On KTAR:

PHOENIX — Arizona Attorney General Terry Goddard told payday lenders Wednesday they cannot keep operating as usual after a law authorizing their existence expires June 30.

The 2000 law allowed payday lenders to operate for 10 years, exempt from Arizona’s cap on annual interest rates of 36 percent. Interest on some loans was as much as 400 percent, critics said.

The lending industry tried, but failed to convince voters and the Legislature to extend the exemption.

Goddard said that means no more high-interest payday loans.

He expressed concern that the lenders will try to get around the new restrictions.

“We believe that a lot of people already are telling their customers to shift to auto title loans, even if they don’t have a car,” he said.

He said those activities are a sham.

Legitimate loans taken against a car title will be legal, along with check cashing operations.

Goddard, standing outside a payday lending store in central Phoenix, said some of the loans held by such stores “are being rolled into a series of loans which, in fact, are fraudulent. So we’re going to be on top of this. The attorney general’s office is going to be watching these transactions.”

He added, “We are encouraging people who are approached, especially in this rollover time, right now at the end of the time that they are in business, to report to us quickly when they see any evidence of the very, very high interest consumer loans continuing in Arizona.”

There are about 650 payday loan stores in Arizona. Executives have said some will stay open and try to make a profit from other lines of business, including auto title loans, check cashing and prepaid debit cards.

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