• 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 to consumers who cannot read.

• HB 877, Introduced by Chris Turner: Relating to certain telemarketing calls by a Credit Access Business. Prevents a CAB or an employee of a CAB to make telemarketing calls to consumers who are on the Texas No Call List.

• HB 1134, Introduced by Republican Tom Craddick wishes to add that City Ordinances should not be pre-empted and that Cities should be allowed to regulate State Licensed Business’s, such as Credit Access Business’s. In fact, the language used in Craddick’s proposed bill goes on to state that “this chapter does not preempt a municipal ordinance regulated a CAB or any form of an extension of consumer credit that a CAB is authorized to obtain for a consumer or assist a consumer in obtaining. If a municipal ordinance described by Subsection (a) conflicts with a provision of this chapter regulating a CAB, the more stringent regulation controls to the extent of the conflict”

• First, we must remind you that Tom Craddick proposed similar bills in the last session two years ago, in 2015.

• How this can affect us. Right now, only a couple of cities are enforcing the ordinance or at a minimum sending city employees out to ensure that CAB’s are registered. If this rule were to go into effect, the city would not need to enforce the Ordinance, it will be under a State Law, allowing OCCC examiners to enforce City Ordinance Regulations, which they do not currently do right now.

• SB 560, Introduced by Hannock. This bill is to empower the OCCC to enforce and apply penalties for those CAB’s who charge a surcharge on those paying via debit or credit card. To the best of our knowledge, none of our members are doing this anyways. If you charge someone a fee for paying with their debit or credit card, you are already out of compliance as this a state-wide rule that is currently in existence, one which carries some hefty penalties by the Attorney General’s office. This Bill by Hannock applies a $500.00 fine for each infraction.

• HB 975, Introduced by Giddings, relating to the threat or pursuit of criminal charges against a consumer in association with certain extensions of consumer credit and providing a civil penalty for the Credit Access Business.

• This bill is interesting as it states that a CAB cannot file a criminal charge against a consumer, unless the CAB has “extrinsic evidence sufficient to prove that the consumer committed an offense”. If a CAB or anyone for the matter could determine what sufficient evidence of a crime is, then that would essentially eliminate District Attorneys as they are the officials in the capacity to make that determination of whether a case should be brought against someone or not. This one may not last too long.

• HB 741, Introduced by Bernal: Relating to the affordability of extension of consumer credit. This bill is extremely vague as well. It states that a CSO must verify a consumer’s income, and establish that the income verified to be used demonstrates that a consumer can reasonably repay the loan in cash.

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.

OCCC and Finance Commission Report Information, Meeting is Friday 10/20 and will summarize data from September 0f 2016 to August of 2017.

CAB Examinations:  Down from 707 in 2016 to 652 in 2017 (-7%).

CAB acceptable level of compliance: 98.93%.

Complaints processed payday: 208 in 2016 and 148 in 2017 (-28.8%).

Complaints processed title: 198 in 2016 and 147 in 2017 (-25.7%).

Top 3 Complaint Types Payday:

Overcharges:8.8.

Financial hardship:14.9.

Payment processing: 25.7.

Top 3 Complaint Types Title:

Financial hardship: 13.6.

Repo: 14.3.

Payment Processing: 21.8.

Jan-June 2017 and other years during same period,  CAB Reporting said:

Unsecured installment and payday loans have been almost exactly flat in the last (4) years going back to 2014, hovering in the 1.044 to 1.1 million loans range for the Jan-June periods.

For comparison, the highest year was 2013 with 1.2 million loans and 3,176 locations reporting activity.  In 2017 the locations totals are 1,817 – this is a new number I have been seeing 2,200-ish.

(ATTENTION CITIES AND CONSUMER ADVOCATES WHO PASSED CITY ORDINANCES TO PASS – ARE YOU READING THIS???) 

Title loans in the last (2) years are hovering flat in the 129,000-133,000 range, with a steady drop from 2013 when there were 241,000 in the same six-month period.

Repos – steady in the 15,000 range the last (2) years.

# Consumers using products Jan-June of 2017, 2016, 2015:

Single payment payday loans in 409k, 453k, 510k

Unsecured installment loans:416k, 385k, 365k

Single payment title loans: 63k, 71k, 109k

Installment title loans: 53k, 53k, 36k

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.

So much time and effort is spent on attacking the “payday loan industry” it is baffling.  Why do consumer advocates and the CFPB refuse to make the banking industry Public Enemy #1 instead?

See below for a shocking breakdown of how banks target and abuse US Consumers with un-godly annual revenue via Overdraft and NSF Fees:

• $15 billion in NSF/Overdraft fee revenue in 2016.
• Average fee is $35.
• That comes to $41,095,890 in fees earned every day for 365 days.
• That comes to 428,571,428 individual fees at $35 each.
• That comes to 1,174,168 fees charged every day for 365 days straight.
• Said for many, that comes to $442 per year – at that rate that comes to 34 million consumers each year.
• Our industry serves about 15 million people per year and makes $10 billion in fees and interest.
• Studies show that when applying the same APR% calculation to the typical $100 returned item that a 1600% APR figure is arrived at! (See FISCA).

Why then are the consumer advocates and CFPB so focused on little old us?  Why aren’t the Cities in Texas passing ordinances to restrict bank abuse of low to middle end consumers?  Your guess is as good as mine!

What I do know is that our payday, installment, and title loan services in Texas are directly combating the bank revenues by helping consumers avoid those charges by getting a short term loan cover pending items on their bank account.  Consumer choose our services because we are fair, we are fast, and we understand their needs.  We are 100% upfront (ad nauseum) about the costs and terms of our services.  Banks, not so much…and can you believe those numbers????

Here is a link to this information – from USATODAY.com:

https://www.usatoday.com/story/money/personalfinance/2017/09/26/bank-customers-fork-over-15-billion-fees-2016-cfpb-says/703324001/

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.

Yesterday I read an article written by William Webster the former CEO of Advance America, it was published on www.AmericanBanker.com and titled “Forget Payday, It’s Time to Reinvent All Lending Practices.”  The piece resonated with me in regards to local ordinances, and what I would like to see Credit Access Business stakeholders and lawmakers keep their focus on during this year’s legislative session.   Mr. Webster stated that “First, the standards of disclosure for credit products’ fees and terms must be vastly simplified and uniformly applied.”  I have to agree, if we can lighten the load on the operator, and simplify the kinds of things that they need to do to “be in compliance,” then I am confident the approach to a customer will be more simple and easy to understand.

For example, the OCCC Consumer Disclosure documents are 2 pages, those need to be provided in addition to a typical set of consumer loan contracts that are 10-15 pages, for one loan, and the same goes again for refinancing.  Then, is there a payment receipt?  Notice to co-signer?  Privacy Policy?  And, now we are looking at being required to have the documents in English, Spanish, and possibly Cantonese.  Imagine the man hours in salary spent on just handling those documents.  What about printers, ink, scanners, and paper?  A year’s worth of all of those things adds up to a major expense.  And, in the end, the customer rarely reads the disclosures.  Customers want to know how much they are getting, what they are paying back, when its due, and commonly whether they have options versus a full payoff.  Let’s start with what the customer wants and keep it simple moving forward from there.  Competition and transparency would result, per Mr. Webster, and I agree.  Companies would compete, fees would go down, service strength goes up, and the customer benefits on all sides.

Here is the link to the article in American Banker:

http://www.americanbanker.com/bankthink/forget-payday-its-time-reinvent-all-lending-practices-1056839-1.html?zkPrintable=1&nopagination=1

Mr. Webster was really thinking about the industry as a whole, but let’s apply his points to Texas in specific.  Local ordinances in a state with licensed CAB’s are the exact opposite of uniformity.  Consumers and CAB’s are having another layer of confusion jammed down their throats.  Cities don’t know the industry, and don’t even have budgets to enforce ordinances for that matter.

The argument is against the payday industry is always the same:  opponents talk about rates, limits, ridiculous APR%’s, use the term “predatory,” call people loan sharks, etc.  It is a petty angle to take with name calling, and in the end it can actually creates more support for the industry when their representatives stoop that low.  Texas CAB’s are open to improvements, so how can we set the standard, be forward thinking, and innovate with the long term in mind?   The fact is that high risk consumers will always need money fast, and if you restrict legal access to those services then they will be left with less ideal sources.  This is a fundamental truth!  So, bright minds might say what Mr. Webster did,  embrace the industry, simplify, create uniformity, and competition will force licensed operators to be the best they can be.

CAB Consulting has assembled a group of CAB stakeholders and retained a lobbyist for this year’s Texas Legislative Session.  It is our goal to voice some of our perspective on the matters above, as well as offer our own specific “Borrow Smart” message.   The “Borrow Smart” message is innovative and comes with a plan to deliver uniformity, transparency, and competition to the Texas payday industry.  We have already begun to share details on Borrow Smart with industry stakeholders.  Contact Michael Brown via phone at 214-293-8676 or send emails to Michael@CreditAccessBusiness.com.