A defense of a payday loan giant doing business with Dallas City Hall

(David Woo/Staff)

ACE Cash Express at Abrams and Skillman

Earlier this month, there was an ugly controversy at City Hall over who should do the collections for the city’s municipal courts.

We had to agree that the city should take a deal with a new vendor, MSB, over the incumbent, Linebarger law firm, because MSB made a wildly better offer.

Of course, the whole thing was salted with local politics. it was anything but simple, but in the end MSB won the case.

Then I got some concerning news that I wish I’d have uncovered first. Around the state, MSB uses the company ACE Cash Express for a lot of its collections. Payday lending is a major part of ACE’s business.

Given the city of Dallas’ push against payday lending – and ours for that matter – I was concerned and urged the city not to let MSB send Dallas customers to ACE on fear they will be urged to take out a payday loan and exacerbate their troubles.

That prompted a call from ACE chief executive Jay Shipowitz, who wanted the chance to defend his company. That’s entirely fair, and I want to give him that chance now.

Shipowitz noted that only the tiniest fraction of customers who enter ACE’s to pay collections end up taking out a loan. He cited the figure of 3 of 10,002 last year. No question, that’s a small number. Shipowitz went on to add the following.

There is a commonly held misconception about the relationship of walk-in bill payments and providing short-term credit at the same location. We have been answering, perhaps well-meaning, but misinformed assertions about taking utility and other payments at locations where ACE also offers payday loans for many years.
ACE issued a statement in 2007 to refute the irresponsible “report” issued by the National Consumer Law Center. They have been silent on the issue ever since. I encourage you to read our statement.

The fact is that walk-in bill payers don’t take out loans. Conflating the two transactions does not serve anyone. Denying access to neighborhood retail stores that have expertise to efficiently handle cash transactions will add cost and inconvenience to both the vendor and individuals making their payment.
In the case of MSB, ACE processed walk-in payments for 10,002 customers during the last 12 months in multiple states. Of those, three customers subsequently got a loan.

As the facts clearly show- the misconception that consumers will be lured into payday loans if ACE holds the MSB contract with the city is simply not true.

I remain uncomfortable with the idea that the city would do business with ACE, even through a third party. There is a dissonance in the message. But I accept Shipowitz’s explanation of the two sides of the coin here and hope it informs you on the debate.