December 22, 2015

Ace Cash Express (ACE) has filed a petition for review with the Supreme Court. The petition comes on the heels of the appellate court’s dismissal of ACE’s attempt to invalidate the City of Denton’s payday lending ordinance. ACE initially filed a suit against the city in a civil court, arguing that the ordinance exceeded the city’s police power, violated due process, and exceeded the city’s constitutional authority. The trial court determined that it did not have jurisdiction over the lawsuit, and that the proper place to challenge a criminal ordinance is a criminal court, not a civil court. ACE appealed the trial court’s decision to the Fort Worth Court of Appeals, which also ruled in favor of the city and dismissed the case.

In its petition for review, ACE contends that its lawsuit fits within an exception to the general rule that a criminal ordinance should be challenged only in criminal court. ACE relies on a Texas Supreme Court decision from 1894 to do so. Further, because the city has not prosecuted ACE in municipal court, ACE argues that it has no other way to challenge the city ordinance than in civil court. In short, ACE is arguing that the appellate court erred because it distinguished ACE’s justification for a lawsuit from the facts in the 1894 decision, and that the Supreme Court must step in to clarify the impact of its previous decision.

The League will monitor and report on any significant developments in the case.

December 9, 2015

Cities that have adopted, or are considering the adoption of, an ordinance regulating payday and auto title lenders should consult with their city attorneys about the potential impact of a recent United States Supreme Court ruling, Los Angeles Versus Patel (PDF). In that case, the Court held 5-4 that the city’s ordinance allowing police officers to inspect hotel registries without a warrant or subpoena violated the Fourth Amendment. The court emphasized that administrative searches generally require pre-compliance review before a neutral decision maker.

Most Texas cities’ payday ordinances contain a provision authorizing city inspection of a credit access business’s records upon request by the city. Although the Los Angeles Versus Patel decision has no direct bearing upon city payday ordinances, cities interested in adopting an ordinance should discuss any record inspection provision with their attorneys in light of the Supreme Court’s ruling.

November 11, 2015

On October 30, the Office of Consumer Credit Commissioner (OCCC) published proposed administrative rules in the Texas Register regarding some aspects of payday and auto title lending. Among other things, the proposed rules outline:

  • The factors the OCCC will consider when reviewing criminal history information and grounds for denial, suspension, and revocation of a credit access business license
  • OCCC’s examination and investigation authority regarding credit access businesses
  • The record-keeping requirements applicable to credit access businesses

Interested cities can review the proposed rules here.

Comments on the proposal may be submitted by email to in writing to:
Laurie Hobbs, Assistant General Counsel
Office of Consumer Credit Commissioner
2601 North Lamar Boulevard
Austin, Texas 78705-4207

To be considered, a written comment must be received at or before 5 p.m. on November 30, 2015.

August 12, 2015

On August 11, 2015, Corpus Christi became the 26th Texas city to adopt business regulations governing payday and auto title lenders. The ordinance will be effective 90 days from passage. During the weeks preceding the city’s adoption of the ordinance, the Consumer Service Alliance of Texas (CSAT), the statewide trade association for credit access businesses in Texas, made numerous comments on the city’s actions.

CSAT pointed out that the federal Consumer Finance Protection Bureau (CFPB) has made public their proposed rules for short term consumer lending across the country. CSAT claimed in an email to the city that the ordinance (which is the example provided at the bottom of this page) “would be in direct conflict with many of the provisions being considered by the CFPB, and would make you the first city (to my knowledge) in Texas to adopt this flawed and capricious ordinance.” In response, Corpus Christi Mayor Nelda Martinez stated that “many people who take out these loans get trapped and end up losing everything, it sets them up for failure. We are going to protect those who we were elected to protect.” View the CSAT Comments and the City's Response (PDF).

June 12, 2015

On June 4, the Fort Worth Court of Appeals issued a memorandum opinion in the case of Ace Cash Express, Inc. Versus City of Denton. Ace Cash Express claimed that Denton’s ordinance (which is essentially the same as the example available on this page) overwhelmed customers, increased default rates, caused a significant decrease in revenue, and could lead to the closure of at least one of its two Denton locations. It sought an injunction and declaratory judgment that the ordinance exceeded Denton’s police power, violated due process, and exceeded the city’s constitutional authority. The court disagreed, holding for the city on all claims. The opinion is available under “Denton” on the Lawsuit Pleadings page.