Last July we told you about House Bill 2 – the bill that as originally proposed would have required every unemployed Ohio worker seeking unemployment compensation benefits to electronically “register” (prepare and post a complete job resume) on the new OhioMeansJobs before he or she could receive any unemployment benefits. Check out our July 25, 2013 posting “Advocates Improve Unemployment Compensation Bill for Ohio Workers” for the details on HB 2.
To sum up, as a result of discussions among the Governor’s Office, the Ohio Department of Job and Family Services (ODJFS), and worker advocates (including the Ohio Poverty Law Center), HB 2 was substantially amended before being passed by the General Assembly and signed by the Governor. For example, the requirement that unemployment compensation applicants electronically register on the OhioMeansJobs website as a precondition to receiving any unemployment benefits was dropped. In addition, ODJFS provided assurances that unemployed workers could initially apply for benefits and register by phone and could also choose to receive information about job matches by phone. This new law just took effect earlier this month – on April 11, 2014. It will take at least several months to evaluate the possible impact – both good and bad – of the changes triggered by the implementation of HB 2.
The debate and negotiations over HB 2 should have lain to rest mandatory electronic filing requirements for unemployment compensation. However, in March of this year, the Kasich administration introduced the budget corrections bill – the so-called Mid-Biennium Review (MBR). Buried in that 2500-page bill was a surprising provision that would require everyone – with certain narrow exceptions – to electronically file their initial applications for unemployment compensation benefits and all subsequent continuing claims. This troubling provision became part of the appropriations bill, House Bill 483 (HB 483). HB 483 was on a fast track for passage by the House Finance Appropriations Committee (and the full General Assembly).
Once again, the Ohio Poverty Law Center (OPLC), Policy Matters Ohio, Disability Rights Ohio, Protecting Ohio Employees, and other worker advocates opposed this electronic filing mandate and requested its removal from HB 483. Once again we were successful. The controversial language was taken out of HB 483.
Unfortunately this issue is like a bad guest that will not leave the party. Similar language may be incorporated into a separate, stand-alone bill to be introduced in the General Assembly in the near future. So the battle is not over, but removing the language from the budget bill is a significant victory for unemployed Ohio workers because the legislature is likely to proceed with greater deliberation and care in considering a separate bill during the regular legislative process – instead of the fast-track, high-pressure budget appropriations process.
The legislature should take a deliberate approach. The recent disastrous experience of Florida in implementing a similar law, resulting in tens of thousands of workers losing their unemployment benefits and a finding by the U.S. Department of Labor that Florida’s unemployment compensation system violated the Americans with Disabilities Act, the Civil Rights Act of 1964, and other major federal civil rights laws, is a cautionary tale. Data from Connect Ohio shows there is still a significant digital divide in Ohio. For example, only 72% of Ohio homes subscribe to in-home broadband access. The adoption rate is even lower in Appalachian Ohio and among low-income households, persons without a college education, older Ohioans, and adults with disabilities. Moreover, at least one in eight Ohioans who did not subscribe to broadband service do not do so because of their lack of computer skills, and more than 2.7 million working-age Ohioans have difficulty completing many computer-related tasks required by today’s employers. There are also some communities – and in particular in southeastern Ohio – where residents do not even have access to broadband service.
Obviously, and despite all the contrary information, an all-electronic system for handling unemployment compensation has the attention of both the Ohio legislature and the Governor. OPLC and its partners plan to stay on top of any future legislative efforts to require electronic filing of all unemployment compensation applications and continuing claims, and potentially even more intrusive requirements such as completing extensive online questionnaires or tests without a telephone alternative or being able to obtain in-person assistance at local, OhioMeansJobs sites. But every Ohio worker has a stake in the outcome of continuing legislative efforts to sacrifice worker access to critical benefits in the name of efficiency and economy. In weighing the options, access to benefits should always win out.
written by Mike Smalz
In the struggle to regulate the short term, small dollar loan industry, one theory regularly pops up. This theory states that if such loans are capped and regulated, violent loan sharks will take the place of legitimate small loan businesses that would not be able to survive under such onerous regulation. The violent loan shark threat is mainly raised by industry members and supporters, as most recently happened in Idaho, where a legislative fight to rein in payday loans is waging. An industry supporter quoted in the local news cautioned that making it harder to obtain payday loans could drive borrowers underground. “The danger is that they turn from this sort of legal high-cost loans to illegal high-cost loans such as loan sharking, which, of course, is not a good thing.” In a 2012 article from the Washington and Lee Law Review entitled Loan Sharks, Interest-Rate Caps, and Deregulation, Professor Robert Mayer debunks this “loan shark thesis” using well-researched historical evidence and common sense analysis.
According to Mayer, loan sharks have existed in America at least since the Civil War. The name comes from their predatory behavior, in which the lender seeks to keep the borrower in a cycle of repeated renewals of the high-interest loan. The lender is more concerned with the regular interest payments than the principal itself. Enforcement methods of these early loan sharks did not involve violence at all; instead, loan sharks focused on non-violent personal harassment, wage assignments, and power-of-attorney based judgments to get their money. The idea of violent loan sharks with ties to organized crime did not arise until the 1960s, when splashy headlines captured the public’s attention and forever linked the term to violent enforcement of repayment.
Payday loan regulation was enacted in about three quarters of the states by the mid-twentieth century and was based on a common structure, which limited not only interest rates but contained other regulatory oversight. By the 1950s, many commentators were declaring the problem of predatory lending over because of this regulation, which had placed reasonable limits on the small loan industry.
According to Mayer’s analysis, violent loan sharks historically did not simply pop up wherever strict regulations were enacted. They were limited to certain geographic areas, which tend to be large metropolitan areas like New York, Chicago, and Philadelphia. This suggests that mob-tied loan sharks exist only where organized crime is prevalent, which makes logical sense. It seems unlikely that criminals are in the business of monitoring legislation to pick and choose where they will operate as illegal lenders. Moreover, loan sharks did not come about right after regulation; it took a relatively long time. For instance, Illinois passed a regulatory law in 1917, yet there is no historical evidence of loan sharks being active there prior to World War Two.
Moreover, loan sharks do not target people living paycheck-to-paycheck because the loan sharks do not want to be forced to violently enforce the loan agreement; no one wins when the lender does not get his money back. They are careful to only loan money to those who are likely to pay them back in a short period of time. Payday lenders, on the other hand, cater to the working class who sometimes require cash to tide them over until their next payday. The markets for loan sharks and payday lenders are entirely different, so a rise or fall in one will not necessarily affect the other.
Nevertheless, the “violent” loan shark business and the payday loan business share a common business model. Both are more interested in keeping borrowers in a cycle of debt and profiting from continued interest payments. Multiple studies of the payday loan industry document that repeat borrowing is the norm, and that the industry depends on repeat borrowing to make enough money to stay in business.
A number of states have never legalized the short term, small dollar loans commonly called payday loans, and several others who initially permitted payday lending have since imposed interest rate caps, or allowed enabling statutes to lapse. Yet, the industry has not put forth any credible evidence of an influx of violent, mob-tied loan sharks roaming the streets, filling a lending void in those states.
As Mayer notes, no specific evidence ties payday loan regulation to criminal lending because none exists. Modest regulation of the payday loan industry does not bring violent loan sharking to the forefront of the small loan industry. It does, however, save working class people money and helps prevent them from falling into a destructive debt cycle.
On December 10, Ohio legal aid advocates, represented by Julie Robie from the Legal Aid Society of Cleveland, participated in an oral argument before the Ohio Supreme Court in the case of Ohio Neighborhood Finance, dba Cashland v. Scott. What is notable about our participation is that legal aid did not represent any party involved in this case. Cashland had its stable of expensive big firm lawyers to brief and argue the case. Mr. Scott has long since gone on with his life, having made no appearances in any of the courts hearing his case. Legal Aid and our allies appeared as amici, or friends of the court, to give the Ohio Supreme Court the consumer perspective on the issues involved in this important case.
This case is important for consumers because it challenges the current business model of payday lending in Ohio. As some of you may know, in 2008, Ohio adopted a statute reforming payday lending, repealing the old business model that allowed short term, single pay loans with 391% APR. Ohio has never used the term “payday” loans in its statutes – when enabled in 1995, they were “loans by check cashing lender licensees.” These old loans were eliminated, and replaced with “short term loans.” The loan period for short term loans must be a minimum of 31 days, with a maximum APR of 28%.
Despite legislative reform, payday lending continues as usual for Ohio borrowers. No lenders are licensed under, or making loans under, the Short Term Loan Act. Instead, lenders like Cashland made deliberate business decisions to continue making payday loans, shoehorning into other lending licenses and making convoluted legal arguments to justify evasion of Ohio law. The Elyria Municipal Court and the 9th District Court of Appeals said Cashland cannot make payday loans under the lending license they currently hold. Now it is up to the Ohio Supreme Court to say “yes” or “no.”
But if the Ohio Supreme Court says no – no payday loans – what will this mean for Ohio borrowers? No more payday loans, at least in this current form? I wish. Unfortunately, the consumer small loan industry will continue to flourish. Even as we await the Cashland decision, cash-strapped Ohioans can get a short term consumer installment loan secured by a postdated check. Or they can stop in their friendly neighborhood auto title loan shop and walk out with a loan secured by the title to their car. And all of this and more can be done over the internet and without leaving the comfort and convenience of home. This market, “the financially underserved market”, generated $89 billion in fee and interest revenue in 2012. This industry is limited only by the ingenuity of its management teams, clever legal staff, and the greed of its funders and investors.
Under the veneer of industry best practices and superior customer service, the short term loan industry is making money selling credit to struggling families as a means to bridge the income gap. None of these financial products help struggling families address the underlying problems of chronic income shortfalls, or help families build wealth so they can move up the socio-economic ladder. Despite very credible studies showing that the economic activity generated by this industry results in a net loss to the economy, this industry will thrive until policymakers step up to the plate.
Stepping up to the plate doesn’t just mean better regulation of the industry and more consumer protections. Enforcement of existing consumer protection laws and the political will to stop predatory lending will always lag behind this constantly moving target. Stepping up to the plate means policy makers must address the much tougher issues involved in closing the income gap between low wages and what it really takes to make ends meet.
The political struggle to expand Medicaid, the Governor’s refusal to apply for a federal waiver to waive work requirements for food stamp recipients, the shrinking Ohio Works First program, continued high unemployment rates and Congress’s refusal to extend Emergency Unemployment Compensation all indicate that Ohioans will not soon see any real shift toward policies that support working families in the struggle to not just to make ends meet, but to make a better life for themselves and their children.
In the meantime, 46 Credit Services Organizations, 234 Ohio Mortgage Loan Registrants with 1202 Mortgage Loan registrant branch offices, 32 Small Loan Licensees with 171 Small Loan licensee branch offices, 150 licensed pawnbrokers with 178 branch store fronts (as of December 19) will be in our neighborhoods or at our fingertips to help us get the money we need. As long as we can afford their exorbitant fees and interest.
Recently, Ohio residential consumer advocates were invited by the Public Utilities Commission of Ohio (PUCO to file comments of on the rules governing the connection, disconnection and reconnection of gas and electric service and Ohio’s low income assistance program the Percentage of Income Payment program Plus (PIPP Plus) as part of the PUCO’s five-year review. Collectively, the consumer advocates are the only voice for everyday residential consumers before the PUCO, who makes and enforces rules regarding: utility security deposits, appropriate proof of consumer creditworthiness, and the timing and manner of shut off notices. This case is the only place where advocates can make recommendations on behalf of low- income customers who depend on the PIPP Plus program to get and/or remain connected to their utility to have heat and lights. These rules affect over 7 million customers who get gas or electric utility service from one of the regulated utilities in Ohio such as Duke, First Energy, AEP, or Columbia Gas, to name a few.
Consumer advocates urged the adoption of rules or changes to the rules in order to protect customers and maintain service without undue harm to utilities. In addition, the advocates made recommendations to improve PIPP Plus, which makes electric and gas payments affordable for low income Ohioans. The PIPP Plus program was created almost 3 years ago when the “Plus” was added to the existing PIPP program to provide arrearage forgiveness to many residents who had built up significant utility debt. The consumer advocates made the following recommendations for the Credit and Connection rules:
- Reduce utilities’ use of Social Security numbers to reduce the risk of identity theft
- Make security deposit requirements reasonable and affordable
- Connect service within a reasonable time after a request for service has been made
Similarly, the advocates also offered suggestions when disconnection or reconnection of service is an issue:
- Forbid landlords from using utility shut-offs to force tenants to move
- Require reconnection soon after payment is received if service is disconnected for nonpayment
- Make tenants liable only for service for the times that they actually rent and occupy a unit
- Create uniform rules and allow online access to forms for both residents with health emergencies and their healthcare providers to request temporary waivers of payment during health emergencies
This is only a sample of suggestions made by the consumer advocates. Click here and here to see all of the topics covered. Use this link to see the current rules and the rule changes proposed by the Staff of the PUCO.
As mentioned previously, consumer advocates also made numerous recommendations to improve the PIPP Plus program, such as:
- Maintain a hardship exemption to waive the $10 minimum payment for up to six months
- Allow customers the benefits of arrearage forgiveness if they fully or partially pay in advance
- Extend the time periods for customers cycling off PIPP Plus (for whatever reason) to provide payment schedules that are reasonable and affordable
- Allow the transfer of delinquent accounts to a PIPP Plus account
- Provide a more expansive definition of “on-time payment.”
Our positive recommendations will only improve the current rules, and we hope that the PUCO agrees and adopts many of these recommendations. The consumer advocates who jointly submitted comments include: the Ohio Poverty Law Center (OPLC) as well as most of the legal aid programs in Ohio, the Ohio Partners for Affordable Energy (OPAE), the Ohio Consumers’ Counsel (OCC), the Citizens’ Coalition, the Coalition of Homelessness and Housing in Ohio (COHHIO), the Ohio Association of Area Agencies on Aging (OAAA), the Ohio Association of Community Action Agencies (OCAA), and the Ohio Association of Food Banks.
OPLC releases Health Care and Uncompensated Care Fact Sheets for Ohio Counties
The Ohio Poverty Law Center recently developed uncompensated care and Medicaid fact sheets for each of Ohio’s 88 counties to illustrate the benefits of expanding Medicaid on local economies. For more than a year, Ohio has been debating whether to expand Medicaid to Ohioans up to 138% of the federal poverty level. That expansion would provide access to health care for 300,000 very low-income Ohioans who are currently uninsured and have little or no access to health care.
For each county, the fact sheets include:
- the number of uninsured adults living in the county
- the number of uninsured adults living in the county with incomes at or below 138% of the federal poverty level who would be eligible for Medicaid under an expansion
- the current number of Medicaid recipients living in the county
- the amount of uncompensated care provided by hospitals
This information illustrates the economic benefits Medicaid expansion would have on local economies by (1) reducing medical debt so that low-income patients and their families can use their scarce resources for other necessities such as food and housing, (2) dramatically reducing cost shifting by hospitals for care provided to uninsured patients, and (3) pumping millions of dollars into county economies and billions of dollars into the state’s economy via Medicaid payments to hospitals, physicians and other health care providers.
For a full set of the county fact sheets, visit: http://www.ohiopovertylawcenter.org/county-medicaid-expansion-fact-sheets
Studies have found that every $1.00 of Medicaid spending generates about $3.15 of economic activity so that this multiplier effect will help to create even more new jobs and businesses in Ohio’s counties. One such study is: R Greenbaum and A Desai. Uneven Burden: Economic analysis of Medicaid expenditure changes in Ohio. The Health Foundation of Greater Cincinnati, Cincinnati, Ohio 2003. http://www.ppm.ohio-state.edu/ppm/Medicaid.pdf.
Of course, the benefits of expanding Medicaid go far beyond mere dollars and cents. Improved health status, extended life expectancy, expanded employability, greater family stability and other personal and societal benefits will eventually dwarf the economic impacts, but the economic benefits to the state and each of Ohio’s counties should persuade policy makers who only focus on the bottom line too support expanding Medicaid.
Please share this information with friends and neighbors and encourage everyone to contact their legislators to ask them to support expanding Medicaid in Ohio to the fullest extent
Let us all hope that Ohio takes the steps to expand Medicaid soon so that all Ohioans and our local and state economies can enjoy the benefits beginning in January 2014.
The Ohio General Assembly has passed new unemployment compensation legislation, House Bill 2 (HB 2), and Governor Kasich signed HB 2 on July 11, 2013. It becomes law 90 days after the Governor’s signature, but certain requirements take effect at a later date. As a result of advocacy by Mike Smalz (Ohio Poverty Law center), Hannah Halbert (Policy Matters) and the Ohio Employment Lawyers Association (OELA), the final version of HB 2 represents a huge improvement over the bill as it was introduced.
As introduced, HB 2—sponsored by Representative Tim Derickson—required all unemployment compensation applicants to personally “register” on the OhioMeansJobs website as a precondition to receiving any unemployment benefits. (OhioMeansJobs is the exclusive job placement service for Ohio’s “one stop” employment assistance centers.) “Registration” involved posting a complete résumé. In addition, every week unemployment claimants would receive an email from OhioMeansJobs listing appropriate job matches. The bill also required everyone to “report” to their local One Stop office beginning in their eighth consecutive week of claiming unemployment benefits.
Mike Smalz and Hannah Halbert met several times with the bill’s sponsor, the Ohio Department of Job and Family Services (ODJFS), and the Governor’s Office to discuss a number of issues of concern. Mike and Hannah pointed out that some low-income unemployed individuals do not have a computer or reasonable access to the Internet, or are computer-illiterate. Other individuals face disability- or language-related barriers. Mike also cited an April 6, 2013 U.S. Department of Labor Finding determining that Florida’s unemployment compensation online application, registration and reporting requirements violated the Americans with Disabilities Act (ADA), Title VI (language discrimination) and other federal civil rights laws.
Representative Derickson, ODJFS and Senate Republicans agreed to amend several key provisions of the bill. As a result, final Sub. HB 2 provides:
— Individuals may register either online or by phone. People who file their unemployment compensation applications by phone will also “register” by phone: the information they provide over the phone will generate a basic résumé that will be automatically be posted on the OhioMeansJobs website, although claimants may later be required to update or expand their résumé.
— Individuals who lack a personal email account will receive telephone calls from ODJFS informing them of their weekly OhioMeansJobs job matches. Claimants will not be required to pursue those specific job matches so long as they make the required number of weekly job searches.
— The following categories of persons who have significant “barriers” are exempt from the registration requirement: individuals who are legally or physically unable to use a computer or who have a limited ability to read, write, speak, or understand a language in which OhioMeansJobs is available.
— Individuals who are temporarily laid off as part of a mass lay-off or plant closing, or who are attending an ODJFS-approved training course, or who are a member of a union that refers members to jobs through its labor referral or placement system are also exempt from the “actively seeking work” and registration requirements.
— Finally, the requirement that claimants “report” to their local One Stop office beginning in their eighth week after first filing for unemployment benefits may be accomplished by in-person, online, or telephone contacts, depending on ODJFS policies and the claimant’s particular circumstances.
Sub. HB 2, in its final version, is a victory for Ohio’s unemployed workers and a far better outcome than what has happened in other states where conservative governors and legislators have pushed through legislation creating major hurdles to getting unemployment benefits or reducing the amount or duration of unemployment benefits.
written by Mike Smalz
Recently, Representative Lou Terhar introduced HB 173 in the Ohio House. The bill purports “to regulate the for-profit debt settlement industry in Ohio.” Although this industry needs significant regulatory reforms, the proposed modifications of state law would offer mostly redundant regulation while removing fees caps that protect Ohio’ s citizens. The bill that would emerge is bad for Ohio consumers and bad public policy for Ohio, and Ohioans should urge their representatives to just say “no” to HB 173.
Debt settlement companies attract customers through marketing campaigns designed to give debt-burdened consumers the false impression that their services will allow individuals to settle their outstanding debts at substantial discounts.
In practice, however, these companies can leave consumers with higher debt loads and adverse court judgments, while charging exorbitant fees. In doing so, debt settlement companies prey on Ohio’s impoverished citizens, many of whom have been forced to rely on their credit cards as a bridge between their income and needs in desperate economic times. The typical for-profit debt settlement business model advises debtors who enroll in a plan to stop paying their credit card bills and instead set aside money before negotiations with creditors begin. Late fees and penalty interest rates mount as a result, leaving the consumer with a larger debt than when they started. Additionally, entering a plan is no guarantee that collection activities will stop; often creditor harassment and law suits continue.
Studies show that only a small minority of debts are actually settled by the companies in this industry. Even the American Fair Credit Council, the debt settlement industry’s trade association, has admitted that 66% of clients will not see even 75% of their debts settled. Additionally, the industry fails to include fees and the tax consequences of debt forgiveness in the analysis of debtor savings, giving an incomplete picture of the “benefits” of for-profit debt settlement plans. Because of these issues, it is unsurprising that the Better Business Bureau has called the industry “inherently problematic,” and the Office of the Comptroller of the currency has charged that “this is not a legitimate method of satisfying debts.”
Currently, Federal Trade Commission rules ban the most abusive practice common to the debt settlement industry: charging advance fees. Additionally, certain disclosures must be made to potential customers regarding the nature of the debt settlement company’s business practices and the consequences of entering a plan. Existing Ohio law puts fee caps on what this industry can charge for its services, and gives debtors who are victimized by abusive practices claims for relief under the Consumer Sales Practices Act.
HB 173, if enacted, will codify many of the FTC’s restrictions into Ohio law. However, caps on fees are abolished by the proposed bill. With such provisions, HB 173 is an example of “faux reform” for the citizens of Ohio. The proposed regulations are already in place, and the debt settlement industry will have greater freedom to charge astronomical fees. This should come as no surprise, given that the bill is backed by the American Fair Credit Council, the debt settlement industry’s trade association. The support of this organization should be telling for Ohio citizens who seek to restrain the harmful practices of debt settlement companies. For these reasons, Ohioans should urge their representatives to vote “no” on HB 173.