City Council Bans Payday Lenders in Lakewood

After some payday lenders skirted the 2008 Short-Term Lending Act by operating under different licenses, the Lakewood City Council approved a ban on cash-advance businesses altogether in the city.

At least until the Ohio Supreme Court weighs in.

The city’s six-month moratorium means that the building commissioner will not grant to businesses looking to operate under the state’s Mortgage Loan Law or Small Loan Law. 

“If the Ohio Supreme Court rules that these lending practices are legal then council can lift the moratorium and we would advise that they do,” said Kevin Butler, the city’s law director.

“If, on the other hand, the court finds that these lending practices are illegal then that would throw the entire industry into a state of uncertainty and the legislature may need to act.”

Similar businesses already operating in Lakewood won’t be affected by the moratorium.

The 9th District of Appeals court ruled in November that Cashland stores must comply with a state measure aimed at capping the interest rate at 28 percent. 

However, Butler said that some businesses have been charging much higher interest rates. 

Council unanimously approved the moratorium on Monday night.