SHOCKER: Internal Emails Reveal Florida Legislative Staff Asked Payday Industry for Approval on Changes to New Lending Bill

Legislative Staffer Asked Representatives from Amscot Financial and Advance America If They Were “Good with the Proposed Changes” To a Payday Lending Bill Now Under Consideration

WASHINGTON, D.C. – Today, consumer watchdog organization Allied Progress released shocking emails obtained as part of a Florida Public Records Act request that show a legislative staffer for the Florida House of Representatives repeatedly asking representatives of the payday lending industry if they were “good with the proposed changes” to H.B. 857, a payday lending bill currently being considered by the state legislature. Officials at payday lending companies, Amscot Financial and Advance America, agreed with the changes and repeatedly thanked the legislative staffer.

“Despite holding Florida’s disastrous payday lending law up as a model for the rest of the country, these financial bottom feeders are working to make a bad situation for consumers even worse. They’ve given millions of dollars to Florida politicians and spent even more lobbying. Now we know what they got in exchange for this investment: the ability to literally approve edits to a new Florida payday lending bill that will boost their profits by trapping consumers in cycles of debt with massive interest rates,” said Karl Frisch, executive director of Allied Progress.

The emails also show the payday lending industry being far more candid in their communications with the legislative staffer than they have been in public. During debate over SB 920 and H.B. 857, industry representatives and a legislator who sponsored one of the bills, tried to hide the APR on the short-term loans being proposed. But private emails to legislative staff reveal Advance America’s chief legal officer prepared a handout with a sample repayment schedule and APR for a $500 payday loan in Florida acknowledging a 217% interest rate.

In 2016, Allied Progress released a special report showing the payday lending industry had showered Florida’s political establishment with $2.5 million in campaign cash with more than one-third of that total ($970,050) coming from members of the Florida-based MacKechnie family and their payday lending company, Amscot Financial, which plead guilty to civil racketeering charges in 1998.

The emails obtained by Allied Progress can be read here (PDF).

BACKGROUND ON THE EMAILS

  • A Florida House of Representatives legislative staffer repeatedly sought the approval of payday lending representatives for changes to H.B. 857, a payday lending bill now under consideration. An attorney for the Insurance & Banking Subcommittee of the Florida House of Representatives repeatedly asked payday lender representatives if they were “good with the proposed changes” to a payday lending bill. Officials at payday lending companies, Amscot and Advance America, agreed with the changes and repeatedly thanked the attorney for her “efforts” and “hard work.” [Emails between Meredith Hinshelwood and Jessica Rustin et. al. 01/10/18-01/15/18; Emails between Meredith Hinshelwood and Ian MacKechnie, et. al. 01/11/18-01/15/18; Charles Elmore, “Payday lenders spend $8 million, get bills they want in Florida [blog],” Palm Beach Post, 03/05/18]
  • But an email sent to the legislative staffer by a payday industry lobbyist included a handout acknowledging the massive interest rates accompanying the proposed loans. According to payday lobbyist Jim Daughton, Jessica Rustin, the Chief Legal Officer and Chief Compliance Office of Advance America, Cash Advance Centers, “prepared” a handout with a sample repayment schedule and APR for a $500 payday loan issued in Florida and hypothetically due on January 1, 2016. If paid off within two months, the example loan would have had a 217% APR and the borrower would have ultimately paid back $632.40 for a $500 loan. [Email from Jim Daughton to Meredith Hinshelwood, 12/04/17]

THE DISASTROUS FLORIDA MODEL

  • No academic or consumer expert interviewed by PolitiFact “argued that Florida’s law should be considered any sort of national model.” PolitiFact “found that consumer groups, independent researchers at Pew Charitable Trusts and the federal Consumer Financial Protection Bureau have raised multiple criticisms of Florida’s law.” [Amy Sherman, “Patrick Murphy praises Florida’s payday law as ‘stronger than almost any other state,’” PolitiFact, 04/12/16]
  • More than 200 consumer and civil rights groups wrote a letter to Congress arguing that the “‘industry-backed’” Florida payday loan law would hurt consumers. In December 2015, “more than 200 consumer or civil rights groups — including the NAACP, National Council of La Raza, Southern Poverty Law Center, and the Consumer Federation of America — wrote a letter to Congress arguing that the ‘industry-backed Florida law’ would hurt consumers.” [Amy Sherman, “Patrick Murphy praises Florida’s payday law as ‘stronger than almost any other state,’” PolitiFact, 04/12/16]
  • Typical Florida Payday Loans Charge 304% Interest Rates. A typical payday loan in Florida charges 304% APR, and most Florida payday loan customers take out nine payday loans a year.  Check Into Cash advertises a payday loan with an APR of 391.07% in Florida.  Amscot Financial advertises payday loan rates as high as 365%.  [Zach Carter, “DNC Chair Joins GOP Attack On Elizabeth Warren’s Agency,” Huffington Post, 03/01/16; Check Into Cash, accessed 03/06/18; Amscot, accessed 03/06/18]
  • Florida Payday Lending Businesses Collected $2.5 Billion in Fees Since 2005. The Center for Responsible Lending found that Florida payday lending business have collected $2.5 billion in fees since 2005. “The Center for Responsible Lending, in partnership with the [National Council of LaRaza], analyzed a decade of data related to Florida’s payday lending practices. These businesses have collected $2.5 billion in fees since 2005, according to the report.” [Donna Tam, “Are Payday Loans Hurting Minorities?” Marketplace, 03/24/16]
  • Florida payday borrowers are trapped in a cycle of debt averaging nearly nine loans per year; 63% of Florida payday loans go to borrowers with 12 or more loans per year. The Center for Responsible Lending found that payday loan borrowers in Florida take out an average of 8.8 loans per year. Additionally, “63% of Florida loans go to borrowers with 12 or more loans per year, and 85% go to borrowers with seven or more loans per year.” [“Payday Lending Abuses and Predatory Practices,” Center for Responsible Lending, September 2013]
  • The failed push to nationalize Florida’s disastrous payday model was spearheaded by lender Ian MacKechnie of Amscot Financial who later admitted he’d consider expanding nationally if the CFPB adopted the Florida model. “Of the $2.5 million doled out by payday lenders in Florida, nearly $1 million came from members of the Tampa-based MacKechnies and their payday lending company, Amscot Financial. Ian MacKechnie Sr. told the Tampa Bay Times just last week that Amscot Financial would consider expanding nationally if the CFPB’s new push to regulate payday lenders matched Florida’s model. And that, ladies and gentlemen, is the smoking gun. Florida’s entire political establishment worked overtime in an effort to stop federal regulators and expand the disastrous ‘Florida model’ — all because a family of payday lenders who have showered these politicians with cold, hard campaign cash wanted to expand the reach of their payday lending company across the country. [Karl Frisch, “Now we know what was fueling push to expand Florida’s disastrous payday lending model,” Tampa Bay Times, 7/29/16]

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