New rules from the U.S. Consumer Financial Protection Bureau regulating payday lenders were supposed to take effect on Aug. 19. The rules – laid out in 2017 – would have regulated lenders’ ability to withdraw funds directly from a person’s bank account. Those rules are on hold for now as the agency and a payday lender trade group challenge it in court.
In Texas, nearly 70 cities have their own rules regulating payday and other high-interest loans. But there’s one notable holdout: Fort Worth is Texas’ largest city with no laws on the books that regulate payday and auto title lenders.
Luke Ranker with the Fort Worth Star-Telegram reports that city officials are considering taking action. He says payday loans involve small amounts – $500 or less – loaned for a short period of time.
“They carry with them a lot of interest rates, and sometimes a lot of fees,” Ranker says. “So while it may look like you’re going to pay back $500, borrowers will sometimes pay back twice that much or more.”
Ranker says Fort Worth’s lack of payday loan regulation stems from a “very cautious [city] council.” As other cities have cracked down on payday lenders, Ranker says some Fort Worth officials are beginning to take an interest in acting, too.
Council member Kelly Allen Gray, who represents a district where many low-income residents live, is taking the lead on payday loan rules, Ranker says.
Options under consideration in Fort Worth include zoning restrictions that would govern where payday lenders can locate. Ranker says this measure has broad support on the city council. Members also support providing financial education to residents about the high costs of payday loans, as well as offering credit counseling services.
Ranker says any new initiatives in Fort Worth will take a few months to complete.
Written by Shelly Brisbin.