In 2009, Rev. Danielle Ayers was approached by a member of her church who said he was stuck. He’d taken out a payday loan for a few hundred bucks, and he couldn’t pay it off.
Ayers is the pastor for justice at Friendship-West Baptist Church, and she was confused: How could a small loan be such a big problem?
“I was like, ‘Can you just bring me your loan documents?’” she recalled. “I’m thinking, I don’t know, two pages for a small-dollar loan. I wasn’t thinking anything extensive. And it was a thick packet.”
Ayers was floored by what she read: Exorbitant fees and terms that seemed designed to trip people up. The man had already refinanced the loan a couple of times, racking up more and more debt.
“I just knew something was not right with this lending practice,” Ayers said.
Ayers started hearing from more church members struggling with payday and auto-title loans. She talked to pastors from other churches, and they were hearing the same stories.
As she drove around Dallas, Ayers realized just how many payday and title loan stores there were.
“The clustering of them in our neighborhood, that’s intentional,” she said, “this saturation of payday and auto-title loans in communities … where people already struggle to access banking.”
In Texas, payday loans commonly carry annual percentage rates over 600%. These are the highest rates in the nation, nearly 40 times a typical credit card’s APR.
Auto-title loans are less expensive — still commonly with rates above 300% — but they’re also riskier: They use a car title as collateral, so the car could be repossessed if a borrower fails to pay the loan back on time.
A 2010 study by the American Association of Retired Persons found 1 in 4 under- and unbanked Texans aged 44 to 64 years old had taken out auto title loans. That was the case for more than 1 in 5 people over 65 years old who lived in communities without adequate access to financial services.
So Ayers and Friendship-West Senior Pastor Freddy Haynes began researching and organizing. They joined a statewide push to call on the state legislature to rein in the more predatory practices of the industry.
In late 2010, Friendship-West linked up with three other predominantly Black churches in southern Dallas to organize a march down Camp Wisdom Boulevard in South Oak Cliff.
Around that time, Rev. Gerald Britt had started reading up on payday loans, and he joined the march.
It was stunning to see the economic decline of the area around Redbird Mall that was once a thriving center of Black commerce in Dallas. The loan stores can’t be entirely blamed for the decline, he said, but he saw the sheer prevalence of them as part of a pernicious cycle that made it unattractive for other essential businesses to move in.
“The lack of economic health and vitality just became palpable when you’re walking down and you’re seeing payday loan stores next to auto title loan stores next to payday loan stores,” Britt recalled.
Britt, a third generation pastor in Dallas, was working for the nonprofit CitySquare at the time.
And a broad, city-wide Anti-Poverty Coalition made up of faith groups, service agencies and philanthropies had all honed in on the same problem by the beginning of 2011.
Organizations that aim to help alleviate poverty in Dallas, Britt said, “found out we were all spending an enormous amount of staff time, money and [other resources] trying to get people out of these loans,” he said. “Programatically, it was draining us.”
When it became clear the state legislature wasn’t going to regulate the industry, the coalition turned its attention to passing an ordinance at the city level.
The coalition found its champion on the city council in Jerry Allen, a former banker who represented Lake Highlands and other wealthy enclaves in northeast Dallas. n his first term, he was troubled by the less well-off parts of his district that were also saturated with high risk loan stores.
“The payday guys would sit there and I’d debate them, and they’d say, ‘No one else will lend to these people,’” Allen recalled.
Allen said he needed allies like Gerald Britt and Friendship-West and other members of the coalition to help build public support. He wasn’t sure they’d be able to take on the powerful industry, with their strong lobbyists.
Some council members had taken donations from these companies, Allen recalled. Just a year earlier, the council had passed a resolution honoring Ace Cash Express as a good corporate citizen.
“When you’re going to take on giant companies like Ace and Cash America, well you’re going to basically be in a junkyard dog fight,” Allen said. “And you better have folks standing beside you that won’t blink.”
The coalition launched a petition drive, gathered data and organized people to testify to the city council and tell their stories: Teachers who took out payday loans because they had to buy supplies for their classroom, parents who needed extra money when school started, people who had cars that broke down who needed to get to work.
“If a tornado hit Dallas, and you decided to charge people $75 for a sheet of plywood or $10 for a bottle of water, you’d be arrested [for price gouging],” Britt said. “We’re talking about people facing personal financial catastrophes, and saying it’s all right to charge them 300% interest.”
These stories helped shift the narrative from individual failures of personal finance to systemic problems with payday loans, Britt said.
And with a showing from Black church leaders and congregations around Dallas — as well as other faith groups in the coalition — Britt said the coalition successfully reframed the payday loan debate around ideas of morality and justice.
Friendship-West’s Danielle Ayers said Black churches like hers follow in a prophetic tradition that puts this kind of activism as central to the mission of the church. Tracing a lineage back to the founding of Black churches, she said the church not only attends to the spiritual development of individuals, but is called to help improve the material conditions of the community.
“That’s what makes the Black church the Black church,” she said. “That’s why Black folks are still here. It was organized as a protest movement against enslavement, and in each era, we were always organizing [through the church].”
In the end, the coalition was successful.
Two ordinances passed unanimously, one in May 2011, another a month later. Taken together, they limit how closely payday lenders can cluster into neighborhoods, they make loan terms more manageable, and cap loan amounts to what people can reasonably afford.
The rules don’t cap the high fees people pay — only the state can do that — but Ayers said they leveled the playing field, at least a bit.
“It did not keep people from getting loans, it just meant they weren’t being exploited,” Ayers said. “It’s just that exploitive practices have decreased, and we’ve been able to track that.”
Since 2010, 45 cities have followed Dallas’ lead and passed similar loans. Now, about 10 million Texans live in cities that limit payday loans.