This bill, authored by Anchia and is “relating to restrictions in connection with motor vehicle title loans that a Credit Access Business obtains for a consumer or assists a consumer in obtaining.” The bill starts with a recommended limit on auto title loan amounts. CAB’s and Third Party Lenders would be required to limit the amount of a loan to “70% of retail value” of the vehicle. This seems very acceptable, many CABs are operating off more strict criteria right now. And, if a single payment auto title loan is re-financed, there must be an additional payment of at least 5% of the principal, in addition to the interest & fees due. The requirement of a pay down towards principal addressing the “cycle of debt” issue. The bill goes on to say that even if the customer does not make the required pay down, the CAB fees must adjust down as if the customer made the 5% pay down. If the customer does default, the note can still be called due if operator/third party lender desire. Multi-payment loans would need to be fully amortizing, with declining principal, with close to equal payments. If early payoff occurs, pre-computed CAB fees would have to be refunded as un-earned. That’s an important item to make note of, loan terms and CAB fees would need to be carefully considered when CABs are adapting their model to new rules and regulations. Would go into effect 9-1-2013.

Click here for a PDF version of HB 886! HB.886

As of yesterday it looks like Senator John Carona’s Senate Bill 1247 is going to need some additional tweaks to get support from advocates and the payday industry in Texas. Much of the bill has components that are acceptable in the eyes of the payday industry, however there is one rule that would be particularly damaging to small business owners, and that’s the “only one loan” rule.

The bill says that a consumer may have only 1 payday loan out and 1 auto title loan out at any given time with a CAB in Texas. This rule will not allow a consumer to go out and get a lower priced loan, it will decrease competition in the marketplace, and it ultimately result in consumers taking out larger loans than they currently do today. And the big kicker – THEY WILL JUST GET A LOAN ON THE INTERNET IF THEY CANNOT GET ANOTHER ONE FROM A TEXAS CAB!

Imagine this scenario: on Monday a consumer realizes they need to get an advance on their paycheck. The consumer happens to be in Ft. Worth for work, so he/she goes to a local Payday store and completes a quick cash advance. The consumer qualifies for up to $500 but they only need $200 so they take out only $200. Then, later that week one of his/her children falls down at school in Dallas and needs stitches on their chin, the co-pay at urgent care is $150, so they need another $150 cash advance so ideally they would go down the street from their house in Dallas where they live to get it. But, the cannot do this under the “only one loan” rule. The “only one loan” rule would force the consumer to drive back to Ft. Worth 35 miles through traffic where they do not live and get the additional $150 advanced to them from that one location where they are now committed to exclusively. That would be an absurd thing to imagine and it is what will result with a rule like this. So instead what the consumer will do is grab their smart phone out of their pocket, pull up Google, and search for “payday loan.” Thousands of results will pop up on the screen and the consumer will have the $150 deposited in their bank account the next morning by an Indian Tribe payday loan company out of Montana. What just happened in that scenario is the “only one loan” rule failed, the consumer got the loan anyway, and Senate Bill 1247 resulted in a loss of revenue for a Texas business. The “only one loan” rule will result in store closings, and Texas will lose jobs. In the end it will not curb consumer use. This rule has been employed in Florida and Washington with those exact results – look it up or call me to discuss.

The reality that many consumer advocates cannot get their heads around is that if all Credit Access Businesses were to close up shop in Texas, it would not result in consumers being protected more. The consumer would go to the internet and get a loan from a non-Texas business. Many of the internet payday lenders offering services to Texans would be Indian Tribes who are unregulated and unlicensed. So, what’s the point? If closing down the industry and causing Texans to lose their jobs while sending business outside the state lines is your goal – then put the “only one loan” rule into action.

What consumer advocates need to address is that the payday industry is a by-product of consumer need. It is not a shiny toy that evil-doers invented in a back alley to take advantage of low income minorities. Payday industry leaders are serving a need and help many consumers in a positive way each day. The members of the CAB Consulting lobbying group and CSAT are willing to work with Senator Carona on many of the measures in the latest version of Senate Bill 1247. Aside from the “only one loan” rule the bill would be acceptable for most CABs in Texas, and it would put in place additional structure that makes sense to a certain degree if we “have to” have it.

Consumer advocates proved yesterday in the Senate Business & Commerce Committee Hearing that they will never be satisfied, and that their argument is based on emotion. What is at risk if you are their group is that no bill will pass at all. In Texas, Senators and House Representatives are intelligent business minded people. If the consumer advocates don’t stay focused on the realities of business and the consumer need, they will lose the attention of lawmakers and they will end up having to wait until the next legislative session in 2015 to be a part of the conversation again.

If Senate Bill 1247 is going to have a chance, let’s shape it by keeping only the measures that provide meaningful structure to the loan products. As a guiding rule – let’s make sure that Texas businesses can keep their doors open and that competition dictates programs being offered. If a rule in a bill cannot pass that test then it should not be in the bill.

Michael Brown of CAB Consulting testified at the Senate Business & Commerce Committee Hearing on March 19th and conveyed many of the points above. If you would like to speak with him about any of these issues he may be reached at 214-293-8676, or via email at Michael@CreditAccessBusiness.com.

Click here for a PDF of the latest version of SB 1247! SB.1247.Updated.March.19th

The O.C.C.C. is asking for input on the new disclosure forms.  These forms will be provided to Credit Access Businesses for use as guides on how to properly convey compliant notices and disclosures to customers.   Both consumers and Credit Access Businesses are being tapped for feedback.

View the forms by going to this link http://www.occc.state.tx.us/pages/industry/CAB/Consumer%20Disclosures%20main.html

You can provide feedback directly to the O.C.C.C. or if you would like to send comments through me please do so and I will forward them on.  I have been taking questions from both clients and non-clients, providing them with information that I possess, and have been asking questions to the O.C.C.C. about the application as well.  Glad to keep doing it, the more feedback we get the better.  As business owners who are directly dealing with our customers we have an opportunity to shape the rules by providing our opinions based on our experience.  The team at the O.C.C.C. is flexible, and is seeking exactly this kind of input.  It’s a great opportunity let’s hear what you have to say!

Please send your questions and comments to Michael Brown at cabconbrokerage@gmail.com or call 214-293-8676.

• The average Payday Loan was $439 for single pay transactions and $557 for installment loan transactions.
• The average Title Loan was $1,230 for single pay transactions and $1,008 for installment loan transactions.
• The average CAB fee for Payday Loans was about $24 dollars per $100 borrowed on single payment transactions and $166 per $100 borrowed on installment transactions (which is about $14 per $100 every 14 days).
• The average CAB fee for Title Loan was $17.13 per $100 borrowed on single pay transactions and $88 per $100 borrowed on installment loan transactions (which is about $17 dollars per 30 days).

Each month the CFPB releases a complaint report that shows complaint volume by product.  The September, October, and November 2015 reports show that “payday loan” complaints were down by double digits when compared to the same period in 2014:

-12% over the same 3-month period of June-July-August 2014.

(September 2015 report: http://files.consumerfinance.gov/f/201509_cfpb_monthly-complaint-report-vol-3.pdf).

-24% over the same 3-month period of July-August-September 2014.

(October 2015 report: http://files.consumerfinance.gov/f/201510_cfpb_monthly-complaint-report-vol-4.pdf).

-20% over the same 3-month period of August-September-October 2014.

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 lenders left after they enacted the ordinance and this apparently prompted Canyon to follow suit.  Per the Texas Office of Consumer Credit Commissioner (“OCCC”), Canyon only has one active Credit Access Business “CAB”) license.  That CAB is “Texas Car Title & Payday Loan.”  With only (1) CAB for 13,000 people it can hardly be said that the market is saturated, in most markets there is about (1) CAB for every 5,000 in population.

• There are roughly (40) cities in Texas with either a City Ordinance or zoning restrictions regarding the “Payday Loan” businesses. Here is a link to the Texas Municipal League’s website regarding “City Regulation of Payday and Auto Title Lenders.” http://www.tml.org/payday-updates

Link to article: http://www.newschannel10.com/story/34448364/canyon-approves-to-restrict-payday-lenders

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 Michael@CreditAccessBusiness.com.

Dan Micawber at AF$PA / Payday Brokers has announced a Consumer Alert (and operator alert) regarding for a new round of Fake Debt Collectors circulating in our industry.  If you are a consumer who received a call from a debt collector that says you owe money to a “payday loan company” but will not tell you the name of the company or claims they are a member of the “Alternative Financial Service Providers Association” (“AF$PA”) – it is a scam.

All Debt Collections Agencies who comply with the Fair Debt Collection Practices Act “FDCPA” must follow a very long list of rules regarding how contact can be made with borrowers.  One very specific issue with the FDCPA that is not being followed by these current scammers is that they must be able to “verify the debt.”  If they will not say who the debt is from it is not likely they have a contract to collect on.  A collection agency must disclose the name of the company that the debtor owes money to.  If they refuse – it is a scam.  If they say they are sending the sheriff or police – it is a scam.  If they say they can have you locked up – it is a scam.

Our CAB clients and members should be concerned about this as well.  One of the biggest sources of complaints at the OCCC is this kind of problem.  As compliant CAB’s we often times are lumped in with unsavory characters out there who google their way into becoming debt collection scam artists.  A bad actor can simply google search for payday loan and run into the AF$PA website or maybe even grab larger CAB’s name off the internet and start calling people saying they owe them money.  It is only a matter of time before they trick an innocent consumer into running down to the corner store and loading some money onto a prepaid card that sends funds directly to them in an Indian call center.

I have helped consumers on this issue and even had one conference me in with the scam collections agent.  I was able to shut them down in less than 30 seconds and enjoyed it immensely.  Most TOFSC members have the TOFSC Comment / Complaint line posted in their store – if you have any customers telling you they are encountering this problem please have them contact me at 214-293-8676 and we will get them going in the right direction.

Also, the Texas Attorney General’s Office has a website complaint service – report anything that you see to them.  Go here to learn more information:

https://www.texasattorneygeneral.gov/cpd/file-a-consumer-complaint

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 Michael@CreditAccessBusiness.com.

Frequently the topic of pursuing or threatening criminal charges against a customer who has defaulted on a loan via a Non-Sufficient Funds check or ACH debit comes up as I work with CAB Consulting clients. My understanding has always been that unless the customer is guilty of outright fraud that you cannot pursue criminal charges, go to Sherrif’s hot check division, etc. “Outright fraud” would be an umbrella term for forgery, fraud, theft, or other criminal conduct.

On October 14th, the OCCC released an Advisory Bulletin on this subject that makes some important clarifications. OCCC noted that there must be specific evidence of criminal conduct, intent to commit a criminal act, the consumer must have knowingly or intentionally violated criminal law, and that these criteria would need to be proven beyond a reasonable doubt. Pursuing consumers who did not exhibit any of these behaviors would be a violation of Texas Finance Code and the Texas debt Collection Act.

NSF checks and NSF ACH debit returns simply are not something we can pursue criminal charges on. If the OCCC feels this issue is worthy of an Advisory Bulletin then I am confident that research of this activity will be added to the examination checklist.

See below for a link to the Advisory Bulletin. As always, feel free to call or email Michael Brown at CAB Consulting. 214-293-8676 or Michael@CreditAccessBusiness.com.

OCCC.CAB.Criminal.Charges.Bulletin

This week an interesting article came out in Fox Business (written in Motley Fool) titled “4 reasons hourly workers reject jobs – and what to do about them.”   Many of small business owners in Texas could be seeing a rise in the so-called millennial generation phenomenon of “ghosting.” According to the Urban Dictionary “Ghosting” means the shutdown/ceasing of communication with someone without notice.  Check it out:  https://www.urbandictionary.com/define.php?term=Ghosting  

In the cases where Ghosting occurs, it starts with a “no show” of usually a newer hire within the first week or two of employment.  The ghosting employee does not call, text, or email that they have quit the job.  Also they either turn off their phone or block your phone number and send you straight to voicemail when you try and call.  It is truly a strange and often occurring phenomenon…gone are the days when someone has the personal honor to at least let someone know that you have abandoned a job so they can make arrangements to run their business.  C’mon kids!  

In these boom times in the Texas job market it is likely that the new hire knows they can walk into just about any local service business of their choosing and get a new job that day.  The article shares four approaches that could help our payday loan, title loan, and cash advance business owners in Texas to address the problem, very glad to share!  

“1. Location

But the last thing you want to do is spin your wheels in an effort to attract and keep hourly workers, so if you’ve been struggling to hire or keep your team members, keep the above points in mind. In many cases, being a bit more generous, creative, and flexible could help you grow your staff and get your business the support it needs to thrive.”

Here is a link to The Motley Fool / Fox Business article cited above: https://www.foxbusiness.com/small-business/4-reasons-hourly-workers-reject-jobs-and-what-to-do-about-them

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 Michael@CreditAccessBusiness.com.