PHOENIX - Convinced the industry can't be properly regulated, a veteran state legislator is launching an initiative drive to wipe out payday lenders.
By contrast, the payday loan stores, with their two-week loans, charge interest and fees that, on an annual basis, can translate to close to 400 percent.
The decision to go to the streets comes as McClure, long suspicious of these high-interest loans, has been unable to convince colleagues to impose strict new regulations.
A House panel has approved some alterations in the law. But legislators have been unwilling to ban payday loans offered over the Internet, a practice that McClure said is "as dangerous, if not more so, than Internet gaming.''
Lee Miller, who lobbies for the Arizona Community Financial Services Association, said interest caps will kill the industry.
"The price we charge is the price we have to charge to operat that business model in those locations and still make a fair profit,'' he said.
Payday lenders actually don't "loan'' money but instead agree to accept a check they know is not good and hold it for up to two weeks. Borrowers can get up to $500, with the check written out for 15 percent more than that amount.
Miller said the effective interest rate payday lenders charge is much higher because these are short-term loans. By contrast, he said, even companies that issue a high interest credit card "get to charge you interest 365 days a year, year after year afte year, until you pay off your bill.''
And he said the industry constantly needs to find new customers.
"We have no expectation that we're ever going to see you again once you've paid us off,'' he said.
The bottom line, he said, is that the approximately 720 site operated by payday lenders fill a gap in the market.
McClure is unconvinced.
"What did they do before payday loans?'' she asked, noting they were not legal until seven years ago.
"They went to family members, they went to friends,'' McClure continued. "Many times they went to employers and got th employer to give them an advance.''
And sometimes, she said, it just requires creativity.
For example, she said someone who needs a tire doesn't have to buy an expensive new one but instead could get a used one, good for even just a couple of weeks, taking care of the immediate short-term need.
McClure is counting on volunteers to collect the 153,36 signatures she needs on petitions by July 3, 2008. But McClur said she already has taken the first steps to building that army.
She was president of the Arizona Federation of Republican Women before she ran for office. McClure said she believes most of tha 3,000-strong organization are willing to circulate at least a couple of petitions.
McClure said she already is in talks with that group's Democra counterpart, and is counting on support from groups like Arizona Community Organization for Reform Now, which helped put the $6.75-an-hour minimum wage issue on the 2006 ballot.
And Cynthia Fagyas, spokeswoman for the Arizona chapter of AARP, said her organization would be interested in pursuing the issue, though members want to see the final version of the initiative.
While McClure has no real cash for the campaign, Miller said he is sure that the companies which operate the payday loan store will spend what is necessary to defeat her measure.
McClure said she chose the floating cap tied to the prime rate because it is impossible to predict inflation and the economy.
She noted that the prime rate hit 21.5 percent in 1980.
She said her opposition to Internet payday lending is based on its ease.
"With the stroke of a key you could get a payday loan,'' she said. "You could also take 10 of them in one morning's work which, to my way of thinking, is totally too dangerous for the average person.''