Nebraska Initiative 428, Payday Lender Interest Rate Cap Initiative (2020)
| Nebraska Initiative 428 | |
|---|---|
 | |
| Election date November 3, 2020 | |
| Topic Banking | |
| Status | |
| Type State statute | Origin Citizens |
Nebraska Initiative 428, the Payday Lender Interest Rate Cap Initiative, was on the ballot in Nebraska as an initiated state statute on November 3, 2020.[1][2] It was approved.
A "yes" vote supported limiting the annual interest charged for delayed deposit services—also known as payday lending—to 36%. |
A "no" vote opposed this measure to limit the annual interest charged for delayed deposit services (payday lending) to 36%, thereby maintaining the existing state laws on payday lenders, including a prohibition on charging fees in excess of $15 per $100 loan and a $500 loan limit. |
Election results
|
Nebraska Initiative 428 |
||||
|---|---|---|---|---|
| Result | Votes | Percentage | ||
|
|
723,521 | 82.80% | ||
| No | 150,330 | 17.20% | ||
Overview
What did Initiative 428 change about payday lending practices in Nebraska?
- See also: Text of measure
Initiative 428 amended state statute by removing the existing limit that prohibits payday lenders from charging fees in excess of $15 per $100 loaned and replacing it with a 36% annual limit on payday lending transactions. It also prohibited payday lenders from collecting fees, interest, or the principal of the transaction if the rate charged is greater than 36%. Payday lenders are prohibited from marketing, offering, or guaranteeing loans with interest rates exceeding 36% in the state regardless of the lender having a physical office in the state.[1]
At the time of the election, Nebraska law limited the loan amount to $500 and loan term to 34 days.[3]
How many other states have limited the annual percentage rate (APR) of interest charged on payday loans?
- See also: Legal status of payday lending by state
As of October 2020, a total of 37 states permit payday lending. Four states—Colorado, Montana, New Hampshire, and South Dakota—have enacted 36 percent annual interest rate caps that prohibit additional fees or charges. Three of those caps were passed through citizen initiatives: Colorado (2018), South Dakota (2016), and Montana (2010). Four states authorize payday lending with limits on APR, but permit lenders to charge extra fees on top of interest. The remaining 29 states authorize payday lending without limits on APR.[4]
Who was behind the campaigns surrounding the initiative?
- See also: Support and Opposition
Nebraskans for Responsible Lending led the campaign in support of Initiative 428. The campaign had raised a total of $3.6 million in cash and in-kind contributions. The largest contributors were the Sixteen Thirty Fund and the American Civil Liberties Union.[5]
Ballotpedia has not identified a registered campaign in opposition to Initiative 428. Brad Hill, with the Nebraska Financial Services Association, opposed the initiative saying, "We provide credit to a section of the public that cannot get credit from the banks." The measure would "be a death knell" for payday lenders. The initiative is also facing a lawsuit filed on July 27, 2020. Trina Thomas, the owner of Paycheck Advance, argued in the lawsuit that the term "payday lenders" was not in the statute that the initiative would amend and therefore the initiative is misleading to voters.[6]
Text of measure
Ballot title
The ballot title was as follows:[1]
| “ | Shall Nebraska statutes be amended to: (1) reduce the amount that delayed deposit services licensees, also known as payday lenders, can charge to a maximum annual percentage rate of thirty-six percent; (2) prohibit payday lenders from evading this rate cap; and (3) deem void and uncollectable any delayed deposit transaction made in violation of this rate cap?[7] | ” |
Ballot summary
The ballot summary was as follows:[8]
| “ | A vote 'FOR' will amend Nebraska statutes to: (1) reduce the amount that delayed deposit services licensees, also known as payday lenders, can charge to a maximum annual percentage rate of thirty-six percent; (2) prohibit payday lenders from evading this rate cap; and (3) deem void and uncollectable any delayed deposit transaction made in violation of this rate cap.
A vote 'AGAINST' will not cause the Nebraska statutes to be amended in such manner.[7] |
” |
Object statement
The object statement was as follows:[1]
| “ |
The object of this petition is to amend Nebraska statutes to reduce the amount that delayed deposit services licensees, also known as payday lenders, can charge to a maximum annual percentage rate of thirty-six percent; to prohibit payday lenders from evading this rate cap; and to deem void and uncollectable any transaction made in violation of this rate cap.[7] |
” |
Full text
The full text of the measure can be read below.[1]
Readability score
- See also: Ballot measure readability scores, 2020
| Using the Flesch-Kincaid Grade Level (FKGL and Flesch Reading Ease (FRE) formulas, Ballotpedia scored the readability of the ballot title and summary for this measure. Readability scores are designed to indicate the reading difficulty of text. The Flesch-Kincaid formulas account for the number of words, syllables, and sentences in a text; they do not account for the difficulty of the ideas in the text. The secretary of state wrote the ballot language for this measure.
|
Support
Nebraskans for Responsible Lending led the campaign in support of Initiative 428.[5][9]
Supporters
Former Officials
- Former Nebraska state senator Al Davis
Corporations
Unions
Organizations
- AARP of Nebraska
- ACLU of Nebraska
- Democracy for America
- Habitat for Humanity of Omaha
- League of Women Voters of Greater Omaha
- League of Women Voters of Nebraska
- Nebraska Appleseed
- Nebraska Civic Engagement Table
- Omaha Together One Community
- Planned Parenthood of the Heartland
- Sixteen Thirty Fund
- Voices for Children in Nebraska
- Women’s Fund of Omaha
Arguments
Official arguments
Opposition
If you are aware of any opponents or opposing arguments, please send an email with a link to editor@ballotpedia.org.
Arguments
Official arguments
Campaign finance
One political action committee was registered in support of the Nebraska Payday Lender Interest Rate Cap Initiative. Nebraskans for Responsible Lending raised a total of $3.6 million in cash and in-kind contributions. Ballotpedia has not identified any committees registered in opposition to the initiative.[10]
| Cash Contributions | In-Kind Contributions | Total Contributions | Cash Expenditures | Total Expenditures | |
|---|---|---|---|---|---|
| Support | $3,198,230.00 | $419,574.20 | $3,617,804.20 | $3,194,999.32 | $3,614,573.52 |
| Oppose | $0.00 | $0.00 | $0.00 | $0.00 | $0.00 |
| Total | $3,198,230.00 | $419,574.20 | $3,617,804.20 | $3,194,999.32 | $3,614,573.52 |
Support
The following were contribution and expenditure totals for the committee in support of the initiative.[10]
| Committees in support of Initiative 428 | |||||
|---|---|---|---|---|---|
| Committee | Cash Contributions | In-Kind Contributions | Total Contributions | Cash Expenditures | Total Expenditures |
| Nebraskans for Responsible Lending | $3,198,230.00 | $419,574.20 | $3,617,804.20 | $3,194,999.32 | $3,614,573.52 |
| Total | $3,198,230.00 | $419,574.20 | $3,617,804.20 | $3,194,999.32 | $3,614,573.52 |
Donors
The following is a list of the top donors that contributed to Nebraskans for Responsible Lending:[10]
| Donor | Cash Contributions | In-Kind Contributions | Total Contributions |
|---|---|---|---|
| Sixteen Thirty Fund | $1,750,000.00 | $136,961.00 | $1,886,961.00 |
| ACLU | $1,240,130.00 | $59,151.30 | $1,299,281.30 |
| Nebraska Appleseed Center for Law in the Public | $105,000.00 | $21,546.39 | $126,546.39 |
| The Fairness Project | $0.00 | $52,916.00 | $52,916.00 |
| Barb Weitz | $50,000.00 | $0.00 | $50,000.00 |
Opposition
Ballotpedia did not identify committees registered in opposition to the initiative.
Methodology
To read Ballotpedia's methodology for covering ballot measure campaign finance information, click here.
Media editorials
- See also: 2020 ballot measure media endorsements
Support
Opposition
Ballotpedia did not locate media editorial boards opposing the ballot measure. If you are aware of an editorial, please email the article to editor@ballotpedia.org.
Background
Payday loans
The Consumer Financial Protection Bureau (CFPB) describes payday loans as "short-term, high-cost loans, generally for $500 or less, that is typically due on your next payday." To repay the loan, borrowers write a post-dated check for the full balance, including fees, or allow the lender to electronically debit the funds from your bank account. If a borrower fails to repay the loan on or before the due date, the lender can cash the check or electronically withdraw money from the borrower's account. Other common features of payday loans include:[11]
- Loans for small amounts, around $500;
- Loan is to be repaid in a single payment, usually on the borrower's next payday;
- Lender does not consider the borrower's ability to pay the loan back;
- Loaned funds may be provided to the borrower by cash or check, electronically deposited into an account, or loaded on a prepaid debit card.
Payday lending in Nebraska
Payday lending has been legal in Nebraska since 1994 with the passage of the Delayed Deposit Services Licensing Act. The last amendment to the statute was in 2018 by the state legislature. Under the existing law, lenders are prohibited from charging fees in excess of $15 per $100 loan. Loans are also limited to $500. According to the 2019 annual report on delayed deposit services produced by the Nebraska Department of Banking & Finance, the average loan size was $362, and the average contracted annual percentage rate was 405%. The total number of transactions for the year was 507,040.[12]
Legal status of payday lending by state
As of October 2020, a total of 37 states permit payday lending. Twenty-nine states (shaded in light blue) authorize payday lending without limits on APR. Four states (shaded in dark blue) authorize payday lending with limits on APR, but permit lenders to charge extra fees on top of interest. Four states limit APR to 36% and do not let lenders charge extra fees in addition to the interest. Three of those states passed 36% limits through ballot initiatives. Thirteen states prohibit payday lending.[4]
Ballotpedia tracked the following ballot measures designed to limit interest rates and charges for payday loans:
- Colorado Proposition 111, Limits on Payday Loan Charges Initiative (2018)
- This citizen initiative limited all interest, charges, and fees on payday lending to a total APR of 36%.
- South Dakota Payday Lending Initiative, Initiated Measure 21 (2016)
- Montana Loan Interest Rate Limit, I-164 (2010)
- Ohio Payday Lender Interest Rate Cap, Referendum 5 (2008)
In 2008, Arizona voters defeated a measure that would have allowed the practice of payday lending indefinitely after a temporary enabling law expired in 2010.
Path to the ballot
The state process
In Nebraska, the number of signatures required to qualify an initiated state statute for the ballot is equal to 7 percent of registered voters as of the deadline for filing signatures. Because of the unique signature requirement based on registered voters, Nebraska is also the only state where petition sponsors cannot know the exact number of signatures required until they are submitted. Nebraska law also features a distribution requirement mandating that petitions contain signatures from 5 percent of the registered voters in each of two-fifths (38) of Nebraska's 93 counties.
Signatures must be submitted at least four months prior to the next general election. Signatures do not roll over; they become invalid after the next general election at least four months after the initial initiative application filing. Depending on when the initiative application is filed, petitioners can have up to just under two years to circulate petitions.
The requirements to get an initiated state statute certified for the 2020 ballot:
- Signatures: 85,628[13]
- Deadline: The deadline to submit signatures was July 2, 2020.
Signatures are submitted to the secretary of state. The secretary of state sends the appropriate signature petitions to each county, where county election officials verify the signatures. Upon receiving the signatures back from county officials, the secretary of state determines whether or not the requirements were met.
Details about this initiative
- Albert Davis III, Thomas A. Wagner Jr., and Fr. Damian Zuerlein filed this initiative on September 13, 2019.[1]
- On June 25, 2020, Nebraskans for Responsible Lending submitted over 120,000 signatures for the initiative, requiring a signature validity rate of approximately 71% for the initiative to qualify for the ballot.[14]
- According to the July 2020 voter registration report, there were a total of 1,222,741 registered voters in Nebraska at the time of the state's signature deadline. This means that a total of 85,628 valid signatures were required to qualify this initiative for the ballot.[15]
- On July 31, 2020, the Nebraska Secretary of State completed the signature verification process and certified the initiative for the ballot. County election officials verified a total of 94,468 signatures or 110% of the threshold required. Nebraskans for Responsible Lending submitted over 120,000 signatures. The estimated signature validity rate for the petition was 78.7%.[16][17]
Cost of signature collection:
Sponsors of the measure hired FieldWorks LLC to collect signatures for the petition to qualify this measure for the ballot. A total of $322,090.40 was spent to collect the 85,628 valid signatures required to put this measure before voters, resulting in a total cost per required signature (CPRS) of $3.76.
Lawsuits
| Lawsuits overview | |
| First lawsuit | |
| Issue: Whether the ballot language written by the attorney general is misleading | |
| Court: Lancaster County District Court | |
| Ruling: Ruled in favor of the defendant; ballot language is not misleading | |
| Plaintiff(s): Trina Thomas, owner of Paycheck Advance | Defendant(s): Nebraska Attorney General Doug Peterson (R) |
| Second lawsuit | |
| Issue: Whether the withdrawal of signatures causes the initiative to not meet the state's distribution requirement and therefore removes the initiative from the ballot | |
| Court: Lancaster County District Court | |
| Ruling: Dismissed because the lawsuit did not meet the statutory filing deadline | |
| Plaintiff(s): Brian Chaney | Defendant(s): Nebraska Secretary of State Bob Evnen (R) and Nebraskans for Responsible Lending |
| Plaintiff arguments: The signatures withdrawn from the petition after the initiative was certified cause the initiative to no longer meet the state's distribution requirement, therefore it does not qualify for the ballot. | Defendant arguments: The initiative campaign gathered signatures in compliance with state laws and qualified for the ballot. |
Sources: Lincoln Journal-Star and Beatrice Daily Sun
Thomas v. Peterson
On July 27, 2020, Trina Thomas, the owner of Paycheck Advance, filed a lawsuit in Lancaster County District Court against the ballot language drafted by Nebraska Attorney General Doug Peterson (R). She argued that the term "payday lenders" was not in the statute that the initiative would amend and was "deceptive to the voters as it unfairly casts the measure in a light that would prejudice the vote in favor of the initiative."[6]
Lancaster County District Court Judge Lori Maret ruled that the ballot language was fair and not misleading. Thomas appealed the decision to the Nebraska Supreme Court. Ryan Post, who represented the state's attorney general's office at the hearing, said, "At a certain point, we have to be able to have a little bit of discretion to come up with the most fair description of what a ballot initiative is trying to do."[18]
On September 10, the state Supreme Court ruled in favor of the defendants. The Court argued that Thomas did not produce evidence for her claim that the term "payday lenders" was deceptive to voters. The Court said, "Thomas argues that the term 'payday lenders' creates an unfairness, because it is a slang term. However, Thomas has not offered any evidence to support this position. This is not a case where a colloquial term is substituted for a statutory term; rather, it supplements the statutory term with a commonly used term. We agree with the district court that the term 'payday lenders' would not deceive or mislead voters regarding the initiative petition, because the record shows 'payday lenders' is a term commonly known by the general public and used within the payday loan industry. "[19]
Chaney v. Nebraskans for Responsible Lending
On August 31, 2020, Brian Chaney filed a lawsuit in Lancaster County District Court arguing that the withdrawal of signatures from the initiative petition causes the petition not to meet the state's distribution requirement, which requires signatures from 5% of the registered voters in each of two-fifths (38) of Nebraska's 93 counties. At the time of the filing, at least 188 signatures had been withdrawn citing that petition circulators had not read the object statement before voters signed the petition. The original petition contained 31 of the 502 registered voters in Loup County or 6.18% of registered voters. After six Loup County voters withdrew their signatures, the rate decreased to 4.98%. Voters in the following counties withdrew their signatures: Grant, Rock, Wheeler, Hooker, Keya Paha, Stanton, Garfield, Burt, and Butler.
Nebraskans for Responsible Lending responded to the lawsuit saying, "We are confident that our signatures were gathered properly and in exact compliance with the law."[20]
On September 10, a Lancaster County District Court judge dismissed the lawsuit because the challenge did not meet the statutory deadline to file affidavits to remove signatures from the petition. Affidavits must be filed "prior to or on the day the petition is filed for verification."[21]
On October 16, the Nebraska Supreme Court upheld the lower court ruling to dismiss the case.[22]
How to cast a vote
- See also: Voting in Nebraska
Click "Show" to learn more about voter registration, identification requirements, and poll times in Nebraska.
| How to cast a vote in Nebraska | |||||
|---|---|---|---|---|---|
Poll timesIn Nebraska, all polling locations are open from 8:00 a.m. to 8:00 p.m. Central Time and 7:00 a.m. to 7:00 p.m. Mountain Time. An individual who is in line at the time polls close must be allowed to vote. Nebraska is divided between Central and Mountain time zones.[23] Registration requirements
To register to vote in Nebraska, each applicant must be a citizen of the United States, a resident of the Nebraska county in which they are registering, and at least 18 years old by the first Tuesday after the first Monday in November. Citizens are eligible to register to vote on January 1 of the year they will turn 18 before the November general election. People convicted of a felony are ineligible to register to vote until two years after the terms of their sentence have been completed, and individuals who have been declared mentally incompetent by a court are ineligible to register to vote.[24][25] A voter registration application can be completed in person at the county clerk or election commissioner's office, the Department of Motor Vehicles, or other state agencies. In-person registration must be completed by the third Friday preceding the election if completed at the DMV or other state agencies. In-person registration at county election offices must be completed by 6 p.m. on the second Friday before the election. Applications returned by mail must be postmarked by the third Friday before the election.[26] Online applications must be submitted by midnight on the third Friday before the election.[27] Automatic registrationNebraska does not practice automatic voter registration.[28] Online registration
Nebraska has implemented an online voter registration system. Residents can register to vote by visiting this website. The Nebraska State Senate enacted legislation allowing online voter registration in 2014, and the system was implemented in 2015.[29] Same-day registrationNebraska does not allow same-day voter registration.[28] Residency requirementsIn Nebraska, citizens can register to vote the day they become residents of the state.[26] Verification of citizenshipNebraska does not require proof of citizenship for voter registration. An individual must attest that they are a U.S. citizen when registering to vote. According to the state's voter registration application, "any registrant who signs this application knowing that any of the information in the application is false shall be guilty of a Class IV felony under section 32-1502 of the statutes of Nebraska. The penalty for a Class IV felony is up to two years imprisonment and twelve months post-release supervision, a fine of up to $10,000.00, or both."[30] All 49 states with voter registration systems require applicants to declare that they are U.S. citizens in order to register to vote in state and federal elections, under penalty of perjury or other punishment.[31] As of January 2025, six states — Alabama, Arizona, Georgia, Kansas, Louisiana, and New Hampshire — had passed laws requiring verification of citizenship at the time of voter registration. However, only two of those states' laws were in effect, in Arizona and New Hampshire. In three states — California, Maryland, and Vermont — at least one local jurisdiction allowed noncitizens to vote in some local elections as of November 2024. Noncitizens registering to vote in those elections must complete a voter registration application provided by the local jurisdiction and are not eligible to register as state or federal voters. Verifying your registrationThe Voter View site, run by the Nebraska Secretary of State’s office, allows residents to check their voter registration status online.
Voter ID requirementsNebraska requires voters to present identification while voting. Initiative 432, approved by Nebraska voters in November 2022, amended Article I of the state constitution to require voters to present valid photo identification in order to vote. Governor Jim Pillen (R) signed Legislative Bill 514 into law on June 1, 2023, in order to implement this policy change. Due to this legislation, Nebraska's voter ID requirement went into effect on April 1, 2024, in time for the state's 2024 primary.[1][2] | |||||
See also
External links
Support |
OppositionSubmit links to editor@ballotpedia.org. |
Footnotes
- ↑ 1.0 1.1 1.2 1.3 1.4 1.5 1.6 Nebraska Secretary of State, "Payday Lending Initiative," accessed October 18, 2019 Cite error: Invalid
<ref>tag; name "Text" defined multiple times with different content - ↑ 2.0 2.1 Nebraska Secretary of State, "2020 Election," accessed October 18, 2019 Cite error: Invalid
<ref>tag; name "SoS" defined multiple times with different content - ↑ Payday Loan Information, "Nebraska," accessed August 11, 2020
- ↑ 4.0 4.1 Payday Loan Consumer Information, "Legal Status of Payday Loans by State," accessed August 14, 2020
- ↑ 5.0 5.1 Nebraskans for Responsible Lending, "Home," accessed June 24, 2020
- ↑ 6.0 6.1 Omaha World-Herald, "Payday lending interest cap is headed for Nebraska's ballot," July 30, 2020
- ↑ 7.0 7.1 7.2 Note: This text is quoted verbatim from the original source. Any inconsistencies are attributable to the original source.
- ↑ Nebraska Secretary of State, "2020 Initiative Informational Pamphlet," accessed September 28, 2020
- ↑ Omaha World Herald, "Petition drive launches to cap payday loan lending rates at 36% in Nebraska," October 15, 2019
- ↑ 10.0 10.1 10.2 Nebraska Accountability and Disclosure Committee, "Nebraskans for Responsible Lending," accessed November 5, 2019
- ↑ Consumer Finance, "What is a payday loan?" accessed September 9, 2018
- ↑ Nebraska Department of Banking & Finance, "2019 Delayed Deposit Services Annual Report," accessed August 14, 2020
- ↑ This requirement is approximate. Since the Nebraska signature requirement is based on the number of registered voters at the time of filing, it can vary slightly.
- ↑ Omaha World-Herald, "Nebraska group behind petition drive to cap interest rates on payday loans turns in signatures," June 24, 2020
- ↑ Nebraska Secretary of State, "VR Statistics Count Report," July 1, 2020
- ↑ Nebraska Secretary of State, "Signature Verifications Completed for Payday Lending Initiative," July 31, 2020
- ↑ Lincoln Journal Star, "Ballot initiative to cap payday loan interest rates gathers needed signatures," August 5, 2020
- ↑ Lincoln Journal-Star, "Nebraska Supreme Court hears challenge to title of payday lending ballot initiative," September 4, 2020
- ↑ Nebraska Supreme Court, Thomas v. Peterson, September 10, 2020
- ↑ Lincoln Journal-Star, "Lawsuit seeks to invalidate ballot measure capping payday loan rates after signatures withdrawn," September 2, 2020
- ↑ Lincoln Journal-Star, "Supreme Court clears the way for payday lending initiative to appear on ballot," September 10, 2020
- ↑ Cherokee Tribune & Ledger News, "Supreme Court rejects last challenge to payday lending initiative," October 17, 2020
- ↑ Nebraska Statutes, "Section 32-908," accessed April 18, 2023
- ↑ Nebraska Secretary of State, “Nebraska Voter Registration Background,” accessed April 18, 2023
- ↑ Nebraska Secretary of State, “Felon Voting Rights FAQ,” accessed April 18, 2023
- ↑ 26.0 26.1 Nebraska Secretary of State, “Voter Information Frequently Asked Questions,” accessed April 18, 2023
- ↑ Nebraska Secretary of State, “Online Voter Registration Frequently Asked Questions,” accessed April 18, 2023
- ↑ 28.0 28.1 NCSL, "State Profiles: Elections," accessed August 28, 2024
- ↑ Omaha World-Herald, “Online voter registration is coming to Nebraska,” September 5, 2015
- ↑ Nebraska Secretary of State’s Official Voter Registration Application," accessed November 1, 2024
- ↑ Under federal law, the national mail voter registration application (a version of which is in use in all states with voter registration systems) requires applicants to indicate that they are U.S. citizens in order to complete an application to vote in state or federal elections, but does not require voters to provide documentary proof of citizenship. According to the U.S. Department of Justice, the application "may require only the minimum amount of information necessary to prevent duplicate voter registrations and permit State officials both to determine the eligibility of the applicant to vote and to administer the voting process."