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Goddard: Payday lenders out of town after sunset

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Guest opinion

Goddard: Payday lenders out of town after sunset

Arizona's law authorizing high-interest payday loans is scheduled to expire on June 30. In anticipation of this long-awaited date, I have set up "Operation Sunset" - an enforcement initiative that will aggressively pursue and prosecute payday lenders who attempt to evade the ban on payday loans.

In 2008, Arizona voters made it clear that they opposed the continuation of the payday loan industry when they overwhelmingly defeated Proposition 200, which would have allowed payday lenders to operate in the state indefinitely. Despite this defeat, the payday loan industry continued to pursue a repeal of the sunset provision and lobbied for legislation that would have provided the industry essentially the same benefits as Prop 200.

As Attorney General, I strongly opposed this legislation, arguing that it would overturn the will of the voters and perpetuate a debt trap for thousands of Arizona citizens. Fortunately, the legislature refused to extend the sunset period.

The Operation Sunset Enforcement Team will be dedicated to implementing the will of the voters and preventing payday loans being issued after June 30. This unit, which is comprised of attorneys, investigators, and paralegals, will respond to consumer complaints, perform undercover operations, shut down operations that attempt to offer payday loans after the sunset, and where appropriate, bring claims for injunctive relief and civil penalties against those who violate the law.

I have written payday lenders to notify them that my office will be watching for any efforts to perpetuate illegal lending practices. We will be looking at the substance of the loan transaction, not its name.

In other states that have banned payday loans, the industry has not gone away quietly. Deceptive practices have included pre-paid debit cards, which carry a high interest rate plus additional fees; Internet payday lending, which would violate Arizona law, and sham auto title loans. The latter are likely to be seen in our state since more than 200 payday lenders have recently applied for auto title loan licenses.

Payday loan borrowers have better options. They can work out a payment plan directly with creditors to pay off bills over a longer period of time. They can get credit counseling to help set up a debt repayment plan or develop a budget. Nationally accredited counseling agencies can be found online at

Other alternatives include getting a loan from a credit union, which may offer better terms than a bank, or talking with a community organization or faith-based program that helps low-income households.

Ending payday loans promises to benefit far more people than it will hurt. I intend to make sure that these lenders do not continue to market illegal loan products under different names that will keep borrowers in a hopeless cycle of debt.

For Operation Sunset to be most effective, we need the help of consumers. If you witness or become aware of a lender issuing payday loans after June 30, I encourage you to call our payday lending hotline at 866-879-5219 or email us at Together, we can work to ensure the end of predatory payday lenders in Arizona.

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