Many of you are aware that city councils are taking action against payday loan businesses by passing local ordinances that limit retail payday loan stores, regulate the businesses, and add another set of rules that we would have to abide. Some industry advocates are even saying that certain requirements could result in many businesses having to fold up shop.

Can you imagine the headaches these ordinances would cause in Texas if you have not just a CSO registration with a CAB license, but also city licenses with regulations in all the different towns you have stores?

Needless to say, the cities aren’t working together to create one unified set of rules that each are going to impose, which would result in the rules being all over the map. Companies will hire compliance teams and their costs will increase, attorneys will be along for the ride, and legal exposure will be increasing. (in Dallas the violations are $500 each). Think about a company like Advance America with locations all over the state, would you like to oversee different compliance programs for each city they are in? It can be done, but who wants to and it makes no sense. Cities need to let the State do the work. We need to keep these ordinances from spreading. An ounce of prevention is worth a pound of cure, and I think we all need to remember that fact right now.

Payday loan businesses have to fight to preserve their right to free commerce by becoming involved in these local battles. The cities need to defer to the State level where it is the proper forum for these matters. If we get that done, we can work alongside the State lawmakers to create more unified and dually beneficial regulations. As of now, I am not familiar with any cooperation between cities and stakeholders, and the cities are not getting feedback from business owners in a collaborative way.

In Texas, a week after bills 2592 and 2594 passed (both payday loan regulation bills), Dallas passed its own ordinance that went way beyond what these bills accomplished. Dallas added its own set of policy that includes regulation, registration and reporting guidelines above and beyond the state directives. Next, Austin stepped forward and proposed its own set of regulations. Is Houston next? Lubbock? Consumer Services Alliance of Texas (CSAT) filed suit and now the legal battle is underway.

This week, I heard from Max Wood in Birmingham, Alabama. Max has a number of payday loan stores in Alabama and is the President of Borrow Smart. As well, Max is a part of the Council for Fair Lending in Alabama. He let me know that Birmingham is the latest local municipality to throw its hat into the payday loan regulation ring. The folks at Borrow Smart and the Council for Fair Lending swiftly responded to the city of Birmingham’s efforts to put a moratorium in place. His group aims to stop this and other local ordinances from spreading. To find out more go to this link:

http://www.tggtest.com/cfl/Misc/bhammoratorium.htm

Looking forward to keeping stakeholders updated on developments. Feel free to reach out to me anytime.

Email Michael at cabconbrokerage@gmail.com or call me at 214-293-8676.