The infamous and continuously failing Texas Payday Loan City Ordinance.

The infamous and continuously failing Texas Payday Loan City Ordinance.

by The CAB Man Texas on August 22, 2017

Since Texas cities began passing the infamous and continuously failing Texas Payday Loan City Ordinance there has been a decrease of 1,300 or so licensed locations inside the State.  According to the most recent OCCC licensee totals, this represents a 37% market shrink.  The results have been a shuttering of businesses in Texas, a loss of thousands jobs, a loss of real estate rents, and decrease in property tax revenues.  Rates have increased 12% in Ordinance cities and demand for unsecured short term credit has largely remained the same.  This is a cold hard truth that was laid out in City Council meetings when we were asking for a “No” vote on the Ordinance.  Is an “I told you so” in order here?

2017 has been a rough year for the Ordinance though, many cities are now bucking the trend and have voted the Ordinance down.  As well, the City of Austin got the double slam-dunk in their simultaneous loss to Speedy Cash and Advance America City Ordinance lawsuits in April.  Those two cases were around a year in the making I wonder if the taxpayers of Austin feel good about the time and expense the City put into an issue that results in a .000153% complaint to loan ratio for Texas residents?  I live in Austin and things are tight budget-wise in this City, despite all the stories you hear about growth it has some problems that should be commanding the attention of city leadership other than the payday industry.

So here comes the next whammee – I was reading over the OCCC’s 1st quarter MSA report for 2017 and it says that 10 of the 2,200 reporting licensees generated 33% of the single payment loan volume, and get this, those 10 licensees were OUT OF STATE!  As far as installment loans go in Texas, 16 OUT OF STATE licensees funded over 37% of the 271,189 installment loan and refinance transactions in the 1st quarter of 2017.  Yes, these are out of state online lending companies who are licensed to do business in Texas but are not within the jurisdiction of any City.  That makes them free to let the market decide and boy did the market ever decide.  On either of the products mentioned – the out of state licensee group was the largest “market” in Texas.  The next biggest markets down were Houston and Dallas but it wasn’t even close to the out of state operators.  Check out the report for yourself below.

Here is a link to the MSA report:

Imagine if the Payday Loan City ordinance did not force the closure of all of those locations in Texas!  All of that businss would be taking place here in Texas.  Kudos to the online guys who are meeting the need but for obvious reasons we need to work to get those customers back!  I bet the OCCC wishes they had that extra $800,000 per year in licensing revenue.  And how about that $300,000 per year in contributions to the Texas Educational Endowment fund that is now lost?

The full ugliness of the Payday Loan City Ordinance is now beginning to show in the light.  Please pass this information along to your City Council the next time this issue comes up in your market – we are positioned to deliver the facts to them quickly and efficiently so that they can have the full story and move on to the next issue which will be much more meaningful, no doubt!

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

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