THE GREAT STATE OF TEXAS FUCKS THE POOR … AS USUAL

The latest travesty forces poor drivers to borrow money from payday lenders charging annual percentage rates that often exceed 500 percent

The Great State of Texas has never been recognized as a welfare state. Unlike New York and California, The Lone Star State has been very stingy with aid to dependent children payments which make it difficult to shelter, clothe and feed a destitute family.

Indigents accused of crimes are provided with court-appointed lawyers, many of whom are only marginally competent and only interested in getting their clients to plead guilty, regardless of any mitigating facts in the case. If attorneys were food, court appointed lawyers would be fast food as compared to a good full meal cooked at home or dished up in a full-service restaurant.

Now Texas is fucking poor drivers to borrow money from payday-lenders in order to meet the State’s Driver Responsibility Program. Since the poor often do not have the money and cannot borrow from banks, they are forced to turn to payday-lenders for short-term loans with annual percentage rates that often exceed 500 percent and when the borrower can’t repay the principal, they repeatedly roll the loans over.

When it comes to its poor, Texas has no shame.

PAYDAY LENDER USED IN DRIVER PAYMENT PROGRAM

By Marty Schladen

El Paso Times
April 9, 2016

AUSTIN -- The revelation last week that payday lender ACE Cash Express is collecting for the Texas’ Driver Responsibility Program amounts to a double whammy for Texans who are struggling to keep their driver’s licenses, their vehicles and their jobs, critics say.

The program has drawn attack because it can trap poor motorists in a cycle of violations and debt.

“This is, in a sense, an official policy to drive people into some of the worst loan products at a desperate time,” Ann Baddour, a policy analyst at Texas Appleseed, said when she learned of ACE’s involvement. Texas Appleseed is a group that studies payday lenders.

Baddour said that part of the payday-lending business model is to trap borrowers into short-term loans with annual percentage rates that often exceed 500 percent and then get them to repeatedly roll them over when the borrower can’t repay the principal.

The Driver Responsibility Program created a set of administrative fees that, in addition to court fines, have to be paid for traffic violations such as drunken driving, no proof of insurance, driving without a license and accumulating too many points.

Officials with Irving-based ACE couldn’t be reached for comment. But industry representatives have argued that payday and auto-title lenders provide cash to people whom old-line financial institutions deem not to be credit-worthy.

El Paso has a special stake in the issue. With its disproportionately large population of working poor, observers say, the city has been hit hard by the Driver Responsibility Program and the payday-lending industry.

The Texas Department of Public Safety, which administers the Driver Responsibility Program, said that ACE collects only a small part of the fees charged and that it hasn’t received any complaints about the Irving-based company. ACE is under contract with Austin-based Municipal Services Bureau, which contracts with the DPS to collect Driver Responsibility Program payments.

“MSB, in consultation with DPS, determined that establishing retail payment centers throughout the state of Texas would provide unbanked or underbanked customers a more convenient opportunity to remit surcharge payments in cash,” Department of Public Safety spokesman Tom Vinger said in an email Friday.

Vinger said ACE also was cheaper than the other two options for those who don’t have bank accounts and have to pay with cash — MoneyGram and Western Union, which charge between $9.50 and $16.95 for each payment. By contrast, ACE charges 75 cents for payments under $20 and $3 for payments greater than that.

Baddour asked why, instead of sending people to a payday lender, the program couldn’t contract with grocery chains such as Albertsons and H-E-B, which commonly collect bill payments.

An employee at a South Austin H-E-B on Friday said it charges $1 to take city utility payments.

Enraged over the state’s latest use of ACE, two Democratic lawmakers said they plan to file bills next year that would prohibit state agencies from using any payday lender to collect Texas fines and fees.

“Texas government needs to decide whether it’s going to work to protect the interests of its citizens or whether it’s going help the business interests of payday lenders,” said state Rep. Chris Turner, D-Grand Prairie.

Turner last year introduced a bill that would have prohibited state agencies such as toll authorities from directly contracting with payday lenders, but he couldn’t get it out of committee. When he learned that ACE was a subcontractor with the Driver Responsibility Program, he declared that the bill he files next session would prohibit that practice as well.

Controversial program

From the time the Legislature enacted the Driver Responsibility Program in 2003, it drew criticism from people who said it falls too heavily on poor people, it hasn’t fulfilled its original goals, it clogged the courts and has cost huge numbers of Texans their driver’s licenses, putting many on the road without insurance.

The program fines range from $300 over three years for driving without a license to $6,000 over three years for driving with a blood-alcohol content of 0.16 or more.

For a variety of reasons — including confusion and poverty — only about half of the fees that have been levied have been paid. Nonpayment results in license suspensions and potentially more penalties under the Driver Responsibility Program.

About 1.3 million Texas licenses have been suspended under the program, which has had a disproportionate impact on El Paso. A 2013 analysis performed for state Rep. Joe Pickett, D-El Paso, showed that four of the 10 Texas ZIP codes with the most fees were in El Paso.

In testimony, lawyers have told Texas legislative committees about clients who have gotten caught in the program, racking up more than $20,000 in fees and making multiple trips to jail for driving with licenses that were suspended for not paying those fees.

“There’s all sorts of problems with the Driver Responsibility Program and how it impacts low-income Texans,” Turner said.

The Texas Association of Business, the conservative Texas Public Policy Foundation, the American Civil Liberties Union, and groups representing local governments, judges and county sheriffs support scrapping it.

It also has failed to achieve its expressed aim, the Texas Criminal Justice Coalition said in a 2013 report. In addition to likely increasing the number of uninsured motorists on Texas roads, it has failed to reduce the number of traffic deaths due to drunken driving, the report said.

“This particular statute has not enhanced public safety in any way that I’ve seen,” Harris County Court at Law 15 Judge Jean Spradling Hughes said last month during a hearing on the program before the Texas House Committee on Public Safety and Homeland Security.

With growing agreement among conservatives and liberals that the program has been a failure, residents might expect that its days would be numbered. However, revenue from it provided $54 million for trauma care last year, and any plan to repeal it would have to find that money somewhere else.

Twofold trap

Vinger, the Department of Public Safety spokesman, said that the Municipal Services Bureau has collected fees for the Driver Responsibility Program since it was enacted in 2004.

The company gets 4 percent of what the program collects plus per-transaction fees that vary based on how bills are paid. Since the company collected $152 million in 2015, that means the Municipal Services Bureau got at least $6 million for its collections.

Vinger said that of the money the company collects, ACE gathered less than 2 percent — or about $3 million — last year.

Texas Sen. José Rodríguez, D-El Paso, said that ACE likely has an ulterior motive.
“They’re wanting to get people hooked on their payday-lending practices,” he said.

Indeed, an ACE employee said as much in 2013, when the El Paso Times learned that the Camino Real Regional Mobility Authority was working to use ACE to collect El Paso tolls.

“We are going to attract customers who have not done business with us, and that's a good opportunity to offer them a lot of the services that we provide,” Linda Martinez, an ACE manager in El Paso, said at the time.

ACE might view such collections as a business opportunity, but Rodriguez said it crushes opportunity for poor Texans who already are trapped under Driver Responsibility Program fees they’re having difficulty paying.

“This is cause for alarm,” Rodríguez, who is chairman of the Senate Democratic Caucus, said.
He explained that it’s all too easy to imagine that someone desperate to keep a valid driver’s license would take out a payday or auto-title loan without understanding how expensive they are.

Federal regulators and charitable groups have long said that when the poor get trapped in payday and auto-title loans, it costs everybody else.

In a 2013 report, the U.S. Consumer Financial Protection Bureau said that 25 percent of payday loan borrowers receive some form of public assistance.

In testimony before the Legislature in 2011, Bishop Joe Vasquez of the Texas Catholic Conference said that the practices of payday lenders forced some Texans to seek help from Catholic Charities and the St. Vincent de Paul Society.

“We are concerned that our charitable dollars are, in effect, funding the profits of payday lenders rather than helping the poor achieve self-sufficiency,” he said.

Rodríguez said that by allowing ACE to collect Driver Responsibility Program payments, the state is putting a further burden on the poor and the charitable and tax-funded institutions that help support them.

“This is something we need to look at,” he said.