Pursuing, or even threatening, criminal charges against payday and le borrowers is strictly prohibited by Texas law, with very few exceptions. The Texas Cons ution 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 do ents 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 do entation 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.”