A Canton man borrowed $300 just as businesses began to close during the pandemic. He said he had paid $780 on the loan and an additional $300 owed.
A Miamisburg woman said she repaid $1,400 on a $1,000 loan and still owed over $700.
A Patsakala man said he paid off his $300 loan when he learned of a surprise monthly fee of $150.
The three customers, along with several dozen others, have complained to Ohio Attorney General Dave Yost in recent years about predatory payday lending practices at CheckSmart storefronts.
In October 2018, state lawmakers passed legislation imposing interest rate caps and fee limits on payday loans — short-term loans under $1,000 that are automatically paid off on the next payday check. pay. The loans, often given to poor borrowers with bad credit and few alternatives for principal, have a habit of leaving clients in a cycle of ever-increasing debt to keep up.
Complaints indicate that loans continued to be repaid even after the new law took effect. CheckSmart says its relationship with Green Bear Ohio, which provides the loans, ended in June 2020.
Yost, a Republican, did not act against the companies. In both one letter to Rep. Kyle Koehler, the Republican sponsor of the 2018 crackdown, and in response to media inquiries, Yost declined to say whether he was investigating CheckSmart or Green Bear.
Conversely, in a civil lawsuit involving one of the companies’ loans, Franklin County Common Pleas Judge Jodi Thomas said in a decision last month that corporate lending practices created a “legal fiction” designed to evade Ohio’s loan reform law.
Based on consumer complaints and the court ruling, the loans work like this: A customer walks into the window of a CheckSmart store and asks to borrow $500. Green Bear (as Crestline Finance) lends the money, but places an additional $501 in “safety” that the customer does not have access to or control. Lenders charge interest on both the borrowed funds and the “collateral”.
A CheckSmart affiliate, Insight Capital, redeems debts and acts as a collector by suing borrowers in the event of default. A CheckSmart spokesperson said it was part of an “effort to maintain jobs and generate another source of income”. Franklin County Municipal Court alone shows hundreds of lawsuits filed by Insight Capital over the past few years.
Judge Thomas found that the companies devised this “convoluted” scheme to take advantage and evade consumer protections on payday loans by exceeding the $1,000 cap and operating under more lender-friendly mortgage laws. from Ohio.
Koehler made similar statements in a letter to Yost last summer.
“I am concerned that these loans do not comply with Ohio law or may constitute evasive, unfair or deceptive acts and practices,” Koehler said.
“This growing pattern of potential misconduct not only creates a hostile and unfair business environment for law-abiding lenders, but also harms Ohioans who have fallen prey to these predatory practices.”
Yost responded a month later, calling Koehler’s description “an accurate representation of the majority of consumer complaints,” but offering no specific action he is taking in response.
No application ?
The complaints, 90 in total obtained by public records request, span from December 2018 to August 2021. One describes a Columbus woman who borrowed $400 on December 31, 2019 and paid it back in a month. She was then told that she had opened a “$1,000 line of credit” for which she owed $300 in annual fees.
“The consumer has stated that she does not agree to these terms,” the complaint states.
Nate Coffman, executive director of the Community Development Corporation, lobbied for the 2018 payday loan reform. Overall, he says, the law worked. Quoting a bench reporthe said the total cost of a payday loan has fallen since it took effect.
He called CheckSmart a “rogue company” defying the law and issuing “phantom lines of credit” to take advantage of Ohio’s poor. What is needed is the application.
“What we’re talking about here is that they’re directly against the law,” he said. “This is a great opportunity for the Attorney General to pursue this matter further and tell the rogue operators, we are not going to tolerate this activity in Ohio.”
Yost declined an interview request. Spokeswoman Bethany McCorkle said Yost cannot legally confirm or deny an investigation. She said regulatory oversight rests with the Ohio Division of Financial Institutions and directed questions there.
Mikaela Hunt, spokeswoman for the Financial Institutions Division, said the department was “aware of the company and the product,” but said she could not legally release “review or investigation” on Green Bear.
Industry Campaign Cash
Community Choice Financial operates 484 CheckSmart stores, including 111 in Ohio, according to a recent financial statement. It paid its CEO William Saunders more than $2.6 million in 2019, including $58,000 for the personal use of the company’s aircraft.
Saunders and his Dublin-based company spent a lot of money opposing the 2018 legislation.
The bill stalled for much of 2017, but took on new life after then-speaker Cliff Rosenberger resigned amid a criminal investigation into his financial dealings with other lobbyists. payday lenders. (Rosenberger was not charged in the investigation.)
Saunders also runs the Ohio Consumer Lending Association, a nonprofit that donated $40,000 to another nonprofit called United for Clean Power. United for clean energy, who never disclosed the source of his fundsattacked Koehler for opposing a nuclear bailout now at the center of a criminal investigation into former House Speaker Larry Householder.
A spokesperson for OCLA denied any connection to the ads at the time. On Thursday, he said the payment was a decision by former company lobbyist Neil Clark, who was charged alongside Householder with racketeering.
The United for Clean Power ad campaign was cited in Householder’s criminal complaint as evidence that Householder was pressuring fellow lawmakers, who only referred to Koehler as “Rep 6.” The owner has pleaded not guilty and is awaiting trial. Clark pleaded not guilty and has since died by suicide.
The payday loan legislation passed with the support of all Democrats and most Republicans. CheckSmart’s PAC then wrote checks worth between $1,000 and $2,000 to Republican lawmakers who voted no, plus a $5,000 check to Yost for his attorney general campaign.
Along with the CheckSmart contribution, Yost received approximately $38,000 from Lee Schear and his wife. Lee Schear is President and CEO of NCPFinancea Dayton-based payday lender.
Yost came to power with the support of the Association of Republican Attorneys General. Saunders donated $12,700 to RAGA in May 2018. Populus Financial Group, another payday lender, donated $250,000 to RAGA in 2020. Yost’s spokesperson said political contributions have no effect on the work of the office.
CheckSmart’s answer
Community Choice Financial spokesman Patrick Crowley said CheckSmart has no affiliation with Green Bear and does not receive any funds from Green Bear. He said CheckSmart gets its money from other financial services like check cashing.
However, he acknowledged that the first CheckSmart sites were founded by James Frauenberg. Frauenberg and his son (who shares his father’s surname) left CheckSmart in 2008. The younger Frauenberg started Green Bear Ohio, which lists his Park City, Utah residence as an operating address in company documents. ‘State.
Crowley declined to comment on complaints about Green Bear and said the company responded to its own complaints in a timely manner. He said Green Bear stopped taking out new loans in Ohio on June 27, 2020.
Regarding the court ruling calling Green Bear’s loans a legal fiction, he said the ruling had no weight of precedent and only applied to one narrow case.
“Apart from this isolated decision, there has been no suggestion, even remotely, that Green Bear’s lines of credit were anything other than in full compliance with its license issued by the Ohio Department of Commerce, Financial Institutions Division. “, did he declare.
Green Bear could not be reached for comment. No store locations could be identified in Ohio. It has no apparent website, although a listed on complaints against the company’s ties to a Californians-only lender.
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