so I think that despite all the talks loans with no credit check will stay expensive.
  2. steeline
    Report Abuse
    steeline - July 13, 2012 10:24 am
    Wait a minute. The "poor" people that acquired "payday loans" because they were poor, just made themselves poorer. With all the Obama programs available to a low income family there should be no need to borrow money to survive. No one will starve, or go without medical treatment, or heatfor their homes in the winter or rent help. If the low income folks borrow money to make ends meet they should cut out the big screens, cable TV, electronic toys, booze, smokes etc. and get a second job. The payday loan folks were just a bunch of low life leeches that lived off those who got hooked on the easy money. We have to restore the American Dream.
  3. FlamingLiberal
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    FlamingLiberal - July 09, 2012 11:10 am
    The Big L said: "Montana’s voters overwhelmingly disagree with you."

    At the time, they did, however, I also think many folks have changed their minds since they've seen the effects this law had on the very population it purported to protect.
  4. The Big L
    Report Abuse
    The Big L - July 06, 2012 11:56 am
    Montana’s voters overwhelmingly disagree with you.
  5. FlamingLiberal
    Report Abuse
    FlamingLiberal - July 05, 2012 12:41 pm
    Where do people with poor credit get short-term micro-loans now? By closing the "lenders of last resort," the well-meaning voters of the state actually forced the poorest citizens to pay usurious bank fees, or go without. If a single working parent writes a $25 check and it bounces, the bank will charge a fee of $35 or more right away, plus weekly overdraft fees, plus the recipient of the check demands a similar amount... a payday lender would charge $15 to float that same person a two week loan of $100. Who is really victimizing the poor here? Payday and title loans allowed people to obtain small amounts of cash to get through a crisis, and prevented a financial death-spiral from stacked overdraft fees, interrupted utilities, and unexpected bills. We did the poor no favors by passing the cap. Just took away an option.

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