Georgia payday loan industry loses record release lawsuit

Inside Subprime: June 2, 2018

By Lindsay Frankel

A new Georgia Supreme Court ruling will allow watchdog agency Campaign for Accountability to obtain correspondence between a Kennesaw State University professor and the Consumer Credit Research Foundation.

The agency requested the communications under Georgia’s Open Records Act after professor Jennifer Lewis Priestley published an article about a study she had conducted in 2014. Priestley received a $30,000 grant from the Consumer Credit Research Foundation, a payday loan industry group, for her work. Campaign for Accountability filed requests over concerns that the payday loan industry was funding academic studies that were favorable to payday lenders.

“Not only are they paying for these studies, but then they’re using these studies to ward off government regulation,” said Daniel Stevens, executive director of the campaign.

But the Consumer Credit Research Foundation filed suit to block the nonprofit from receiving the correspondence. While the Court of Appeals ruled in favor of the foundation, the decision was unanimously overturned by the Supreme Court.

Atlanta lawyer Henry Chalmers of the Campaign for Accountability called it “a great win for anyone who believes in the importance of open and transparent government.” Had the court ruled in the foundation’s favor, he said “it essentially would have pulled the shade down on sunshine into government affairs.”

Atlanta lawyer Tom Clyde also praised the ruling.

“The Supreme Court’s decision today means governments’ hands are not tied when they want to release information to the public,” he said. “Unless a law specifically forbids release, government agencies can use their best judgment to keep the public informed. That’s the way democracy is supposed to work.”

The Consumer Credit Research Foundation argued that the information to be disclosed fell under two of the Open Records Act’s 50 exemptions, and the release of the correspondence should therefore be prohibited. But Justice David Nahmias said the law only states that a public entity is not required to release such information, not that the information is “prohibited from disclosure.”

Nahmias argued that the foundation’s reading of the law was “contrary… to the English language” and offered the hypothetical example, “Owners of vehicles that are exempt from emissions testing requirements are not prohibited from testing their vehicles’ emissions.”

While payday loans in Georgia are prohibited, residents of many other states find themselves trapped in debt at the hands of the predatory payday loan industry. In many states, payday loans carry triple-digit annual interest rates that make it impossible for low-income individuals to pay back their loans on time. Priestley’s research negates the idea that the industry causes financial harm to borrowers by noting positive changes in credit score for individuals with a high number of rollovers. But the fact that the study was funded by the industry invites further review. This ruling represents a move towards transparency surrounding the industry’s funding of favorable payday loan studies.

To learn more about payday loans in Georgia, check out these related pages and articles from OppLoans:

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