Payday Lender Loophole Upheld by Ohio Supreme Court

On June 11, 2014, the Ohio Supreme Court upheld a loophole utilized by payday lenders to make lucrative loans without having to comply with recent regulations passed by Ohio lawmakers.  This decision reversed a Ninth District Court of Appeals decision and the Elyria Municipal Court’s original judgment that had held payday lenders could not use this loophole to get around the new requirements.  The Loan at issue in this case had an annual interest rate of 245%.  The Short Term Loan Act was originally passed to limit high interest rates charged by payday lenders.  Lenders can now avoid these regulations by registering under the Mortgage Lending Act.