Reality Check: Rep. Alcee Hastings Writes Misleading Column Supporting Disastrous “Florida Model” of Payday Lending

RHETORIC: Rep. Alcee Hastings Claims the Florida Model of Payday Loan Regulation Is “Progressive” and “Has Been Protecting Consumers for 15 Years.”

[Huffington Post: Alcee Hastings Op-Ed: “Consumers Must Be Protected and Have Access Short-term Credit”, 3/7/2016]

REALITY: The Florida Model Is a Payday Lender’s Dream: Riddled with Loopholes and Massive Interest Rates. Average Borrower Takes Out 9 Loans.

Payday Lenders in Florida Claimed They Were Credit Service Organizations Not Subject to Florida’s Payday Lending Law.

“Last year, the state Office of Financial Regulation began looking into the practices of EZMoney and Cash America, two Texas-based chains that claim to be “credit-service organizations” not subject to Florida’s payday-loan law. “We’re in the early, fact-finding stages with both of them,” said Ramsden, the agency administrator. “We are aware they’re citing Florida’s credit-service organization law, which was intended to help consumer-credit agencies. In this situation, however, we have payday lenders using it to broker payday loans.” [Orlando Sentinel, “Some Payday Lenders Are Flouting Florida’s Reform Law”4/1/2007]

Payday Lenders Claim They Aren’t Subject to Florida’s Payday Lending Law Because They Don’t Receive a Post-dated Check but Rather a Promissory Note That Allows Them to Automatically Withdraw Funds from the Customer’s Bank Account.

“Here’s their argument: The state’s payday law pertains only to lenders that require customers to give them a postdated check written for the amount owed. When the loan comes due, the lender simply cashes the check. But Cash America and EZMoney require no such check — only a promissory note that authorizes the lender to automatically withdraw the money from the customer’s bank account.” [Orlando Sentinel, “Some Payday Lenders Are Flouting Florida’s Reform Law”4/1/2007]

A Typical Payday Loan in Florida Charges 304% Apr, and Most Florida Payday Loan Customers Take Out Nine Payday Loans a Year.

“Data compiled by the nonpartisan Pew Charitable Trusts is similarly dismal. 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.” [Huffington Post: “DNC Chair Joins GOP Attack On Elizabeth Warren’s Agency”, 3/1/2016]

Check Into Cash Advertises a Payday Loan with an APR of 391.07% In Florida. [Check Into Cash Website, Access 3/8/2016]

Amscot Financial Advertises Payday Loan Rates as High as 312.86%. [Amscot Financial Website, Accessed 3/8/2016]

In Florida, There Are Frequent Rollovers With the Average Borrower Taking Out 8.8 Loans Per Year and Almost a Third of Borrowers Taking Out 12 or More Per Year

Screen Shot 2016-03-08 at 11.07.04 AM

[Center For Responsible Lending, “Payday Lending Abuses and Predatory Practices” 09/2013]

32.7% of Florida Payday Loan Customers Took Out 12 Loans or More Per Year. [Veritec Solutions Report for The Florida Office of Financial Regulation, May 2012]

PARTING SHOT: Rep. Alcee Hastings Has Taken Massive Amounts of Payday Lender Cash Since He Started Promoting the “Florida Model” of Regulation

In October 2015, Hastings Took $23,500 in Contributions from Payday Lenders…

  • Ace Cash Express, Inc. PAC | 10/2/2015 | $5,000
  • CheckSmart Financial LLC PAC | 10/8/2015 | $5,000
  • Financial Service Centers of America, Inc. PAC | 10/10/2015 | $5,000
  • Financial Service Centers of America, Inc. PAC | 10/10/2015 | $5,000
  • Fraser MacKechnie (Amscot Financial) | 10/19/2015 | $1,500
  • Robert Wolfberg (Financial Services Inc.) | 10/19/2015 | $1,000
  • Fred Evensen (CashSmart) | 10/19/2015 | $1,000

[Center for Responsive Politics, Accessed 3/8/2016]

 …and One Month Later Co-Sponsored Legislation Based on the “Florida Model” That Would Delay the CFPB’s Payday Lending Rule by Years

November 16, 2015: Hastings Co-Sponsored HR 4018, The Consumer Protection and Choice Act. [; HR. 4018]

  • Consumer Groups and Community Organizations Opposed HR 4018 Saying It Would Delay The CFPB’s Rulemaking On Payday Loans by Two Years or More and Was an “Industry-Backed Proposal Based On Florida Law.” “The undersigned civil rights, consumer, labor, faith, veterans, seniors, and community organizations, strongly urge you to oppose H.R. 4018, the “Consumer Protection and Choice Act.” This harmful bill would limit the Consumer Financial Protection Bureau’s (CFPB) ability to protect all consumers against high-cost payday, car title, and installment loans. In addition to delaying the Bureau’s rule-making for two years or longer, H.R. 4018 would allow the payday industry to avoid federal regulation altogether by pushing an industry-backed proposal based on a Florida law1 that has proven ineffective at stopping the payday loan debt trap.” [Center For Responsible Lending, Letter To Congress From Consumer Groups, 12/15/15]

…and Eight Days Later Got Another $500 From Payday Lenders

  • World Acceptance Corporation PAC | 11/24/2015 | $500

[Center for Responsive Politics, Accessed 3/8/2016]

April 2015: Hastings Took $8,750 From Payday Lenders…

  • CheckSmart Financial LLC PAC | 4/23/2015 | $2,500
  • Financial Service Centers of America, Inc. PAC | 4/23/2015 | $1,250
  • Ian MacKechnie Jr. (Amscot Financial) | 4/27/2015 | $2,500
  • Jean MacKechnie (Amscot Financial) | 4/27/2015 | $2,500

[Center for Responsive Politics, Accessed 3/8/2016]

… Just Days Before (Including $5,000 the Day Before) He Signed a Letter to Director Cordray Urging Him to Use the Florida Model of Regulation of Payday Loans Rather Than Issuing Rules That Do an “Immeasurable Disservice” to Consumers by “Eliminating” Payday Loans That People Use “To Make Ends Meet” …


[Letter to CFPB Director Richard Cordray From Members of Congress, 4/28/15]

 …and a Couple of Months Later He Was Rewarded with $3800 More in Payday Cash

  • Fraser MacKechnie (Amscot Financial) | 6/15/2015 | $2,700
  • Fraser MacKechnie (Amscot Financial) | 6/24/2015 | $1,000

[Center for Responsive Politics, Accessed 3/8/2016]



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