DaytonDailyNews.com

Columbus, Ohio — Rather than be hemmed in by the new voter-approved short term loan law, pay day lenders are turning to two other state statutes that allow them to continue making high-interest, high-fee loans, according to a study released Monday, March 9, by the Housing Research & Advocacy Center in Cleveland.

Last year, lawmakers approved the short-term loan act, which capped payday loans at 28 percent annual percentage rate. The pay day lending industry, which includes 13 stores in Clark and four in Champaign counties, mounted a multi-million dollar campaign to defeat the law through a ballot initiative, but voters approved the law.

Even before the voters had their say, payday lenders started getting licensed through the Small Loan and the Mortgage Loan acts, which allow them to make 14-day loans with an APR of 423 percent to 680 percent, respectively, once fees are included, the study said.

Some stores require that the loan be issued through a money order or check, and then charge a fee to cash the money order or check, the study said.

"While there is a need for short term loans, these kinds of rates are outrageous and shouldn't be allowed," said Jeffrey Dillman, author of the study.

State Sen. Chris Widener, R-Springfield, who, as a state representative, sponsored the legislation to curb payday lending, said those laws were designed for lenders who make slightly larger and more long-term loans than those payday lenders are now making. He has written to the attorney general and the Commerce Department superintendent, which have the authority to make rules to regulate these practices.

"They've written back and said 'We'd rather have the law changed,'" Widener said. "I've said, why can't we enforce the existing law?"

State Rep. Matt Lundy, D-Elyria, says he is working with consumer groups, the state Department of Commerce and the attorney general's office to draft new legislation that would close off the loopholes, he said.D. Lynn Devault, president of the Community Financial Services Association of America, defended the pay day lenders: "A small loan is sometimes the only option for a consumer. At other times, it is the cheapest one – particularly compared to the high costs of bank and credit card fees. "

• Reporter Emanuel Cavallaro contributed to this story.