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Is Arizona Proposition 209 Bad for Business?

Arizona voters will consider a proposition on this year’s ballot that targets medical debt, as business leaders wonder what impact the measure will have on them.

Proposition 209, known as the “Predatory Debt Collection Protection Act, would reduce the maximum interest rates on medical debt for state residents and increase the amount of assets protected from debt collectors. Some business groups argue the proposition promotes “extreme anti-business policies,” while consumer groups argue it provides financial relief to many consumers who will have more money.

Protect Our Arizona, an Arizona Political Action Committee, urges voters to oppose Proposition 209 because it would limit the amount creditors could collect from borrowers. The group argues the measure will lead to reduced credit, shorter payment plans and higher interest rates. This hurts businesses that try to help Arizona residents obtain credit because it dramatically increases interest rates that consumers will have to pay on debt and makes it more difficult for companies to collect on debt.

Protect Our AZ urges Arizona voters to reject Proposition 209 because it:

  • Creates a $51,000-per-earner threshold for garnishments, which will force those consumers who earn more than the income threshold to make up the difference.
  • Decreases access that Arizona residents will have to consumer credit and requires Arizona consumers to make much larger down payments to acquire credit for large purchases.
  • Increases the amount Arizona consumers will pay for credit through much higher interest rates that lenders will have to charge to make up the difference from consumers who didn’t repay their debt.

Some business groups claim financial support for Proposition 209 comes from California unions.

“At a time of skyrocketing inflation and gas prices, the last thing our state needs is to make the purchase of necessities such as appliances and vehicles even more expensive,” a statement on Protect Our Arizona website reads. “If California unions want to impose measures that harm consumers, they should do so in their own state rather than trying to force Arizonans to pay the costs for extreme anti-business policies.”

Proposition 209 supporters say the measure will keep more money in consumers’ pockets, and that will only help to benefit businesses, as it protects up to $5,000 in consumer finances from debt collection. Proponents argue this means that medical debts will not force someone out of their home or their car, and keeps enough money protected to allow borrowers breathing room to pay bills.

However, the Arizona Chamber of Commerce and Industry says Proposition 209 has unintended consequences because it targets all debt, not just medical. If lenders cannot collect outstanding debt, they will have to pass their losses onto other consumers. The group contends that a measure like this could simply be bad for business owners (and consumers) alike.