Ruby Golden, a 62-year-old disabled Dallas hospital aide, owes so much money that she’s lost track of the amount. It’s somewhere in the thousands of dollars, she said, a sad result of her serial encounters with payday lenders.
“They got so much money from me,” she said. “I got tied up with seven of them. I was borrowing from one to pay the other.”
Payday lenders, with names such as Fast Cash and Ace Cash Express, usually operate from shopping centers and Web sites. They offer borrowers – often those with troubled credit histories, frequently behind on their bills – instant cash for short periods at rates far above what banks charge. On an annual basis, the interest rate on some payday loans can exceed 900 percent.
“It’s greed colliding with need,” said state Sen. Eliot Shapleigh, D-El Paso.
The state of Texas provides virtually no oversight of the business. Shapleigh and several other legislators have introduced bills that would regulate – or effectively abolish – payday lending in Texas.
Payday lenders have spent hundreds of thousands of dollars hiring Austin lobbyists and donating to legislators – and not for the first time. Shapleigh tried to pass bills regulating payday lending in the last legislative session, but they fell to the concerted efforts of lenders’ lobbyists.
They followed us like a pack of dogs,” he said.
In one year, Texas payday lenders make at least $2 billion in loans from more than 3,000 storefronts. They collect, by some estimates, more than $400 million in fees.
For the most part, the lenders cater to customers without access to bank loans or credit cards.
“It’s not like the banks are willing to do this,” said Xavier Dominicis, vice president for public affairs at Plano-based Rent-A-Center, which has 113 payday lending outlets in Texas. “The economy is circling the drain. If ever there was a time that consumers should be given greater options, this is it.”