JEFFERSON CITY | The summary and cost estimate of a proposal to cap interest rates on payday loans were struck down by a Cole County judge Thursday, dealing a setback to groups pushing to put the issue on this year's ballot.
If Judge Daniel Green's ruling stands, proponents would have to start over gathering signatures to put the proposal on the ballot. The deadline to submit petitions to the secretary of state is May 6.
Green said the summary, which was written by the secretary of state's office, and the cost estimate, produced by the state auditor's office, were "inadequate" and "likely to deceive petition signers."
The ballot summary asked voters, "Shall Missouri law be amended to limit the annual rate of interest, fees, and finance charges for payday, title, installment, and consumer credit loans and prohibit such lenders from using other transactions to avoid the rate limit?"
The lead plaintiff on the lawsuit is John Prentzler, an executive with QC Holdings Inc., a payday lender based in Overland Park that operates primarily under the Quik Cash name. Helping pay for the lawsuit was Missourians for Equal Credit Opportunity, a political committee that has received more than $1 million in funding from a Kansas City-based nonprofit.
Who gave to the nonprofit, known as Missourians for Responsible Government, is unknown, since the group is not mandated to disclose its donors. Proponents of tougher regulations contend the money likely comes from payday lending companies, an idea bolstered last month when QC Holdings reported to the U.S. Securities and Exchange Commission that it has already spent "substantial amounts opposing the efforts to place this initiative on the ballot."
The ballot measure would have capped the annual interest rates on short-term loans at 36 percent. The group pushing the measure, Missourians for Responsible Lending, says the signature drive will continue and the issue will be on the ballot this fall.
"We expect the signatures gathered so far to be counted," the group said. "We are proceeding at full speed to complete our signature gathering effort to qualify the ballot. We are going to go boldly forward to win this campaign."