- Payday loans were legal in Arizona from 2000 to 2010
- Legislators, including Michele Reagan, discussed extending it during the 2010 legislature
- Reagan said they looked% 27t% 22 like a rip off,% 22 and that they were cheaper than writing a bad check
- Terry Goddard turned down payday loan renewals and prosecuted payday lenders who continued their business
WHO SAID THAT: Terry Goddard.
THE RACE: Arizona’s Foreign Minister.
THE GOAL: Michele Reagan, Republican Senator and candidate for Secretary of State.
THE COMMENT: “#TBT combats predatory payday lenders. My opponent said of predatory loans, ‘It doesn’t seem like a rip off to me.’ “
THE FORUM: Tweet sent on September 4th
WHAT WE WATCH: Goddard’s notes on payday loans and whether or not Republican Secretary of State to Secretary of State Michele Reagan expressed support for payday loans.
ANALYSIS: Payday loans offer borrowers a short term cash advance, usually less than $ 500. Borrowers write a check or give the lender access to their checking accounts with an agreement that the lender will cash the check after the borrower receives their next paycheck.
Interest on the loans is high, averaging 400 percent, compared to credit card rates of 12 to 30 percent, according to the Federal Consumer Financial Protection Bureau.
Prior to 2000, Arizona banned loans with interest rates greater than 36 percent. That year, the state legalized what it called “Deferred Presentment Transactions” – better known as payday loans – for 10 years. Despite efforts in 2008 and 2010 to extend the legality of the loans, they became illegal in July 2010.
The Reagan quote quoted by Goddard is from a December 2009 article in the Arizona Capitol Timeswhile she was a member of the Arizona House. Just before sunset, the newspaper asked Republican lawmakers about their plans to extend or let the loans expire.
“They provide a service that people seem to enjoy,” Reagan said. “It doesn’t seem like a rip off to me.”
She reiterated her support for the loans in a second article in January 2010, saying that the interest rates make the loans appear worse than they are.
“It costs more to cash a check,” she said. “So if you need a bag of groceries and the two options are to write a bad check or go to one of these places, it’s actually a perk and cheaper (to borrow from a payday lender).”
Under Arizona law, writing a bad check can result in both civil and criminal charges.
Then-majority whip Andy Tobin, who is now running against MP Ann Kirkpatrick in the 1st Congressional District of eastern Arizona, supported a 2010 bill to expand and regulate the payday loan industry. Tobin withdrew the bill in committee and the legislature made no further efforts to extend the legality of the loans.
When AZ Fact Check asked Reagan about her previous comments on payday loans, she said she never had the opportunity to vote as a senator because Arizona voters abolished them in 2008.
In 2007, Reagan voted as a member of the Arizona House for Senate Act 1446, which would have repealed the 2010 notice date for payday loans. It passed the house but was held on the conference committee.
Goddard, the Arizona attorney general from 2003 to 2010, harshly criticized payday loans. He publicly opposed the failed 2008 Proposition 200, a measure backed by the payday lending industry that would have permanently extended the legality of the loans and capped their interest rate at 391 percent. In 2009 he sued a national payday lender who had deceptively advertised the Arizonans; Goddard’s successor, Tom Horne, settled the lawsuit in 2011.
Shortly before the expiry of the Payday Loan Act, Goddard announced Operation Sunset, a campaign to enforce the ban on payday loans. Other states that had banned such loans continued to see them disguised as legal business models.
Goddard sent a letter to payday lenders warning that his enforcement team would ensure payday loans would not continue under a new name and promised that his response would be “quick and aggressive.” Several payday lenders left Arizona.
END EFFECT: As attorney general, Goddard battled payday loans and prosecuted lenders who lent them out after they became illegal. Reagan voted in favor of the loans at least twice before they expired.
THE DISCOVERY, THE KNOWLEDGE, THE FIND: Four stars: Right
SOURCES:Terry Goddard tweet; “Statutes of Payday Loan State, “National Conference of State Legislatures;”What is a Payday Loan?“Consumer Protection Agency website;”Light off on payday loans, “Arizona Capitol Times December 22, 2009; Reagan’s vote on Senate Bill 1446; “Terry Goddard is suing large payday lenders for fraudulent practices“Press release, December 4, 2009;”Attorney General Tom Horne announces settlement agreement with Quik Cash Financial Services”, Press release, March 8, 2011; Goddard letter to payday lenders, June 9, 2010; “Goddard opposes an increase in payday loan rates” The Arizona Republic, September 16, 2008; Arizona Revised Statute 13-0809; Email from Michele Reagan.