Two of the state’s major business groups have announced their opposition to a move that would decimate Arizonans’ ability to get credit and financing.
The Arizona Chamber of Commerce and Industry and the Greater Phoenix Chamber said they oppose what supporters have dubbed the “Protection Against Predatory Debt Collections Act.”
The Predatory Debt Collection Protection Act is introduced by its proponents to help Arizonans in debt through unfair collection practices, protect additional assets from being sold to pay mandatory medical bills, and reduce interest rates.
Proponents say the initiative is aimed exclusively at protecting consumers from unfair medical debt practices, but many believe the convoluted language will have major implications for all types of debt financing.
The initiative is backed by California union SEIU-United Healthcare Workers West and is backed by the Arizona Democratic Party and UNITE HERE Local 11 unions, the Western States Regional Joint Board, the Arizona Building and Construction Trades Council, the Southwest Regional Council of Carpenters and Arizona Education Association.
Arizona Chamber President and CEO Danny Seiden said that despite the initiative’s promises, its negative consequences would be far-reaching.
“When lenders can’t collect outstanding debts, they pass their losses on to their other customers, which means higher interest rates for Arizonans,” he said. “In an age of skyrocketing inflation, do we really want even higher interest rates?
“Worse still, thousands of Arizonans will lose access to previously available financing. Without the ability to collect on their loans, lenders will simply stop doing business with the hard-working Arizonans who need access to funds the most, leaving those potential customers unable to get credit to buy a car, rent an apartment or buy a house.
Todd Sanders, president and CEO of the Greater Phoenix Chamber, agreed, saying passing the initiative would have dire consequences for Arizonans.
“The House opposes a new initiative that would make it harder for lenders to collect debts,” he said. “It could make it harder for Arizonans to access credit and amplify the current housing affordability problem, making it harder for people to buy homes and start businesses in Arizona. Passing this initiative would be a disaster for Arizona and should be avoided at all costs.
Other business, civic and community groups opposing the ballot initiative include the Arizona Bankers Association, Arizona Retailers Association and the NAACP Phoenix Branch.
Interest rates for consumers have increased over the past year. Despite the recent half-point drop, the average 30-year mortgage rate is 5.3% for the week ending July 7, nearly doubling from last year.
The cost of living has risen rapidly over the past year, with prices in the area rising 2.5% over the past two months. According to Bureau of Labor Statistics data released Wednesday, the inflation rate in the United States was 8.3% compared to Arizona’s national high of 11%.
If passed, the law could hurt consumers and lenders, leaving the credit market strangled and creditors worse off in times of high inflation.
The Healthcare Rising Arizona campaign delivered more than 470,000 petition signatures to the secretary of state’s office on Thursday. If enough signatures prove valid, the initiative question will appear on the November ballot.