Fort Worth, Largest Texas City with No Payday Regulation, Considers Its Options

Inside Subprime: September 18, 2019

By Jessica Easto

Fort Worth, Texas, is the largest city in the state with no payday loan regulation on the books. Over the past several years, 70 cities in Texas have enacted legislation to limit payday loans and auto title loans. These short-term, high-dollar loans are often criticized for targeting vulnerable populations—those who are unbanked or lack enough credit to qualify for traditional loan products—with predatory practices and terms. 

Payday lenders often charge fees—typically $10 to $30 for every $100 borrowed, which can be charged again if the borrower can’t pay the loan off in time and “rolls it over.” This frequently traps borrowers in a cycle of debt. Many states put caps on these fees, but Texas has none, which is one of the major issues critics have with payday loans in the state.

Today, Fort Worth is the only major city in Texas to have not addressed the issue, and it is considering its options with five plans recently presented by city staff. These included:

  • Educating vulnerable populations on the dangers of payday loans.
  • Creating a community loans pool to mitigate the risks of lending to credit-poor borrowers.
  • Adopting payday loan regulation similar to those that have been adopted by other Texas cities, based on a draft ordinance created by the Texas Municipal League.
  • Look into statewide payday legislation.
  • Limit payday loan company within the state by making changes to zoning and permit codes.

“These businesses are predatory to our most vulnerable citizens,” said Councilman Dennis Shingleton. “We got to find a way to regulate, educate and service those vulnerable.”

Current state regulation requires licensing, data collection, and legal disclosures, but according to the Fort Worth newspaper, “laws addressing the cycle of debt facing many people have fallen apart in past legislative sessions.”

In 2011, Dallas was the first city to enact regulation in the payday loan industry. Arlington passed an ordinance in 2015, as did Hurst, Euless, and Bedford in 2016. 

Many councilmembers were eager to support regulatory measures, but Mayor Betsy Price was more cautious, favoring the financial education, baking pool, and zoning options over the ordinance, citing concerns over enforcement.

Payday loans “do exist because there is unfortunately a need, and we need to figure out how to counter that with education,” she said.

Learn more about payday loans, scams, and cash advances by checking out our city and state financial guides, including Austin, El Paso, Houston, San Antonio, and Waco.