Payday loan companies file suit over ordinance.
Lending practices - Four businesses say new Portland regulations conflict with state law

03/23/2006
Source: OregonLive.com

Portland, Oregon – Four payday loan companies filed a lawsuit Tuesday challenging a new Portland law governing them. The suit asks Multnomah County Circuit Court to declare the city ordinance invalid on grounds it violates the state Constitution. It also asks the court to bar the city from enforcing the law, passed last month, until the case is decided.

The suit argues that Portland's law conflicts with a state law passed in 2001 to regulate the short-term lenders, who commonly charge interest rates exceeding 500 percent annually on small loans.

"The state has pre-empted local legislation" by adopting its own law earlier, said John Junkin, a Portland attorney representing the payday lenders. In a news release Tuesday, Portland City Commissioner Dan Saltzman called the lawsuit "shameful."

The city took action because state law does not even cap interest rates, he said.

The Portland law requires the 71 payday lenders in the city to pay a $1,500 a year permit fee; to give borrowers a payment plan if they have trouble repaying; to collect at least 25 percent of principal on a loan before extending it; and to give borrowers up to a day to opt out of a loan.

The payday loan companies filing suit are Evergreen Financial Investments Inc., based in Nevada, and three Oregon companies: Anyday's Payday, Pacific Finance Corporation Inc. and Paycheck Advance.

-- Bill Graves