Make us your home page
Instagram

Could payday loans be outlawed? Amscot isn't taking any chances

Amscot founder Ian MacKechnie at the company's Tampa headquarters, with 102,458 handwritten customer comments that were sent to federal regulators. The company says new proposed regulations on the payday loans would drive it out of business.

Amscot founder Ian MacKechnie at the company's Tampa headquarters, with 102,458 handwritten customer comments that were sent to federal regulators. The company says new proposed regulations on the payday loans would drive it out of business.

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.

Previous coverage: Are payday lenders like Tampa-based Amscot a necessary part of the banking industry?

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 aknothe@tampabay.com. Follow @KnotheA.

Amscot payday loans by the numbers

Loans per year: 3.5 million, worth $1.5 billion

500,000 to 600,000 customers per week for all business

Average number of loans per customer per year: 7

Payday loans account for 60 percent of Amscot's annual revenue and 20 percent of business transactions

Could payday loans be outlawed? Amscot isn't taking any chances 10/07/16 [Last modified: Friday, October 7, 2016 3:34pm]
Photo reprints | Article reprints

© 2017 Tampa Bay Times

    

Join the discussion: Click to view comments, add yours

Loading...
  1. Legalized medical marijuana signed into law by Rick Scott

    State Roundup

    TALLAHASSEE — Gov. Rick Scott on Friday signed into law a broader medical marijuana system for the state, following through on a promise he made earlier this month.

    Gov. Rick Scott signed legislation on Friday that legalizes medical marijuana in Florida.
  2. Line of moms welcome Once Upon A Child to Carrollwood

    Business

    CARROLLWOOD — Strollers of all shapes and sizes are lined up in front of the store, and inside, there are racks of children's clothing in every color of the rainbow.

    At Once Upon A Child, you often as many baby strollers outside as you find baby furniture and accessories. It recently opened this location in Carrollwood. Photo by Danielle Hauser
  3. Pastries N Chaat brings North India cuisine to North Tampa

    Business

    TAMPA — Pastries N Chaat, a new restaurant offering Indian street food, opened this week near the University of South Florida.

    The menu at Pastries N Chaat includes a large variety of Biriyani, an entree owners say is beloved by millions. Photo courtesy of Pastries N Chaat.
  4. 'Garbage juice' seen as threat to drinking water in Florida Panhandle county

    Water

    To Waste Management, the nation's largest handler of garbage, the liquid that winds up at the bottom of a landfill is called "leachate," and it can safely be disposed of in a well that's 4,200 feet deep.

    Three samples that were displayed by Jackson County NAACP President Ronstance Pittman at a public meeting on Waste Management's deep well injection proposal. The sample on the left is full of leachate from the Jackson County landfill, the stuff that would be injected into the well. The sample on the right shows leachate after it's been treated at a wastewater treatment plant. The one in the middle is tap water.
  5. Honda denies covering up dangers of Takata air bags

    Autos

    With just a third of the defective Takata air bag inflators replaced nationwide, the corporate blame game of who will take responsibility — and pay — for the issue has shifted into another gear.

    Honda is denying covering up dangers of Takata air bags. | [Scott McIntyre, New York Times]