Senator Eliot Shapleigh - El Paso, Texas

AUSTIN - Texas military families are one of the most vulnerable communities when it comes to predatory lending and insurance practices. That’s why Senator Eliot Shapleigh is trying to pass legislation that will stop this predatory practice.

One of the bills, SB 506, was approved by the Senate last week, and the other bills, S.B. 1479, will be debated on the Senate floor either today or tomorrow.
“When soldiers are off fighting a war for the US, we should fight here for them. Over the years, we have seen predatory lenders who abuse soldiers with high interest rates and repossession of collateral while soldiers are at war. This bill is for that,” said Senator Shapleigh, Chair of the Senate Subcommittee on Base Realignment and Closure.

Here is what the bills do:

S.B. 1479
Members of the military and their families are a prime target for payday lenders. Military personnel are paid regularly, never get laid off, and face penalties for failing to repay debts. This puts them in the bulls eye for payday lenders because the chances of default are very slim. Lenders know they'll recoup their money because they can call the commanders of soldiers who do not pay their debts. Troops who do not pay can face a court-martial and, in some cases, can be discharged.

Payday lending preys upon the cash-strapped citizens of Texas. Many payday loans result in triple-digit interest rates. The financial burden on the borrower and the consequences of being unable to repay lead the borrower to refinance loans, creating an onerous cycle of increasing fees. The relative youth of military personnel leaves them with a lack of sophistication in financial matters, making them particularly ill-equipped to deal with the financial burden produced by payday loans.

The chart and report compiled by Profs. Graves and Peterson detail the excessive numbers of payday lenders that target the Texas military community. S.B. 1479, introduced by Senator Shapleigh, amends §342 of the Texas Finance Code by preventing payday lenders from taking certain actions that are particularly harmful with respect to members of the military. The lenders are prohibited from:
• garnishment of military wages;
• conducting any collection activity against a military customer of their spouse when the military customer is on combat deployment; and
• contacting a commanding officer in an effort to collect.

In addition, lenders must make clear disclosures regarding these regulations. Finally, S.B. 1479 requires that lenders be bound by the terms of any repayment agreement they negotiate through military or third party credit counselors and agree to honor any statement by a military base commander that a specific payday lending location is off-limits.

C.S.S.B. 506
Senator Shapleigh has also introduced C.S.S.B. 506. This bill prohibits an insurer or an insurer's agent from selling a life insurance policy to a member of the United States Armed Forces or a member of the Texas National Guard without notifying the member of less expensive policies that may be available through the federal government. It also requires the state commissioner of insurance to adopt new standards for the marketing of life insurance products to military personnel, and gives the commissioner the authority to revoke an insurer's certificate of authority or an agent's license for non-compliance with those standards.