Friday was the cutoff for the public to weigh in on the payday lending industry before federal regulators choose what terms companies can — and can not — offer to millions of low income borrowers around the country.
The issue is of vital interest to Florida's largest payday lender, Tampa-based Amscot. The firm has warned that the federal regulations, as currently proposed, would put it out of business. Privately held Amscot employs about 1,850 people and has annual revenues of more than $200 million.
Over the last few months, the company has asked its customers to contribute to the public comments, listing their name and address, which Amscot mailed to Washington, D.C.. About 560,000 Amscot customers did so, the company said. The majority of the customers chose to sign one of five pre-printed forms prepared by Amscot. One of the letters read in part: "Without this provider in my community, I know my family will suffer."
Industry representatives estimated that about 1.5 million comments have been submitted to the U.S. Consumer Financial Protection Bureau, which is responsible for implementing the new regulations.
"This rule-making has generated enormous interest," said Alex Horowitz, a senior officer for The Pew Charitable Trusts small-dollar loans project. "It demonstrates this is a high-stakes rule-making ... This could save low-income households more than $10 billion a year."
Horowitz and Amscot expect the CFPB to take roughly a year before the new regulations are imposed.
Payday loans are marketed to nearly half of Americans who do not have the cash to cover an unexpected $400 bill.
Amscot this week invited a Tampa Bay Times reporter to look over 102,458 handwritten customer comments, which were split into piles thousands of pages high.
"I am on disability and unfortunately my once a month check does not cover my monthly expenses. I actually rely on the cash advance in order to survive," one Tampa customer wrote. The company asked the Times not to publish the names or addresses of those who wrote the comments. The Times compared a handful of names to public records data and found matches.
"If you changed the cash advance program you will put more stress on familys (sic) that work from paycheck to paycheck," a St. Petersburg customer wrote.
The CFPB in June proposed new regulations to "end payday debt traps" by putting caps on the number and amount of loans that companies would be allowed to provide to customers.
Payday loan opponents want to get rid of triple digit interest rates and other practices they say victimize the poor.
But even opponents acknowledge that the working poor have few existing options outside the payday loan industry. The Pew Charitable Trust has encouraged the CFPB to pass regulations that would make it easier for banks and credit unions to offer small dollar loans at a lower cost to consumers.
The Florida Office of Financial Regulation sets a maximum fee of $10 per $100 borrowed over 31 days. The loans also carry a one-time verification fee of up to $5. Amscot's total fee is $11 per $100. Florida also imposes a $500 cap on loans and limits borrowers to one at a time.
In order to qualify for the loans, customers must have proof of income and a checking account.
Amscot said the letters will be used in a lawsuit against the CFPB if the final regulations threaten the business.
Comments to the CFPB can be submitted at regulations.gov.
Times senior researcher John Martin contributed to this report. Contact Alli Knothe at [email protected] Follow @KnotheA.