That’s when she noticed an ad in Greensheet, an ad site, for The Cash Store. She thought the ad said she could pay off the loan at her own pace, and so she didn’t think too much about walking into one of their 15 locations in Houston, handing in pay stubs and her information. bank account, list the names of five friends and relatives, and walk away with $1,455 in juicy bills.
The APR was 581.72%. And it’s very expensive money: if she had made all 10 payments as scheduled, it would have cost $2,831.54 on top of what she borrowed.
“They made it look like I could do it for a year or two, but that’s not how it ended,” Rowland said. “Should I have understood that? I should have, but I didn’t. You walk in, and 15 minutes later you leave with cash in your hand. It’s so easy and so attractive.”
Payments started coming out of his bank account, every two weeks: $357.21, on a paycheck of about $1,600 before taxes from his job at a building supplies company. What was left was not enough to cover his bills, so Rowland called them asking for a break, but there was no negotiation. After a few months, on the advice of a local association, she closed the account.
That’s when the phone calls started. They called her every day, called her 80-year-old mother, her uncle, her colleagues, asked her if they knew what she was doing and told her to get in touch. Gradually the calls dwindled to weekly, then half-heartedly to monthly. And then, two weeks ago, someone called her at work – this time claiming he was from the Houston Police Department. The IRS had audited her Wells Fargo account, he said, and found she was still in debt.
“He wanted $1,600, and he wanted it before they hung up the phone,” Rowland said. If she couldn’t pay, said the voice, he would be there to take her to the police station and take her fingerprints on the spot. She told them she would call back, and never did, and the alleged policeman never came. So now she’s just waiting, at an awkward stalemate. “I see no end to it unless they let it go,” she says. “It’s difficult, because I took the loan? Yes. Do I have to repay it in good faith? Yes. Did I try? Yes, I tried. Do they do something to make it easy? They don’t.” (The Cash Store did not return a call for comment.)
Last Thursday, the Federal Consumer Financial Protection Bureau placed an order against ACE Cash Express, based in Irving, Texas, for some of the same practices that Rowland fell victim to: being “perpetually overzealous” in its pursuit of borrowers and creating a “culture of coercion” aimed at trapping them in cycles debt. It was a high-profile bust, but one that will hardly hold the industry back; the much longer-lived Federal Trade Commission took such enforcement action for years and failed to stop the abuse.
Corn something else is moving in favor of Rowland and people like her, driven into financial ruin by an immediate need for money. On July 1, a city order went into effect, making some of the most pernicious parts of the loan she obtained illegal. And it’s not just Houston: A total of 18 Texas cities have adopted a similar set of rules since 2011, finally imposing limits on an industry that state law had until then left almost untouched.
This is just another example of how, as the federal government remains in lockdown and some states fail to act, cities are stepping into the breach.
Four years ago, ACE Cash Express was the company that made Dallas Councilman Jerry Allen the leader in the payday loan industry. worst ennemy.
The day before, he was preparing to celebrate the launch of the Betting on Dallas program, which helps people get bank accounts, Allen received a call from a lobbyist asking if he would agree to meet with ACE leaders. He didn’t have time and refused. But the next day, alongside routine council business, it became apparent that two council members had attended the meeting: They issued a proclamation declaring ACE a model corporate citizen, after donating $100,000 to relief efforts. in Haiti. “It irritated me that these guys thought they could play this game,” Allen said. “That was the game.”
Texas has been a gold mine for payday lenders since 2005, when a court ruling sanctioned a loophole in usury laws that allowed them to charge whatever interest they wanted. Shop windows have proliferated to the point where, according to a 2012 study Texas Appleseed Report, the state accounted for 60% of the profits of the four largest listed companies. A major push by church and community groups to pass restrictions in the state legislature failed in its last biannual session, in 2013; they have only succeeded in requiring that borrowers receive certain information when taking out loans.
Allen, however, had already started pushing on a different front. In 2011, he obtained a order passed that limited the number of installments on a loan to four, each of which had to repay 25% of the loan principal and could not exceed 20% of the borrower’s paycheck. In addition to this, the council adopted zoning restrictions which prevented the opening of new stores at certain distances from highways, residential areas and other payday lenders.
It’s not really an aggressive set of rules. Because municipalities aren’t allowed to legislate on an area already regulated by the state, Dallas didn’t limit the actual interest or fees that lenders could charge, in order to stay safe from legal challenges. Still, Allen says, not a single new “credit service organization,” as they’re called in the state, has asked to move to Dallas since his death. And meanwhile, 17 other cities – including most of the larger ones, in addition to Fort Worth – have adopted similar rules. It left defenders, especially Allen, feeling triumphant.
“You can run, but you better run fast, because we have jets,” Allen says. “Go down your rabbit holes, because we’re going to put concrete in them. We’ve got them on the run and we’re shooting them in the back.”
Allen doesn’t have much hope that Texas next legislative session significantly strengthen or standardize ordinances that cities have adopted on their own; he just hopes the conservative house doesn’t cancel them. In the meantime, he awaits the expected regulations from the CFPB in the fall, which could include national requirements for a borrower’s ability to repay their loans, even if the agency cannot simply cap interest rates. And most importantly, he’s working to develop alternative banking services, so people don’t end up in Gail Rowland’s shoes in the first place – a common criticism of the industry, who says people will just look for even worse options. they can’t. borrow against their next salary.
A possible substitute: community loan centres, such as this one in Brownsville, Texas., which offer more affordable small dollar loans. They will have an easier time growing once the payday lenders pull out, as they have done in most places that place serious limits on their operations.
“If there’s a situation where people don’t have access,” Allen says, “well, eraser dad, we have to get it to them.”
