Ohio Payday Loan Reform Worked


(Pictured is then candidate, now County Auditor David Thomas in 2017 on the Front Steps of the Ohio Statehouse rallying for Ohio H.B. 123 for Payday Loan Reform.)



Ohio Payday Loan Reform Worked!


We are now three years in after the passage of bipartisan payday loan reform -- the Ohio Fairness in Lending Act — and Ohio consumers have widespread access to safer, more affordable small-dollar loans.

Back in 2018, I joined leaders across Ohio as part of the Ohioans For Payday Loan Reform coalition in pushing for reform of our state’s payday loan industry.

Prior to this reform, it cost the average payday loan consumer over $600 in fees to borrow just $400. The average costs and interest made our state the worst in the nation for consumers needing access to credit. I felt this was due to a market failure in the system, bad actors who took advantage of loopholes in Ohio law and set up shop.

After realizing this was an issue in our community, it didn’t take me long to see how many store fronts and flashy advertisements for easy cash upfront and hidden fees on the backend we had in Ashtabula County. This was a real problem causing issues for our fellow neighbors across all backgrounds and socioeconomic situations.

I supported State Rep. Kyle Koehler as he championed Ohio House Bill 123. It and a companion Senate bill passed in 2018 to balance the need for credit and cash to consumers but also the ability for the private sector to succeed in providing this service. We had to have both and the legislation I testified in support of helped to make this a reality.

Three years later, the legislation has resulted in millions of dollars back in the pockets of consumers each year while preserving access to credit. In 2020, short-term lenders gave $99.7 million in credit to roughly 250,000 borrowers at an average loan cost of just $112. That’s affordable borrowing.

The closing of loopholes in HB 123 meant that some in the industry who charged outlandish fees and contributed to the market failure would no longer make it, while other lenders who followed the rules and treated their customers better would stay.

This doesn’t mean access to credit has decreased. If anything, it has increased and under better terms, too.

The success of this reform is something we can point to in protecting consumers using free market principles that everyone can follow. Ohio now has even become a model for the nation in this reform effort, something I am proud to see happen.