The Fort Worth City Council has added to the growing list of cities in Texas now imposing restrictions on the payday lending industry.
By a 5-3 vote that makes Fort Worth the last major city in the state to take action, businesses dealing in such operations will now be required to register with the city on an annual basis, maintain customer records of up to three years and limit the number of installment payments.
the ordinance also limits cash advance loans to one-fifth of the borrower’s gross monthly income and auto title loans to just 70 percent of the car’s value, the Fort Worth Star-Telegram reported.
The payday lending industry has long been sharply criticized as one that preys on those most economically vulnerable, with fees on every $100 borrowed spiraling to as high as $30. For loans that are rolled over or renewed, additional fees are attached, with the state of Texas up until now having no limit on the amount of fees charged.
“These loans are very harmful to families and the community as a whole,” Ann Baddor of the Austin-based nonprofit Texas Appleseed told the Star-Telegram. “People with low incomes and bad or no credit are most likely to be harmed by payday and auto title lending. The high cost of the loans coupled with the recipient’s inability can trap them in a cycle of debt forever.”
Presently in Texas, almost 70 cities have enacted some form of regulation, and an additional 16 have passed zoning requirements that limit payday lenders from operating near low-income neighborhoods.
In Fort Worth, the vote came after more than a year of wrangling between council members and city staffers.
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