Pursuing, or even threatening, criminal charges against payday and title borrowers is strictly prohibited by Texas law, with very few exceptions. The Texas Constitution unequivocally states, “No person shall ever be imprisoned for debt.”
But new research released this morning by Texas Appleseed shows that criminal charges against payday borrowers for missing payments is common in Texas. Texas Appleseed documents more than 1,500 criminal complaints of bad check and theft by check allegations filed by payday loan companies in Texas between 2012 and the spring of this year. Many of them resulted in fines, arrest warrants and even jail time.
The research builds on reporting by the Observer published in July 2013, which found 1,700 instances in which payday lenders in Texas have filed criminal complaints against customers. The Observer story prompted an ongoing investigation by the state Office of Consumer Credit Commissioner, which regulates the industry in Texas, into one payday loan business, Cash Biz. It also led regulators to issue an advisory bulletin to lenders warning them to stop pursuing criminal charges against their customers.
Texas Appleseed found 13 different payday loan companies pursuing criminal charges in eight different counties, including Travis, Dallas, Harris and Collin. Texas Appleseed filed a complaint today with the federal Consumer Financial Protection Bureau, the Federal Trade Commission, the Texas Attorney General’s Office and the state Office of Consumer Credit Commissioner. The complaint letter, which includes 700 pages of supporting documentation calls for state and federal authorities to launch an investigation and take enforcement action against lenders abusing the law and their customers.
“In addition to their outrageous rates and lending practices, payday loan businesses are illegally using the criminal justice system to coerce repayment form borrowers,” said Ann Baddour of Texas Appleseed. “This directly contravenes state and federal law, which eliminated debtor’s prisons long ago.”
In one justice of the peace court in Harris County, the group found that arrest warrants were issued in more than 42 percent of the cases and at least six people served jail time. In Collin County, there were 740 documented criminal cases against payday borrowers—636 from a single lender, PLS Loan Store—and $132,000 collected from borrowers.
Go read the whole thing, and read that Observer story from last year that I managed to overlook at the time. I don’t know about you, but I don’t want my county’s law enforcement apparatus acting as a debt collector for private companies. Here’s the Texas Appleseed press release and the complaint they filed, which lists all the offenders. Consider this your pre-session reminder of why we need state regulation of these shysters. I don’t know what any of the offices that received these complaints can do about it, but I would suggest that boiling them in their own pudding and burying them with a stake of holly through their heart would be poetically just, if perhaps not quite constitutional.
Doesn’t help that the Consumer Credit Commission is run by Perry appointee William J. White – who is simultaneously a Veep of Cash America! In fact, there were stories last year about how when the media tried to contact White IN HIS CAPACITY AS COMMISSION CHAIR, they were told to go ahead and call him at Cash America.
Yeah, I don’t know…. Pretty big difference between going to jail for being poor, and passing bad checks back to the lender who made you a loan for WHATEVER reason. Pass NSF check to your mortgage lender and you may find yourself being foreclosed on. Pass bad checks to Specs on Smith and they’re alerting the authorities as it’s a Class C misdemeanor. It’s the Justice of the Peace, Harris County Court that decides whether or not the local authorities are going to hunt you down.
“Theft by Check, Section 31.03 and Section 31.06 of the Texas Penal Code”
The shylocks require the borrower to provide a number of post dated checks, which are deposited on the payment dates. I think the law provides that’s not a bad check if it bounces.
I am generally pro free market, but payday lenders are vile scumbags that prey on the less fortunate, and therefore need tight regulation.