Mayor Parker’s proposed payday lending ordinance will be up before Council today, though it might wind up being delayed until the new Council is sworn in. It’s not clear yet how the vote might go, but in the meantime it’s worth pondering what the enforcement mechanism for this new law would be. Other cities that have passed similar ordinances, on which the Houston version is modeled, have taken it slow so far.
Martha Hernandez, who was hired to handle enforcement of the ordinance for the city of Austin, said four complaints have been referred for prosecution in 19 months. Her staff is nearly done with an analysis showing which lenders are most likely violating the ordinance, based on the accuracy of their reports, complaints and other data. That list will guide compliance audits, she said.
“Our process, we anticipated it would be complaint-driven, but there’s just not very much demand on that. We’re constantly looking at what we can do to better inform the public about the ordinance,” Hernandez said. “The plan has always been to do audits in tandem with the complaint-based investigations.”
Dallas City Councilman Jerry Allen said more than 30 lenders were closed for violating a 2011 ordinance governing where the stores could operate, but agreed Dallas’ enforcement has been slow. The lenders’ lawsuit made the city cautious, he said, and officials paused to see if the Legislature would act.
“I wish it was quicker, but we’ve had a pretty organized approach to it. Without question, it’s now time for enforcement,” Allen said, adding audits could come in weeks. “Dallas is coming. We will find violations, it’ll be $500 a day, and we’re going to keep coming.”
San Antonio Councilman Diego Bernal said his city has hired no staff and acknowledged the first year under the new regime was quiet. However, he said, workers have begun stings, and he said there is enough public awareness that valid complaints are coming in.
“Some of the violations have been rectified: They weren’t registered and so we got them registered. Now we’re at a point where what we’re left with are bad actors that are purposefully violating the ordinance,” Bernal said. “We’re pursuing all enforcement options, one of which is full-on litigation.”
Houston plans to begin enforcement on its estimated 550 such lenders July 1 to give proper time to staff up, [City Attorney David] Feldman said.
See here for more on what the cities have been doing. I’m okay with the approach described above. This would be a big change, and it’s sensible for the city to give the payday lenders some time to make themselves compliant, as well as some time to get its own ducks in a row for future enforcement. To some extent, Houston and other cities will need to rely on consumer complaints, but it’s a good idea to get to a point where someone at the city has a reasonably clear picture of how these businesses are operating and can step in as needed to deal with problems. And none of this changes the fact that the Legislature needs to get its own act together and pass a real law that builds on what these cities have done and holds these businesses accountable across the board. We’ll see if Council does their job today or if we have to wait till next year. Campos has more.