Even though Texas ostensibly outlawed the practice, Texas Appleseed has alleged "an ongoing trend of unlawful use of criminal charges by payday loan businesses to collect debts" in a complaint to Texas' Consumer Finance Protection Bureau. Lots of juicy detail there so rather than excerpt it, I'll just say those interested should read it themselves. Bottom line: Most counties seem to have stopped, some have clearly not (whether due to confusion, miscommunication or avarice - in general, prosecutors' hot check funds are dwindling), and there's insufficient data to track the issue in close detail.
See also coverage from Texas Public Radio, Huffington Post, the SA Current, and of course The Texas Observer, whose earlier reporting launched the most recent push toward payday lending reform. Also, I was happy to see the complaint referencing a report on the topic my wife helped prepare for Consumers Union 15 yeas ago. She poured a lot of herself into this issue back in the day, so she'll be glad to learn folks are still finding CU's work product useful.
How much capital does it take to become a Payday Lender?
ReplyDeleteFleaStiff,
ReplyDeleteMy guess would be you could start a venture like that with a couple hundred thousand dollars and maybe much less. I'm guessing that because those loan amounts are so small, say $250-$1000? The tricky part is always finding the right attorney to set it up and keep you out of trouble. Guessing again you'd need to take a close, hard look at state usury laws. A depressing business if you ask me :-(
I do not understand how any DA's Office could justify filing criminal charges on a payday loan. I suspect that the DA's offices that have filed these were not aware of the true nature of these extortionist predatory lenders. The law is clear that theft does not occur unless at the time of the loan and the post dated check, the client intended not to pay. So many of these people are seduced into signing on-they have no idea how corrupt lawyers and lenders can coerce them into trying to pay even though they do not have the money. By the time the loan is due, they not only owe the money they borrowed, they owe massive fees in addition to the loan. This is a despicable scheme that should never be supported by any legitimate prosecutorial office.
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