According to The Oregonian, four payday loan companies have filed a lawsuit challenging the new Portland law passed to govern them. The suit asks the Multnomah County Circuit Court to declare the city ordinance invalid on grounds it violates the state Constitution.
The four Oregon payday loan firms have also asked 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 payday advance lenders.
“The state has pre-empted local legislation by adopting its own law earlier,” said John Junkin, a Portland attorney representing the payday lenders.
Portland City Commissioner Dan Saltzman called the lawsuit “shameful,” and said that the city took action because state law does not have caps on interest rates, and consumers need protection. The new Portland ordinance requires the 71 agencies in the city that issue payday loans to pay a $1,500 fee annually for a permit. They must also:
- Give borrowers a payment plan if they have trouble repaying.
- Collect at least 25 percent of a payday loan’s principal before extending it.
- Give borrowers up to 24 hours to opt out of a cash 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.