PayDay Loan Law Passed

Texas legislators in House of Representatives passed a measure recently requiring that payday loan and auto title lenders disclose to customers information about their interest rates and fees upfront.  Other legislation required lenders to discuss with customers other ways they could get credit and how those credit avenues compare to payday loans or auto title loans is still up for debate and failed to pass.  State Rep. Vicki Truitt sponsored three pieces of legislation which are designed to reign in what she has described as an almost totally unregulated industry which operates in a “wild, wild West” fashion.  But Truitt’s legislation is facing fierce opposition from the payday loan industry which has at least one of its own seated in the legislature.

Rep. Gary Elkins, R-Houston, who owns 12 payday loan locations throughout Texas, actually supported the payday loan bill which passed the House after certain language was removed; but has still criticized the effort to restrict the industry which he says is already overregulated. According to Elkins, the new proposed laws may be more about restricting competition in the payday loan market than in protecting consumers.

“Whenever an industry asks to be regulated, ask whom they are trying to keep out,” Elkins told his colleagues. “Big boys can always comply. I’m just a little business guy trying to comply.”

While there is no doubt that the payday loan industry is competitive with its own brand of in-fighting, this is not to discount the need of Texas to regulate this industry. Payday loans and their auto title loan sister are designed to take advantage of the poor and uninformed. With high interest rates and a repayment system which keeps the borrower indebted, the payday loan industry has proven that it does not have the best interests of its customers in mind.

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