PHOENIX (Legal Newsline) - Arizona Attorney General Terry Goddard has announced an enforcement initiative that will pursue payday lenders attempting to evade a forthcoming ban on payday loans.

Operation Sunset, as the initiative has been titled, will take action against any payday lenders offering loans with illegally high interest rates beginning July 1.

"The Operation Sunset Enforcement Team -- which is comprised of attorneys, investigators and paralegals -- will respond to consumer complaints, perform undercover operations, shut down operations that attempt to offer payday loans after the sunset and, where appropriate, bring claims for injunctive relief and civil penalties against those who violate the law," Goddard said.

A law that had previously allowed high-interest loans is set to expire on June 30. That law provided a 10-year exemption from Arizona's cap on annual interest rates approved in 2000.

"In 2008, Arizona voters made it clear that they opposed the continuation of the payday loan industry when they overwhelmingly defeated Proposition 200, which would have allowed payday lenders to operate in the state permanently," Goddard said.

"Despite this defeat at the polls, the payday loan industry continued to pursue a repeal of the sunset provision in the payday lending law and lobbied for legislation that would have provided the industry essentially the same benefits as Proposition 200.

"As attorney general, I strongly opposed this legislation, arguing that it would overturn the will of the voters and perpetuate a debt trap for thousands of Arizona citizens. Fortunately, the Legislature refused to extend the sunset period."

Operation Sunset is meant to ensure protection against any payday lenders that attempt to continue operation and charge more than the allowed 36 percent interest rate after June 30.

To date, approximately 200 such stores have made requests to remain open by transferring to a different kind of business. Goddard has warned that payday loans can be offered in many ways, including as car-title loans or through a middleman. Those loans will also be illegal beginning in July.

Goddard said that North Carolina and Arkansas, among other states, saw deceptive practices after laws were enacted to end payday loans, including auto loans, pre-paid debit cards and Internet payday lending.

"I will use every tool at my disposal to enforce the end of exorbitant payday loans in Arizona and seek fines and penalties against those who try to continue this abusive practice," Goddard said. "I encourage citizens to report violations to our Office. Our enforcement will be swift and aggressive."

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