Consumer advocates and state representatives on Friday vowed to fight against any measure that would legalize “flex loans” in the state.
About a dozen people gathered outside two title loan stores in Phoenix to oppose the efforts behind HB 2611, which would have allowed consumers to open a line of credit up to $3,000 and pay the money back in installments.
Bill sponsor Rep. J.D. Mesnard, R-Chandler, pulled the bill from the Senate Finance Committee this week. Bill opponents said Mesnard struggled to find the votes he needed for passage.
However, those opponents said they don’t believe the issue is dead. They said Mesnard could resurrect the bill as a “striker” ¬– which would replace language in another bill and move it forward.
Opponents said the loans would charge fees that add up to 200 percent interest and “trap low-income and working-class Arizona families in a spiral of debt,” organizers said.
On Friday, Mesnard continued to support the bill, which was aimed at people with poor credit.
“If you use (annual percentage rate), it’s going to sound really bad,” he said, adding that the opponents have “distorted” how much people would pay.
“It’s just not that much money,” he said.
Rep. Debbie McCune Davis, D-Phoenix, on Friday said the group wanted to warn the public to be aware of what she calls “yet another mechanism in which they can trap families in debt.”
The opponents said the bill was a way to bring back predatory lending practices. Voters outlawed payday loans with high interest rates in 2008.
“This is not a Republican issue. This is not a Democratic issue,” said Kelly Griffith from the Southwest Center of Economic Integrity, a consumer rights and watchdog organization. “All parties voted it down because it’s a human decency issue.”
Mesnard said he introduced the bill to fill a need for people who might find themselves in a bind and need a loan, but can’t get a traditional bank loan.
“I’m trying to give people options,” he said. “There are people who don’t have access to credit right now and the folks who are against this bill have no solution for that.”
Several groups supported the bill, including Arizona Financial Choice Association, Arizona Free Enterprise Club and the Goldwater Institute.
Opponents included AARP Arizona, the Children’s Action Alliance Arizona and the Arizona Coalition to End Homelessness.