Payday lenders rely on their ability to trap customers in a cycle of debt and prey on financially uneducated borrowers, a former industry district manager in Ohio told state lawmakers yesterday.

Nearly half of the customers at the two payday lenders where he worked were drawing Social Security or some other retirement benefit, and the companies routinely failed to consider a person's ability to repay a loan in two weeks, said Terrence Jent, who, after working for Check 'n Go, most recently was a district manager in the Dayton/Cincinnati/Columbus region for Allied Cash Advance.

"In my most recent position here in Ohio, we openly instructed customers to go to another borrower for money if they were unable to pay their loan," he told the House Financial Institutions Committee. "These predatory payday lenders would rather drive a person deeper into the cycle of debt than spend the time finding a real solution to the problem."

Jent testified in favor of House Bill 358, one of three pending bills that would change the way Ohio's 1,600 payday-lending branches operate. He said he also supports a similar measure, House Bill 333, which would reduce the current 391 percent annual interest rate that lenders can charge (about $15 per $100 on a two-week loan) to 36 percent.

Both Jent and Philip Cole, executive director of the Ohio Association of Community Action Agencies, who also testified in favor of a lower cap on interest rates, faced tough questions from a committee that appears skeptical of lowering the rate.

Some members, including Rep. Christopher R. Widener, R-Springfield, the committee chairman, noted that the interest and fees come out to about 15 percent per two-week loan, when not annualized. Cutting the annualized rate to 25 percent or 36 percent would permit lenders to charge less than $1 for every $100 borrowed for two weeks, said Rep. Thomas F. Patton, R-Strongsville.

"If we want to put these folks out of business, let's just say we're going to put them out of business," Patton said. "If they leave, is it Louie the Legbreaker in the dark corner of the bar that's going to be loaning that $500?"

When Jent said "payday lenders avoid the responsibility of improving an individual's financial position," Rep. Jimmy Stewart, R-Albany, asked: "Whose responsibility is it to improve someone's financial position? Is it (payday lenders')?"

Jent also mentioned the industry's "record-setting profits and explosive growth," to which Rep. James J. Zehringer, R-Fort Recovery, replied, "You just identified also the ethanol business. There's nothing wrong with capitalism, if it's done right."

Lawmakers also are considering a third option, the payday industry-backed House Bill 337, which would give customers a one-time extended payment plan, but would not lower the interest rate. More committee members have signed on to co-sponsor that bill, which is up for a hearing next week.

Jent was fired from his job in early January hours after he reported to police a fraud scheme in a West Carrollton store, where, according to Dayton media reports, employees were taking customer information and creating fake files so they could write checks.

According to WKEF-TV (Channel 22) in Dayton, Allied fired Jent because money was missing from the store. "There was no missing money," Jent said yesterday, declining to comment further.

jsiegel@dispatch.com