Serving the Church in Texas

HB 3947: strikes at payday lending reform

Michael Barba

The Texas Catholic Conference of Bishops opposes HB 3947.

Bill Analysis. HB 3947 establishes that a suit may be filed by a state-licensed business in district court against a municipal regulation if:

  • the municipal regulation is more burdensome than the state regulation, or
  • the municipal regulation would result in an adverse economic impact on the business.

Moreover, under HB 3947, the licensed business must show by a preponderance of the evidence[1] that the local regulation substantially burdens his/her right to engage in work authorized and regulated by the state. If the licensee does so, the municipality must show by clear and convincing evidence[2] that:

  • the regulation does not conflict with state law, and
  • is necessary and narrowly tailored to protect the public’s health and safety.

Cause for Opposition. We recognize that it is legitimate to protect the livelihood of working Texans, but it is precisely this concern which moves us to oppose this bill: the TCCB has worked for years to curb the abusive practices of payday and auto title lenders. To date, 42 cities have established regulations to reform the industry and protect borrowers. This bill would provide a path by which the industry could strike down the reforms, and again pull Texans into a cycle of debt.
[1] This standard requires the business to show that a particular fact or event was more likely than not to have occurred; at least 51 percent of the evidence must favor the business’ contention.
[2] This standard requires the municipality to prove that a particular fact is substantially more likely than not to be true; in other words, there must be a high probability of truth. This standard is higher than “preponderance of the evidence,” but lower than “beyond a reasonable doubt,” which is used in criminal cases.