A recent guest column in the Sarasota Herald-Tribune (“Financial Regulators Clear Way For Predatory Lenders,” Sept. 2) twisted Florida’s consumer-friendly regulations for short-term loans, spreading tired myths about a system that worked well for millions of Floridians. As the CEO of a company that offers a range of useful financial products to consumers, I take offense to this portrayal.
I emigrated from Scotland in 1986 and moved with my family to Tampa, where we worked in a small bakery. Turns out we weren’t good at baking. But what we saw were local employees cashing their paychecks at local liquor stores. We wanted to offer an alternative, a place that offered a safe, clean and friendly lobby and offered other convenient services such as money orders and bill payment. This is how the idea of Amscot was born.
Even in the best of times, people sometimes need a little help with an unexpected expense, like a car repair or an unexpected visit to the doctor. This is even more true in the current climate of uncertainty related to COVID-19. This is where small, short-term loans can provide relief to people in difficulty.
Thanks to legislation passed in 2001, Florida has one of the strongest consumer protections in the country. These reforms were passed by a unanimous, bipartisan group of lawmakers who recognized the importance of preserving access to short-term credit – while weeding out unscrupulous lenders.
The authors’ assertion that these loans “create a cycle of indebtedness” is far from true. Under Florida law, a person can only have one loan outstanding at a time, and a mandatory cooling-off period between loans ensures that proceeds from one loan cannot be transferred to another. . Coupled with this with a statewide, 24/7, real-time database, there is no way these loans will pile up.
I wholeheartedly agree with one point made by the authors: every out-of-state lender operating in Florida should be licensed by the state and abide by state law, including compliance with the rate caps of the Florida. The “rent-a-bank” program they rightly criticize is an attempt to circumvent regulations that state legislators have previously passed – regulations that work.
But unfortunately, that is where our political agreements end. The “repayment capacity” rule they advocate is not a regulation, but a prohibition. This ban will harm consumers by subjecting them to mandatory paperwork, unnecessary delays and financial outlays more typical of a home loan. The average loan we make is only around $400, and in many cases consumers simply can’t wait for a long underwriting process to get the funds they need.
And Florida law already requires good underwriting, which is why these loans are repaid on time by more than 98% of borrowers.
The Federal Bureau of Consumer Financial Protection’s proposal for onerous underwriting requirements was clearly not developed with the consumer in mind. According to their own analysis, such a mandate would reduce the availability of small dollar loans by 62%, effectively wiping out an industry in Florida, depriving millions of Floridians of access to credit and destroying thousands of local jobs.
These short-sighted regulations also ignore safeguards currently in place under Florida law that guarantee clear caps on fees, no accrued interest, and a requirement for lenders to offer generous credit terms. grace.
But focusing only on rules and regulations, however strong, ignores the value that these financial services bring to the customers who use them.
Since we opened our doors over 30 years ago, we’ve received millions of comments from customers describing how much they appreciate access to these loans and highlighting the fact that they don’t want us to take them away. These personal stories are the driving force behind what our team does every day.
Florida consumer protections have stood the test of time, and that is a fact that cannot be ignored. The bottom line is that Floridians deserve a full range of safe and reliable options to meet their financial needs – not deceptive scare tactics that paint a picture far from reality.
Ian MacKechnie is the founder and CEO of Amscot and lives with his family in Tampa.