Goldwater Fights Special Interests’ Deceptive Debt Cancellation Scheme

Arizona is ground zero for yet another deceptive ballot initiative that would inflict untold economic damage on the state—and the Goldwater Institute is again fighting back.

In an effort to do to Arizona’s economy what they’ve already done to California’s, a special interest group funded by California unions has collected signatures to put the so-called “Protection from Predatory Debt Collection Act” on Arizona’s November ballot. This deceptive, foolhardy, and immoral proposal is being sold to voters as limiting the interest rate on borrowing to pay medical expenses, so that Arizonans can obtain affordable healthcare without being saddled with debt. But the proposition would inflict economic damage far beyond what voters are being told.

Now, concerned Arizonans are challenging the initiative’s misleading language in a lawsuit—and the Goldwater Institute filed a brief yesterday to help explain why the initiative’s legally required “description” is inaccurate and misleading. That summary is so deceptive the measure should be disqualified from the ballot under Arizona law.

The description makes the proposal sound innocuous, but it’s actually breathtakingly wide in scope. The proposal would make it hard, and maybe impossible, for lenders or other people who are owed money to be repaid—regardless of whether those debts have any relationship to medical care. It would do this by severely restricting garnishments, raising the amount of home equity shielded against unpaid creditors, and drastically increasing a host of personal property exemptions—all measures that would leave businesses, landlords, and judgment creditors without legal recourse when people don’t pay their debts. And who will lend money if they know they won’t get paid back?

If the Act were to become law, the enormous losses it would inflict on lenders and creditors would have a devastating effect on the ability of Arizonans to obtain loans or to afford housing. Making it harder for lenders to collect when borrowers fail to pay will increase the cost and decrease the availability of credit. And that will make it especially difficult for low-income earners to get loans and exacerbate the state’s housing affordability problem.

But rather than explain this to voters, the initiative’s authors misrepresented the Act’s aims and effects. No one should be able to mislead voters about ballot measures—especially out-of-state special interests who don’t have to suffer the consequences of dangerous public policies.

Especially in this market—with rising inflation and taxes—it is imperative that Arizonans be made fully (and accurately) aware of what the measures they’re being asked to approve will actually do, so that they can properly weigh their decisions. We hope the court will disqualify this misleading initiative from the ballot, protecting Arizona voters and the economy.

Christina Sandefur is the Executive Vice President of the Goldwater Institute.