Commerce sets hearings aiming to revoke licenses of three payday lenders

By SHERYL HARRIS

Lenders switched their licenses to enable them to continue operating as usual, with new fees.

The Ohio Department of Commerce announced Tuesday that it has taken steps to revoke the lending licenses of three payday lenders.

The department said Check Into Cash of Ohio, Quik Cash (QC Financial Services) and 1st Choice Financial (RMPF Investments) had ignored Commerce’s warnings against issuing loans in check form and then charging customers to cash the checks.

The department alleged the practice is being used to evade the state caps on loan fees.

For years, Ohio allowed payday lenders, who make loans against a consumer’s next paycheck, to charge 391 percent annual interest rates on their loans. But in late 2008, Ohio voters supported the creation of the Short-Term Loan Act, which capped quick turnaround loans at 28 percent.

When the law went into effect, though, the majority of payday lenders switched their licenses to either the Small Loan Act or the Mortgage Lending Act. The switch in licenses allowed them to conduct business pretty much as usual.

Many of the lenders, who had always issued loans in cash form, began issuing loans as checks that they then charged customers additional fees to cash.

The state said it sent warning letters to the companies in the spring advising them to stop. It said its examinations of payday stores last fall showed stores were continuing to charge customers to cash the loan checks.

Check into Cash spokesman Ryan Harris said the company had no comment on pending litigation.

Other companies did not respond to requests to comment.

When these types of orders are issued, companies can contest the allegations at a department hearing, agree to a license revocation or settle the charges, which usually means agreeing to a cease and desist order.

Hearings have been set for all three companies within the next three months.