Today’s Inside Tucson Business Editorial:

No need to shed a tear, the end for payday lenders is near. For all the national notoriety Arizona lawmakers have taken this year, we need to give credit where it is due. Despite some last-minute efforts by the payday lending industry to allow them to continue loan-sharking in the state, nothing was passed.

The law will expire after Wednesday (June 30). For that we should all be grateful.

It probably had something to do with the 60 percent of the state’s voters who rejected the November 2008 attempt by the industry to do the same thing.

Still though, some lawmakers did try. And we should never forget that it was a Legislature 10 years ago that initially gave the industry the green light.

On Thursday morning, Arizona will join at least 10 other states where payday lending is prohibited.

Judging from what’s happened in other states, including North Carolina and Arkansas, payday lenders tend not to go away quietly. For an industry that makes lots of money preying on the poorest among us with small high-interest loans, these are not the kind of people who are about to leave a crumb on the table.

Payday lending is big business. W. Allan Jones, founder of Check Into Cash, said his national chain of 1,200 stores takes in more than $22 million a year in after-tax profits, according to Gary Rivlin, author of a new book titled “Broke USA” that looks at the business of making money from low-income people.

As Rivlin said on the public radio program “Marketplace” in an interview with Kai Ryssdal, “The problem with the payday loan is the person who’s so desperate today that they’re borrowing money at that kind of rate, two weeks from now, how are they doing to have the extra money to pay back the borrowed amount, plus the fee?”

At its peak in 2008, there were more than 700 payday lending stores in Arizona. It’s estimated that number is now down to around 580. About 200 of them have applied to state officials to move into auto title loans. And up to another 250 or so say they plan to offer other financial services such as high-rate pre-paid debit and credit cards, other short-term loans and check-cashing services.

At most, they’ll be limited to charging a loan interest rate of no more than 36 percent, plus a 5 percent administrative fee.

It remains to be seen how successful any of these alternatives will be considering other retailers already offer them.

Arizona State Attorney General Terry Goddard — who is running for governor — has put out the word that his office will be monitoring the shut-down of the payday lending industry in a program called “Operation Sunset.”

The enforcement unit is comprised of attorneys, investigators and paralegals who will respond to consumer complaints, perform undercover operations, shut down operations that attempt to offer payday loans after Wednesday, and where appropriate, bring claims for injunctive relief and civil penalties against those who violate the law.

It includes a toll-free hotline number: 1-866-879-5219.

Desperate Arizonans could still be vulnerable to those lenders trying to skirt the law. And payday loans remain legal in every U.S. state surrounding Arizona. There are also online payday lending stores, which Goddard says cannot legally loan money in Arizona.

At least one online lender, Pay1Day.com says it won’t fund personal payday loans to Arizona residents because they don’t think they can legally go after an Arizonan for repayment.

That’s something to celebrate.

Copyright 2010 Inside Tucson Business

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