In a minor defeat for the payday lenders, the South Dakota Supreme Court ruled unanimously today in favor of the Attorney General’s ballot explanation of Initiated Measure 21, the real 36% rate cap on payday loans.
Erin Ageton, VP of payday lending firm Select Management Resources, sued Attorney General Marty Jackley last June, claiming that he should have included a statement that the 36% rate cap would put her company and all other payday lenders out of business in South Dakota. The Sixth Circuit backed the A.G. Today, so did our Supremes, who said every one of Ageton’s arguments was wrong.
At the heart of the ruling, the Justice Lori Wilbur says what I recognized last June, that Ageton was trying to force the Attorney General to go beyond his statutory duties and write the payday lenders’ political arguments onto the ballot:
Here, even if we accept that the proponent’s true purpose with the initiated measure is to end short-term lending in South Dakota, that purpose and effect is more appropriate for political dispute and advocacy. There is no language in the initiated measure that specifically bans short-term lending in South Dakota. And, although a 36% interest rate cap on short-term loans for certain lenders might prompt those lenders to cease providing short-term loans, the initiated measure does not prohibit their continued operation [Justice Lori Wilbur, Ageton v. Jackley, 2016 S.D. 29, South Dakota Supreme Court, 2016.03.30].
The payday lenders have wasted their ill-gotten cash on this frivolous lawsuit; now brace for the loan sharks to spend even more on an advertising blitz to spread their propaganda against IM 21 and in favor of their decoy measure, Amendment U.
Update 12:27 CDT: Watch for confounding variables: Erin Ageton’s next spaghetti-throwing will probably include the claim that the 36% rate cap somehow caused EZ Payday Advance on South Minnesota to close (a closing noted with glee by Matthew Paulson):
Facing a class action suit from investors and prosecution by the Consumer Finance Protection Bureau, EZCORP, Inc., closed all of its payday lending shops nationwide last July.
Thank you SD Supreme Court Justices for your wise decision in this matter.