CLAIM: Today, CFPB “Acting Director” Mick Mulvaney told an audience at the U.S. Chamber of Commerce that his “gut” tells him the CFPB has previously ignored appeals from Florida politicians to abandon the CFPB’s tough new rules for payday lenders and instead protect the so-called “Florida model.
- While speaking at the Chamber event, Mulvaney mentioned a note “written in 2015 from the state regulator in Florida on payday.” Mulvaney’s summary of the letter was, “‘Please don’t do this. We’ve already done it, and it works. We’ve figured out a way in Florida to protect consumers, still protect the marketplace, provide this service that is necessary at points and helpful to people at other points, without completely snuffing out this particular business. And it’s working.'” Mulvaney said in his “gut” he believed “that [sentiment] was completely ignored.” [Restoring Small Business Lending – CCMC, US Chamber of Commerce, accessed on 03/01/18; Mick Mulvaney Comments at US Chamber of Commerce, 13:11-15:25, 03/01/18]
REALITY: Experts Agree the Florida Model Does Not Offer Strong Consumer Protections – In Fact, it allows Payday lenders to trap consumers in cycles of debt featuring 300-400% interest rates.
- 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]
REALITY: 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. “A typical Florida payday loan customer ends up taking out nine payday loans a year and is stuck in debt for nearly half of that year, according to Pew. The average interest rate on Florida’s payday loans is 304 percent — only slightly better than the 390 percent annual average. Critically, the average payday loan amount of $389 is equal to 35 percent of average paychecks in the state — in line with national figures.” [Zach Carter, “DNC Chair Joins GOP Attack On Elizabeth Warren’s Agency,” Huffington Post, 03/01/16]
- Check Into Cash advertises a payday loan with an APR of 391.07% in Florida. [Check Into Cash, accessed 02/06/18]
- Amscot Financial advertises payday loan rates as high as 365%. [Amscot, accessed 02/06/18]
REALITY: 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]
REALITY: Florida Payday Borrowers are Trapped in a Cycle of Debt Averaging Nine Loans Per Year
- 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]
REALITY: 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]