Payday lenders spending big in bid to stay open

Payday lenders funneled another nearly $2.4 million into their campaign Monday in an effort to persuade voters to let them stay in business.

Proposition 200: Payday loan reform

Judge to rule on dispute over Prop. 200 summary

The new cash infusion brings total donations so far to nearly $11.6 million, all of that from the association made up of payday loan firms. Spending on no other measure on this year's ballot comes close.

And there are still seven weeks to go until the election.

Industry spokesman Stan Barnes would not say how much the lenders are planning to put into the campaign for Proposition 200.

"We're going to spend what it takes to educate voters on an industry that most voters know nothing about," he said. And he said that process is more expensive "in a year when presidential candidates are defining the space of political thought."

Barnes said, though, it's unlikely the campaign will break the record of $21.1 million spent by Indian tribes in 2002, when they persuaded voters to allow them to expand casino gaming - and to legally prevent anyone else from getting in the same business - in exchange for giving a share of profits to the state.

The payday lenders, operating under the banner of "Arizonans for Financial Reform," are billing Proposition 200 as a method of revamping the industry and its statewide network of stores.

A series of mailings to homes of registered voters have promised that the changes would reduce costs to those who take the two-week loans, as well as reduce the number of lenders operating in the state.

But Barnes acknowledged that the main reason for the heavy spending on the initiative is to allow payday loan shops to remain in business after July 1, 2010 - the day the decade-old statute authorizing the practice and the high rates expires. If it does not pass, he said, it will be the first time legally operating companies have been put out of business in Arizona.

State law limits interest rates to no more than 36 percent a year.

A 2000 law creates an exemption for what technically are called "deferred presentment transactions."