Texans concerned about credit access businesses such as payday lenders should make their views known now to members of the state’s Sunset Commission, advocates for fair lending asserted during a recent webinar.
Representatives of the Texas Fair Lending Alliance urged citizens to contact the Sunset Commission before Aug. 29, when the group meets to determine its recommendations regarding the Office of Consumer Credit Commissioner. The office oversees licensing and collecting complaints on credit access businesses, including payday and auto-title lenders.
The Texas Fair Lending Alliance is a coalition of 60 individuals and organizations, including the Texas Baptist Christian Life Commission.
Opportunities and dangers noted
In an Aug. 20 online presentation, Ann Baddour with Texas Appleseed and Ashley Harris with United Ways of Texas noted Sunset review—a process established to hold state agencies accountable by periodically evaluating whether they should continue to exist—offers opportunities to strengthen consumer protection against what they consider predatory lending.
However, they asserted the payday lending industry also will attempt to persuade the Sunset Commission to expand the products it can offer, raise the rate caps on consumer loans and weaken regulations. So, they emphasized the importance of individual citizens making their voices heard.
Proponents of payday lending and auto-title loans insist they provide an important service by helping an underserved population gain access to quick cash.
However, opponents insist the lenders trap low-income consumers in a cycle of debt they cannot escape. In Texas, the average $500 payday loan costs $1,350 or more to repay, representatives of the Texas Fair Lending Alliance reported.
So far, 45 cities have adopted uniform ordinances to place limits on the number of times loans can be rolled over and paid in installments, and to require that proceeds from any renewal payments apply toward significantly reducing the original loan amount.
“The city payday reform ordinances continue to be on solid legal ground,” Baddour said.
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However, she and Harris encouraged vigilance to make certain the Sunset Commission does not recommend the Texas Legislature seek to preempt city ordinances or allow the expansion of high-cost loan products.
Expand authority to include online lending
The Texas Fair Lending Alliance also recommends that the Office of Consumer Credit Commissioner’s authority be expanded to include over oversight of online lending, which is expected to reach 10 percent of the consumer lending market by 2020.
While online operators include legitimate companies, the online space also is “a haven for fraud,” Harris noted.
For instance, she reported, 10,000 Texans were cheated out of more than $50 million due to fraud perpetrated by an “online lead generator”—a business that takes personal data from people looking for loans online and then sells that information to the highest bidder.
Granting the Office of Consumer Credit Commissioner authority over online lending simply represents “a governance change, not a policy change,” Harris and Baddour emphasized.
The Texas Sunset Commission includes five state senators, five members of the Texas House of Representatives, and two members of the public appointed by the lieutenant governor and speaker of the house.
Sen. Brian Birdwell, R-Granbury, is chair, and Rep. Chris Paddie, R-Marshall, is vice chair.
Other members of the commission are Sen. Dawn Buckingham, R-Lakeway; Sen. Bob Hall, R-Canton; Sen. Robert Nichols, R-Jacksonville; Sen. Kirk Watson, D-Austin; Rep. Dan Flynn, R-Van; Rep. Stan Lambert, R-Abilene; Rep. Poncho Nevarez , D-Eagle Pass; Rep. Senfronia Thompson, D-Houston; Emily Pataki of Cedar Park; and Ronald G. Steinhart of Dallas.
To submit public input on an agency under review by the Sunset Commission, click here.
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