Legislation was introduced on December 17, 2010 to crack down on storefront payday loan lenders that prey on those vulnerable to payday loans in Texas. Legislation was entered in both the Texas Senate and the House. It is a bipartisan effort, so this has a very good chance of passing and adding additional consumer protection in the state of Texas.

The measures are designed to close a loophole that has enabled 2,800+ payday lending outlets to prey on borrowers without the same oversight as banks and credit unions. These borrowers typically end up refinancing the original loan multiple times, with interest and fees often exceeding 500 percent of the original loan amount.

The bill would limit the interest rate they are charged to 36 percent, the same ceiling in federal legislation signed by former President Bush. Additionally, it would close the loophole in the Credit Service Organization Act that has enabled these lenders to operate with little regulation.