Down goes another “payday down city ordinance! On Thursday, April 27th. 2017 the Abilene City Council did right thing and voted “NO” on the so-called “payday loan city ordinance.”

Things do not seem to be going very well for the payday loan city ordinance these days the truth is really starting to get out that it is not even being enforced and the courts have decided (in two separate cases) that it is pre-empted by State Law!

So, let’s talk about how this latest defeat of the payday loan city ordinance went down in Abilene.  First, I must say that I have been to many city council meetings to participate in the payday loan ordinance conversation and I have never seen so many customers turn out to tell a city council to stay out of their personal finance decisions.  Not only did they turn out in droves to the meetings but those who could not attend inundated the city council email in-boxes and phone lines with a strong voice saying – vote “NO” on the ordinance.

Dozens of customers attended both the city council meetings the week of the “NO” vote wearing white t-shirts with “Stop the Ordinance” on it, inside the shape of a big red stop sign.  Supporters of the ordinance had to have been very impressed by the sea of white t-shirts streaming into the council chambers while cameras were rolling.  I think there was a grand total of (1) customer who attended the meetings that supported the ordinance on the other hand.  But, our anti-ordinance customers stood tall and proud when they approached the microphone.  Nearly (30) anti-ordinance supporters attended in their “Stop the Ordinance” gear, and the total for the two meetings had to have been way above that.

Those payday and auto title loan borrowers in attendance were there to tell the council to vote “NO,” to share their reasons for borrowing, and to vent their frustration that they could be possibly have their financial choices severely damaged by a reckless city ordinance that is a complete failure in 41 other cities in Texas.  In the end, it was the voice of those customers that stood proud and tall to defend themselves that swayed the city council to refuse to pass the ordinance.  I can remember the moment Councilman Shane Price held up the stack of comments he received and printed out from his email.  The vote “NO” stack was inches thick and the stack of comments from those who supported the ordinance was quite light.  In the end, he said that is what mattered.

What an empowering experience for many of these folks to go down to the formal and intimidating City Hall and have their voice heard.  The customers stood strong in the face of Newspaper reporters, TV cameras, and the breathless consumer advocate groups who were there to insult them and suggest they were not intelligent enough to manage their own finances.

I could see how those supporting the ordinance began to place pressure on city council, how they began to burden the council with solving the much larger issue that is at the core of the need for short term small dollar loans.  That is the fact that many Americans simply do not have enough money saved to fall back on in the event of an emergency or other problem in life.  70% of Americans do not have over $1,000 in their bank account – this is the problem.  The supporters of the payday loan ordinance were trying to sell the council and get them to pass an ordinance that would raise payment amounts, close businesses, and do nothing to impact that core issue.

I was talking with a customer of ours at the meeting and we were joking and wondering if the next ordinance to be rolled out would restrict Whataburger from selling hamburgers with meat in them so the Abilene City Council can end all heart attacks in city limits. Can you imagine this?

“Hey, Whataburger, yeah, we are not saying we want to put you out of business, but um, yeah we can’t allow you to actually put meat on your burgers anymore, because, you know, it uh, causes heart attacks and you are a terrible person too by the way, but we just want to protect our citizens from your predatory burger making practices with some thoughtful restrictions on fast food hamburgers…oh and burgers can still be sold at real restaurants though, they can still sell hamburgers it is just your kind of hamburgers that we don’t like, yeahhh.” 

It was hilarious, but quite honestly from our standpoint the payday loan ordinance is just as absurd.  The payday loan ordinance is a misguided disaster that is going to continue to unravel.  What the consumer advocate groups and church groups cannot grasp is the fact that the city ordinance does not achieve what they say they want.  It is a gigantic lie that has been perpetrated in 41 cities.  Their (mostly Texas Municipal League and Texas Appleseed) technique to get the ordinances passed has worked in those cities where council members do not do their homework, believe in a lot of regulation, or just want the businesses to go away.  But, their tired argument has grown stale, the final blow appears to be that cities are losing court cases over it, and cities are now voting it down.

Consumer advocates and church groups have their hearts in the right place but are choosing wrong vehicle to help solve what is a much larger problem than the short term small dollar loan industry.  I mean, unless you just did not do the math on how the 25% rule in the ordinance works, how can you ask the city council to approve an ordinance that will raise a borrower’s payment amount?  That fact alone should have caused the ordinances to get dumped in the trashcan two minutes after Texas Appleseed comes strolling into a city council person’s office.

Texas Appleseed – did you know payday transactions have hovered at the same level statewide even with a 41% decrease in stores?  Is the ordinance really the ideal vehicle for your cause?  If you want to do some more good, why not help communities apply for for a $30,000 grant from the Texas Educational Endowment Fund ( to start financial education in the schools in your town instead?  This fund is completely funded by Credit Access Businesses to the tune of $400,000 per year (roughly).

The bad news regarding the TFEE is that Texas Appleseed and TML’s efforts resulted in the closure of 1,400+ locations which caused contributions to the TFEE to fall through the floor.  In 2013, the annual contribution amount was more like $700,000 per year.  $300,000 less per year is an insane amount of money that they took away from some groups that could have made a difference for the same people you are trying to help.

Also, the OCCC has taken a huge hit on licensing revenue that they could have used to hire new examiners to enforce the regulations already in place statewide.  Licensing fees are $600 per year per location, with 1,400 less locations in 2017 versus 2013 that comes to $840,000 less in licensing revenue per year.

Between the loss in TFEE contributions and the loss of OCCC licensing revenue that adds up to millions of dollars you have caused to evaporate from places that could have helped the consumers you are trying to protect.

To Churches and other groups besides TML and Texas Appleseed that have chosen to pile onto this issue when the issue comes up at city council meetings – why not just payoff all the loans that people take out with your own money?  Or why not just offer them a loan at 10% APR yourselves?  Stop asking the city fix the problem with a lousy ordinance and fund some loans yourself!

Long blog and I could go on about this for days, but I am going to wrap this up and save my energy for the next city that wants to look at the payday loan city ordinance.  I will conclude with another thank you to all the people that worked hard in Abilene to get the “NO” vote and again say how much we appreciated the opportunity to tell our side of the story to a city council who really committed to doing their research on this issue.

If you would like to read about what happened in Abilene here are a couple links to news on the “NO” vote that we were so thankful for:

This blog post was written by Michael Brown, President of CAB Consulting and the Texas Organization of Financial Service Centers.  He can be reached at 214-293-8676, or


Around March 1st a huge blow was dealt to the “Payday Loan Ordinance” in Texas.  The news came out that an Austin court had ruled in favor of Credit Access Businesses in (2) lawsuits related to the ordinance where the City of Austin was sued.  In those cases, the court ruled that the ordinances were “preempted” by State law in several ways. Preemption is something that we as a group have been after for a very long time and we are pleased to see that our industry got its day in court.  The consumer advocate groups who have been pushing the ordinance on cities should be on notice that the truth is starting to get out.  All that has happen is for the cities to enforce the ordinance.

Many of you may not know the truth, which is that the cities have not been enforcing their ordinances.  This is a deliberate tactic to avoid being sued by Credit Access Businesses. It is also likely that they have no staff or budget to allocate to the endeavor which is worth mentioning as well.  Each city is given a payday loan city ordinance “playbook” that gives them the tactics and methods for enacting the ordinance along with how not to get sued.  If they do not enforce then the payday companies have no legal grounds to sue on because they have not actually been “harmed.”

Well, the City of Austin went beyond its rights and decided to go in and examine and cite two Credit Access Businesses – Advance America and Speedy Cash.  This was the first instance that I know of where a city has enforced and cited a company for not abiding to the ordinance.  So, the first time a city goes in and enforces an ordinance what happens?  They get sued and lose!  This simple scenario is one that should resonate with all cities who have passed an ordinance and with those who are looking at it.  Austin happens to have its act together and enjoys a pretty decent legal budget – if they can lose then anyone can lose.

Cities should know that there is now a very real legal risk for them – their city councils will be embroiled in lawsuits and will have to consider retaining outside legal counsel to defend themselves.  Council members who know that they have been charged with real responsibilities such as protecting water, investing in infrastructure, maintaining police strength, and providing general safety for their citizens know that they are way outside the lines when telling someone how much money they can borrow and how long they can have to pay it back.  It seems incredibly absurd to me.  For many of you it would be like having the city tell you that you can only have a car that costs $10,000 or less and you must pay it off in (6) payments. Also, you can only have one car!  It is literally the same thing.  What if you have the cash to simply pay $40,000 for a car?  What if you have a spouse that you want to buy a car for?  That example plus a hundred more can be made – and what it does is blow a gaping hole in the practicality of the “Payday Loan City Ordinance.”  That is where the whole thing should have stopped years ago.

But now the cold hard truth has landed on the desks of anyone involved in this matter – the court has ruled in favor of Credit Access Businesses.  Cities now need to decide what they are going to do.  They need to be asked publicly, “Are you going to enforce this ordinance?”  If they say “No,” then won’t that mean they are effectively rolling back the ordinance?  If so, Credit Access Businesses will be able to go back to offering the kinds of credit that consumers in the ordinance cities need and want.  Won’t this be an improvement over being told they must drive 15 minutes down the road or get on their smartphone to request a loan from an unlicensed unregulated offshore lender in the Bahamas?

What if they say “yes, we are going to enforce the ordinance?”  Then Credit Access Businesses will be given the chance to defend themselves like Speedy Cash and Advance America did. What they will simply do is execute a transaction that violates the ordinance, then take that one transaction down to the City and “self-report” the violation.  At that point the city must act and if they do cite the Credit Access Business then they will turn around and sue the City.  What lies ahead will be a court decision that will resemble that of the court orders in Austin.

CABs are already sufficiently regulated by the Office of Consumer Credit Commissioner.  We have 20-30 page contracts for a $300 loan!  We adhere to a long list of federal and state rules and regulations (all in our contract package) and our complaint percentages on the state and federal levels are fractional on a complaint to loan basis.  I believe in Texas the complaint percentage is .000153% (yes that is three zeroes!).  Our CABs abide by a 90-point CAB Examination checklist that we obtained from the OCCC.  TOFSC members tune in to a weekly conference call every Wednesday where we talk about CFPB and OCCC compliance, share ideas, and try to safeguard our businesses.  We are small business owners banded together to try and survive the ordinances.  In the last (4) years CABs have shrunk from over 3,500 in Texas to about 2,200 that is a 37% decrease in CABs.  That is thousands of jobs lost, thousands of leases broken, a significant loss in tax dollars for cities, and a loss of livelihood for many.  All of that and the demand has not decreased (check OCCC data and consumer reports for online inquires in ordinance cities the data is there if you want to do some homework) although there has been a 37% decrease in stores.

TOFSC Members are tuned in to this issue and we are ready to fight to save our businesses and to bring the access to credit back to consumers in ordinances cities that is desired.  Cities should prefer that legal, licensed, and regulated businesses serve their citizen’s needs.   C’mon cities – let’s bring it back to the CABs and let the cities focus on their big priorities!

See the links below for the court orders.  For media inquiries – feel free to call Michael Brown at 214-293-8676, or email me at  Michael is the President of the Texas Organization of Financial Service Centers (“TOFSC”) which is a trade group comprised of small to mid-sized Credit Access Businesses in Texas.  As well, he is President of CAB Consulting, a consulting firm that offers startup, licensing, compliance, and operating guidance to payday businesses in Texas and other states.


The devil is in the details

February 27, 2017

Check your work!  Last week my team and I released a blog about Carlos Uresti, a San Antonio based Senator whose offices had been raided by the FBI.  We happened to know that a politician by the name of Uresti in the San Antonio area had also written a bill that would attempt to “cap” […]

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You are not going to believe what CFPB spends its money on

February 14, 2017

I just about fell out of my Toyota Prius when I learned what the CFPB spends its money on.  Anyone who has been watching the CFPB has probably heard about how the expenses there are out of control, but this was a mind blower.  Come to find out, they have actually been getting looked at […]

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City Ordinance is shot down in Lubbock.

February 10, 2017

Some very positive news came out of Lubbock with the City Council voting down the “Payday Loan Ordinance” by a vote 5 to 2.  Credit Access Business owners all across Texas were impressed by Lubbock’s push back of the liberal backed City Ordinance.  Ordinances across Texas have shut down over 40% of Credit Access Businesses […]

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Another City Ordinance passes in Texas. (Canyon)

February 10, 2017

Canyon, Texas The City of Canyon, Texas has enacted a “Payday Loan” ordinance. Per News Channel 10 in Amarillo, the City Council of Canyon enacted the ordinance on Monday of this week. Canyon is located about 18 miles south of Amarillo and has a population of just over 13,000.  The City of Amarillo said many of their […]

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Use caution when accepting payoff payments on motor vehicle title loans

February 10, 2017

Review your company policy regarding acceptable methods of payment for motor vehicle title loans in Texas as a Credit Access Business. With tax season upon us, there will be an increase in the number of folks paying off loans, especially motor vehicle title loans as the income tax refunds start to pour in over the […]

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Texas Legislative Session as of this week: (7) bills related to Credit Access Businesses

February 10, 2017

HB 60, Introduced by Romero Jr: Requiring a Credit Access Business to verify the vehicle identification number used to obtain a motor vehicle. HB 197, Introduced by Bernal: Relating to the contracts and other documents issued by a Credit Access Business (requiring to have English & Spanish). Also, to read the contract in its entirety […]

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Credit Access Business rules for 2017 that you need to know!

January 13, 2017

New Technical Rules for 2017 you should be aware of.  Did you know there are new rules related to the application for new licenses, transferring a license, and criminal history of CAB owners?  Much of this was covered during CAB Consulting’s “CAB II” project that many clients and members took advantage of.  *The language for […]

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Legislative Session: (3) bills as of last week, this is the 4th

January 12, 2017

New bill: HB 877, from Chris Turner (Democrat out of Tarrant County, Represents Grand Prairie & portions of Arlington). Caption: Relating to prohibiting certain telemarketing calls by a credit access business. A credit access business or a representative of a credit access business may not make a telemarketing call, as defined by Section 304.002, Business & Commerce […]

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