Texas Appleseed Blog


2017 Legislative Priority: Rein in Abusive Payday and Auto Title Lending Practices in Texas

Updated: April 14, 2017

Loan Shark Bills Heard in Committee This Week

Earlier this week, two bills that would effectively preempt the 42 and counting city ordinances that rein in the worst payday and auto title lending abuses in Texas were heard in committee—HB 3081 by Rep. Capriglione and HB 3947 by Rep. Laubenberg.  Neither of the bills has the words “payday lender” in them, but don’t be fooled. 

HB 3081 is a direct attack on the unified city ordinance reining in the most abusive practices of payday and auto title lenders. That ordinance is showing positive results in communities across Texas, with lower fees and fewer cars being repossessed by auto title lenders in cities that have adopted the ordinance. (see p.13 of a Texas Appleseed study released in June of 2016.)  HB 3947 is a bit sneakier, creating a new cause of action against cities for a long list of state licensees. If passed, this bill would create a deluge of frivolous lawsuits against cities--at great expense to taxpayers.

Faith and nonprofit leaders showed up to oppose the bills at the Tuesday hearings.  Rev. Gerald Britt, of CitySquare in Dallas, offered some of the most inspired testimony of the hearing on HB 3081.  He drove through pounding rain and hail in the bad weather of the day to make it to Austin to testify on the bills.   His words to the committee captured the essence of the strong opposition to the bill, “Our cities are tired of citizens being taken advantage of, tired of the lack of economic development in many of the areas where these businesses [payday and auto title lenders] are located; tired of the proliferation of businesses in these areas that choke out opportunities for wholesome businesses to locate…”

Not mincing words, Rev. Britt closed his testimony, telling committee members, “The message this committee sends by even passing this bill out of committee is that business trumps all…Business trumps the interest of families; business trumps health; business trumps individual freedom; and the economic welfare of business trumps the citizen’s right to expect fair treatment from those with whom the citizen conducts business.”

Don’t let the profits of loan sharks trump the well-being of our families and communities. Call the members of the House Investments and Financial Services Committee and ask them to vote no on HB 3081.  Call the members of the House Judiciary and Civil Jurisprudence Committee and ask them to vote no on HB 3947.  A “yes” vote on these bills is a vote for expanding abusive lending in Texas.

Original Post: January 27, 2017

Rein in Abusive Payday and Auto Title Lending Practices in Texas

Texas is one of only a handful of states with no cap on payday and auto title loan fees or refinances (rollovers). Because of the high cost and structure of the loans, too many borrowers are unable to pay off the loan principal, becoming mired in an ongoing cycle of debt. The result is a huge financial drain. In 2012-15, churches and nonprofits coming to the aid of borrowers, along with Texas families, collectively paid payday and auto title businesses $5.9 billion in fees alone. Texas Appleseed supports adopting into state law the unified local ordinance, passed in 40 Texas cities, which ensures fair practices in the market. The ordinance limits the size of the loan based on borrower income, requires paying down the principal by 25 percent with every payment, and limits each loan to a total of four payments, ensuring that the loans are, in fact, short term. We also support rate and fee caps as a simple way to ensure fair loans, as well as measures that shield consumers from wrongful threats of criminal prosecution to collect on these loans. This issue falls under our Fair Financial Services work.

For a full list of our priorities, click here.  

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