House Closes Loophole, Limits Payday Lender Telemarketing

Legislation passed by the House on Wednesday will prohibit payday lenders and auto title loan businesses from placing telemarketing calls to Texans on the "do not call" list. The measure now heads to the Senate. 

House Bill 411 by state Rep. Chris Turner, D-Grand Prairie, closes a loophole that currently allows so-called "credit access businesses" to make unsolicited calls to individuals, regardless of whether the company has an established relationship with them. 

"If you sign up for the 'do not call' list, you expect not to receive unsolicited telemarketing calls," Turner said. "With this, we are closing a loophole." 

Advocates for the bill see it as a positive step toward reining in the payday lending industry, which they say preys on poor and vulnerable individuals, pulling them into financial quicksand where they are pummeled with accumulating interest and late payment fees. 

But some consumer advocates preferred a previous version of the bill that extended the ban on telemarketing calls to all people in Texas, regardless of whether they're on the "do not call" list. The broader measure got preliminary approval in the House on Tuesday — but failed to get the votes needed for final passage on Wednesday.

Following that failed vote, state Rep. Ron Simmons, R-Carrollton, called for reconsideration and introduced an amendment that limited the telemarketing ban to those on the "do not call" list. That struck a balance between commercial freedom and consumer protection that was more palatable to lawmakers who had voted against the earlier version.

"I definitely preferred the previous version of the bill; I think it had more teeth to it," said Ann Baddour, a senior policy analyst at Texas Appleseed, a social advocacy organization. "But at the same time, I am happy to see this measure move forward." 

The bill will not restrict the calls that credit access businesses are able to make to current customers, including those with outstanding debt. As part of an amendment introduced Tuesday, the legislation also stipulates that the businesses will only be allowed to make telemarketing calls for up to one calendar year after all loans have been paid off.

The bill passed with a 109-24 vote.