Video: Fake 18% Rate Cap Petitioners Mislead Signers

Petitioners collecting signatures for the fake 18% rate cap at SDSU yesterday appeared unable to give signers accurate information about the proposed constitutional amendment they are circulating.

SDSU student Cully Williams found at least three circulators working the fake 18% rate cap and Marsy’s Law petitions (again, that shady association reported by Matt Hildreth Tuesday) outside the SDSU Student Union yesterday. He stopped at their table to ask some questions. As this video shows, he got some wildly misleading answers:

Here’s my transcript of the relevant dialogue:

[Circulator 1, seated, in the “Proud to Be an American” shirt]: The second one is regarding payday loans. It’s to make the companies more transparent with their interest rates. They can’t just charge whatever they feel like it. After it gets up to 18%, they have to notify the customers. Every time they raise the interest rate, they have to notify the customers [petition circulator, recorded by Cully Williams, Brookings, SD, 2015.09.17].

Stop right there. Let’s read the fake 18-percenters’ proposed constitutional amendment:

No lender may charge interest for the loan or use of money in excess of eighteen per cent per annum unless the borrower agrees to another rate in writing. No law fixing an annual percentage rate of interest for the loan or use of money is valid unless the law provides borrowers the right to contract at inteerst rates as may be agreed to by the parties.

No law fixing a rate of interest or return for the loan or use of money, or fixing the service or any other charge that may be made or imposed for the loan or use of money, for any particular group or class engaged in lending money is valid. Any rate of interest or charge fixed by law shall apply generally and to all lenders without regard to the type or classification of the lender’s business [decoy amendment, submitted by Lisa Furlong, South Dakotans for Fair Lending, first published on Dakota Free Press, 2015.07.13].

Nothing in that text says what the circulator just said about notifying customers of increases in interest rates.

Now, does the 18% amendment really cap interest rates at 18%?

[Williams]: So they can’t put the interest rate over 18%?

[C1]: Right. Well, they can do it over 18%, but the customer has to be notified that that’s happening.

[W]: So… I think I’m missing something here. So this doesn’t cap the rate?

[C1]: No.

[W]: So what’s it do then, if it doesn’t cap the rate?

[C1]: It makes it so they have to be notified if the interest rate goes up above 18% [Williams video, 2015.09.17].

So this doesn’t cap the rate? No. Boom—there you have it, one of petition sponsor Lisa Furlong’s own circulators telling you what I’ve reported consistently since Furlong’s proposal went public: it is a fake rate cap.

So what about this measure’s impact on the real 36% rate cap petition intended to curb the predatory payday lending industry?

[W]: Does it also ban the one that actually does cap the rate at 36%?

[C1]: No, these two are not exclusive. You can vote for both of them.

[W]: O.K., but this one doesn’t have text that would explicitly ban a statutory cap of 36%?

[C1]: No, there’s two of them out now.

[W]: I know, but… if I read this one here, it says… “This amendment eliminates the ability to set statutory interest rates that are inconsistent with this amendment” which would not allow a 36% interest rate, since the 18% only applies to verbal, so that would actually ban a cap on that, is what this would do, unless I’m reading that wrong.

[C1]: I… go ask that lady, the pregnant lady. She can explain it. Did you sign it? [Williams video, 2015.09.17].

Williams reads Attorney General Marty Jackley’s explanation of the fake 18% rate cap pretty accurately. Confronted with the text in her own hand, this circulator has to eject. So bring on the help—a pregnant lady! She wouldn’t try to mislead us, would she?

[Circulator 2, standing, in yellow t-shirt]: It’s basically so that when your interest rate goes up above 18%, the lenders contact you and make sure that you know that your interest rate is increasing, so they have to like let you know, because it goes up to like 300% interest and things like that really fast, based virtually without people even noticing…. It’s about like having more disclosure [Williams video, 2015.09.17].

Oh, she would! Her response is a strange mix of fantasy—again, the proposed amendment says nothing about notifications or disclosure or increasing rates—and ugly fact. I’m surprised she’s allowed to even mention the triple-digit interest rates that payday lenders charge.

Back to the next big question: does this amendment really cap interest rates?

[Williams]: Does it actually cap interest rates?

[C2]: No, that’s the other one. I wish I had that one [Williams video, 2015.09.17].

Fascinating! We now have a second circulator confirming that the 18% petition is a fake rate cap! As a bonus, this fake 18-percenter acknowledges that “the other one,” the 36% rate cap petition brought to us by Steve Hildebrand and Steve Hickey, is the real one. She even says she wishes she had that one. (Ma’am, click here to contact the real 36-percenters… and save your mortal soul!)

Now the big legal question: is the fake 18% rate cap really just a trick to abolish the real 36% rate cap?

[W]: Does this one ban capping interest rates by statutory law, because there’s a clause in there that does say that, so this would actually ban an actual cap, because it’s a constitutional amendment.

[C2]: I don’t know. I know there’s like a few of them out there. That’s a great question. I don’t know.

[W]: Because it kinda does, so I was just seeing if I’m misreading that.

[C2]: There was a plebiscite that was out there before that I believe is the one that you are talking about, and then they came out with a new one. But I… I don’t know, I’m going to be honest with you  [Williams video, 2015.09.17].

I’m going to be honest with you—I don’t know where anyone on the street in South Dakota comes up with the phrase “There was a plebiscite.” (As a weekend diversion, I invite readers to find any instance of the word plebiscite being used in the South Dakota press and blogosphere.)

[W]: I mean like when I read it, with signatures on it, it actually said that it would ban statutory caps—

[C2]: Oh really?

[W]: Yeah.

[C2]: O.K., good to know.

[W]: I just didn’t know if I’m misreading it or—

[C2]: Um, no, I don’t know. That’s good to know. I should go over it, too. Have a good day.

[W]: Thanks. You too [Williams video, 2015.09.17].

So instead of explaining the amendment, as the first circulator said she could, the second circulator ends up admitting she hasn’t really gone over the petition she’s urging people to sign. Sigh.

Williams figures he’s had enough, but on his way (to her credit! Always Be Closing!), the first circulator takes another shot for his signature. Williams learns that this gal has been watching the news:

[Circulator 1]: Did you… sign it?

[Williams]: Let me read that one more time. Maybe I’m just off base here…. “This amendment eliminates the ability to set statutory interest rates that are inconsistent with this amendment.” Hey, are the guys that were on KELOLand?

[C1]: Yeah.

[W]: You were?

[C1]: Yeah.

[W]: Are you from South Dakota?

[C1]: Yes, I am. I can show you my ID—

[W]: No, I’ll take your word for it.

[C1]: Yeah, they… I think they even took a picture of him [pointing to other circulator on sidewalk] but his person was with him and they just left the person out… they didn’t take a picture of the person. So it really messed us up [Williams video, 2015.09.17].

This circulator and her partners may not have to run from Angela Kennecke’s blue dress for breaking petition law, but they prove that the petitioners carrying the fake 18% rate cap are either unable or unwilling to tell signers the truth about this decoy petition.