ST. PETERSBURG — Is St. Petersburg mayoral candidate Deveron Gibbons in the predatory loan business?
To hear the customers filtering in and out of the Amscot office on 34th Street S, Gibbons' Amscot Financial is a welcome and convenient service.
"It's clean, they're always friendly, and it's easy," said Sandra Hall, a St. Petersburg office clerk, after cashing a check and getting the free Tootsie Rolls that come with every transaction. "If they weren't here, I'd probably go to a liquor store to do this."
But consumer advocates say Gibbons is part of an industry that preys on cash-strapped Americans and sucks them into a crushing cycle of debt.
"They drain a lot of money out of the community and put a lot of consumers in a debt trap," Jean Ann Fox of the Consumer Federation of America said of "payday lenders" like Amscot.
Gibbons, 36, was hired five years ago to be the face of Amscot, and the privately held company could hardly find a better PR man for an often controversial business. He's a former Tallahassee lobbyist well versed in state lending laws, a gregarious Republican operative who charms top political leaders as easily as inner-city activists.
Amscot's Web site features photo after photo of a smiling vice president Gibbons handing oversized donation checks to local charities. On any given day, you might find him talking to a clerk of court about Amscot's processing the traffic ticket payments or explaining to a local city commissioner what that new Amscot in his district is all about.
"We told Deveron when he came on board, we want you to get in front of every single county commissioner, city council person in every one of the 16 counties and who knows how many municipalities in Florida where Amscot does business and convey what Amscot does, how we service the communities," said Ian Andrew MacKechnie, Gibbons' direct supervisor and son of Amscot's founder of the same name. "It was a tall order, but he's done it. He's done a great job telling our story."
On the St. Petersburg campaign trail, Gibbons has occasionally stretched his responsibilities at Amscot.
"I run a $6.5 billion corporation every day. … That takes real management experience," Gibbons said at a recent candidate forum, though he later stressed to the St. Petersburg Times that he meant to say he helped run the company.
Gibbons deals with public and government relations and, more recently, establishing Amscot as bill-paying centers for governments and corporations. Still, it's a top job in a 2,500-employee company in which Gibbons is senior to all but a handful of officers.
Gibbons has little executive experience but said Amscot has taught him plenty about customer service and efficient management of resources. Amscot colleagues describe a man who would bring to the mayor's office an uncanny knack for working with people of diverse backgrounds and for turning ideas into reality.
"He has a lot of energy. He gets focused on the task. I see him as fearless in terms of approaching people, people who may have another argument or position," said Amscot founder and chief executive Ian MacKechnie, whose company reported $154 million in revenue in 2008.
Still, Gibbons' line of work presents a potential liability for his campaign. For all the customer testimonials and glowing business publication profiles of Amscot in recent years, this is still a company whose CEO, MacKechnie, is barred for life from selling insurance in Florida after a statewide grand jury accused Amscot in 1998 of trying to rip off high-risk car insurance customers.
And it's part of an industry reviled by consumer advocacy groups.
Amscot offers check cashing, money orders, tax preparation, bill paying and other services. Payday loans account for less than 20 percent of the $6 billion in transactions the company handles annually, CEO MacKechnie said.
But that's the service that draws most of the criticism.
"It's crazy to suggest it's a good idea to require people who are already financially strapped to pay triple-digit interest," said Lynn Drysdale, a leading consumer advocate in Florida who works at Jacksonville Area Legal Aid. "If you tout it as something to help people get credit, you're setting them up to dig themselves deeper into a financial hole."
That triple-digit interest rate is a major sore point with Amscot. The reality of payday loans seems to be less nefarious than critics describe but not as benign as Amscot suggests.
Here's how a payday loan works:
Say you need a fast $100, and don't have the money in the bank or a relative to lend it. Is it so outrageous to borrow the money with no collateral and simply pay it back with an extra $11 two weeks later?
That's the Amscot fee — $10 interest and $1 toward a statewide database to track every payday loan — which is clearly stated to any borrower.
Under Florida's 2001 payday loan law, customers can't take out more than one loan at a time and can't roll over any loan beyond its due date. Any customer who realized he can't pay off the loan on time is eligible for a 60-day grace period if he undergoes credit counseling, and the interest rate can't rise for late payers.
Ultimately, there's little a payday lender can do to collect a delinquent loan. Someone who defaults won't be able to obtain another payday loan again, but it won't even show up on a credit report. Amscot estimates that it writes off 14 percent of all payday loans.
"Is Amscot a bad company that is going to hurt people? Look at the legislation. At the end of the day, if you don't pay us, there's nothing we can do to you," said Gibbons, suggesting that Amscot critics either don't understand Florida law or have no clue what it's like to lack access to quick cash. "Predatory lending in Florida cannot exist. What we're doing is helping people become more financially responsible by not getting themselves further in debt or over their head."
Payday lenders are required to note the annual percentage rates, or APRs. The $11 for a two-week $100 loan amounts to a 287 percent APR. But Amscot executives say the federal requirement is misleading for short-term loans like theirs. They liken it to calling the annual rate of a $100-a-night hotel room $36,500, and say their interest payment is far cheaper than someone having to pay a fee for a bounced check or for having to get his power turned back on.
Loans can't be rolled over, but the state's latest comprehensive report on payday lending found that customers on average took out at least eight payday loans annually.
"There is a demand and need for these services. We have never taken advantage of a consumer and never will," CEO MacKechnie said.
The trend nationally, however, is that states are banning payday loans or restricting their annual interest rates to the point that lenders can't stay in business. Amscot, and particularly in-house lobbyist Gibbons, keeps a keen eye on the regulatory climate in Florida and Washington, and Amscot has made nearly $630,000 in political contributions in Florida since 2000, more than half of it to the Florida Republican Party.
Gibbons says he's proud of his career, even if it makes some voters uneasy.
"There are going to be some people who don't want to know the answers and understand the industry, but if people are open minded and want to understand what I do as a businessman every day, they'll take the opportunity to do the research and talk to me," he said.
Adam C. Smith can be reached at firstname.lastname@example.org.