LIBERTY, Mo. — Payday loans carry an average interest rate of nearly 400 percent, creating debt traps for consumers.
It's why Liberty voters decided in November to pass limits on lenders. However, a bill on its way to Gov. Mike Parson's desk could undo some of those restrictions, according to some advocates.
The Liberty ballot measure emerged from a petition organized by the Northland Justice Coalition.
"As a city, we had a chance, we thought, to step in and say we think this is unethical and immoral, and we don't want it in our city," said Abby Zavos, one of the organizers.
The ballot measure proposed limiting the number of short-term lenders in the city to one for every 15,000 residents. It also added a $5,000 permit fee for those businesses, with money going to enforcement and education.
It passed overwhelmingly, with 82 percent support.
"It was incredible to be a part of something like that, to see that happen from start to finish," Zavos said. "So it's even more sad to see how easily that can be undone."
Zavos is referring to what happened in Jefferson City last Monday.
Rep. Curtis Trent (R-Springfield) added new language to a banking bill, S.B. 599. The amendment said cities cannot charge fees to installment loan lenders if they are not charged to all lenders.
Installment lenders are different than payday lenders, although state records show many payday lenders have licenses to offer installment loans. Installment lenders issue loans that have a fixed monthly payment, while payday lenders issue short-term loans with high rates.
"It is not uncommon for lenders to hold both licenses, which is permitted under state law," Lori Croy, director of communications for the Missouri Department of Insurance, wrote in an email to the 41 Action News Investigators.
That's why advocates like Harold Phillips, a Liberty city councilman, fear their fee for payday lenders will be thrown to the wayside.
"They could sue the city, and according to that [bill], if they prevail, the city would be responsible for all the fees and attorney costs related to that," Phillips said.
Trent's amendment also allows installment lenders to charge fees to consumers who use cards to pay.
The 41 Action News Investigators first reached out to Trent's office on Monday. On Wednesday, a staff member said the lawmaker did not have time to respond because it was the last week of the legislative session.
However, Trent recently told The Kansas City Star the provision will not impact payday lenders and was a "minor tweak" requested by the Division of Finance.
The division, according to Croy, did not request the measure be passed, but provided input to industry representatives on the topic of when a debit or credit card fee is permitted or not.
"The legislation does not appear to negate a political subdivision's ability to charge a payday lender a higher licensing fee," Croy said.
But advocates aren't convinced and are calling on Parson to veto the bill.
"I think it's time to send a strong message to the governor that the people want our local control reestablished," Zavos said, “and it's important to us.”
Independence and Blue Springs also have ordinances regulating payday lenders. A spokeswoman for Independence said the city is following the legislation, but she had no other comment at this time.