PAYDAY LENDER INFLUENCE

IN FLORIDA

Do Lawmakers Represent Residents or Payday Donors and Lobbyists?

FEBRUARY 2018

CENTER

PAYDAY LENDER INFLUENCE IN FLORIDA February 2018

1

INTRODUCTION Payday loan companies are counting on a fast-moving bill in Florida to protect their predatory business model. With uncertainty at the federal level around a Consumer Financial Protection Bureau (CFPB) rule aimed at reining in the worst abuses in the industry, payday executives are seeking ways around the rule at the state level, and they’re using the traditional playbook to get what they want—campaign cash plus lobbying. Despite failed attempts last year in 10 states,1 the industry is trying in Florida to pass legislation (SB 920/HB 857) to allow so-called “installment loans,” with interest rates above 200 annual percentage rate (APR), a rate that can trap many customers in a cycle of debt. Payday lenders’ installment loans are structured as longer, higher-dollar versions of payday loans, with similar hazards. At stake is the financial stability and wellbeing of low-income Florida residents—more than 3 million are payday customers. The industry has already drained more than $2.5 billion in fees from Floridians over a recent decade and charges APRs that average 278 percent, according to a 2016 report by the Center for Responsible Lending (CRL).2 The more than 900 payday stores in the state outnumber Starbucks locations and are concentrated in the state's Black and Latino communities. The share of seniors taking out payday loans more than doubled during that same period. The industry tends to target vulnerable populations and depend on their ongoing debt to boost profits—83 percent of payday loans in Florida went to people stuck in seven or more loans per year, according to data from Florida’s banking regulator. Despite the well-known predatory nature of the industry, legislation to expand the payday model is moving swiftly through the Florida legislature before the session ends on March 9. This is happening amidst broad opposition from the very communities payday lenders claim to serve—the NAACP Florida State Conference, UnidosUS, and AARP Florida all oppose the bill, along with the Florida Conference of Catholic Bishops, 11th District Episcopal AME Church, and many others. So why is this payday bill sailing through committee votes? Part of the explanation is copious campaign cash from the industry, paired with high-priced lobbying. Together, payday industry campaign money and lobbying expenditures since 2007 add up to at least $8 million.3

1 Kevin Wack, “States mull loosening of laws in response to CFPB payday rule,” American Banker, February 1, 2018. Accessed February 25, 2018: https://www.americanbanker.com/news/states-mull-loosening-of-laws-in-response-to-cfpb-payday-rule 2 Brandon Coleman and Delvin Davis, “Perfect Storm: Payday Lenders Harm Florida Consumers Despite State Law,” Center for Responsible Lending, March 2016. Accessed February 20, 2018: http://www.responsiblelending.org/sites/default/files/nodes/files/research-publication/crl_perfect_storm_florida_mar2016_0.pdf 3 Campaign contribution figures are based on analysis of data downloaded on February 9, 2018 from the National Institute on Money in State Politics (NIMSP) and contribution data downloaded on February 18, 2018 from the Florida Department of State’s Campaign Finance Database. Lobbying expenditure figures are based on data from NIMSP for 2007 through 2016, as well as 2017 and 2018 aggregated compensation reports downloaded from FloridaLobbyist.Gov (for lobbying the Florida legislature).

Together, payday industry campaign money and lobbying expenditures since 2007 add up to at least $8 million.

PAYDAY LENDER INFLUENCE IN FLORIDA February 2018

2

PAYDAY LENDERS SHOWER LAWMAKERS WITH CAMPAIGN CASH Payday lenders have made nearly $3 million in campaign contributions since the 2008 election cycle to Florida state candidates, party committees, and candidate-affiliated PACs (including leadership PACs). The heightened spending in the 2010 cycle likely relates to the open gubernatorial seat, won by Gov. Rick Scott. That cycle, the industry gave $315,750 to the Florida Republican Party and about half that amount to the Florida Democratic Party. Only halfway through the 2018 cycle, payday lenders are giving heavily and appear to be headed for a new record high. The two payday companies that give the most campaign cash, Amscot Financial and Advance America, are also the two companies with the largest footprints in the state. Amscot, with over 200 stores in Florida, is the top donor with nearly $1.7 million to politicians in recent years. The company's record in Florida includes pleading guilty to civil racketeering charges in 19984 and a lifetime ban on selling insurance in Florida for Amscot’s founder and CEO, Ian MacKechnie, in exchange for the state dropping criminal fraud charges.5 But MacKechnie successfully protected his billion-dollar payday business, using cash gifts to make friends at the state and federal level,6 as well as among non-profit and civil rights organizations.7

4 Alli Knothe, “Are payday lenders like Tampa-based Amscot a necessary part of the banking industry?” Tampa Bay Times, July 22, 2016. Accessed February 21, 2018: http://www.tampabay.com/news/business/are-payday-lenders-like-tampa-based-amscot-a-necessary-part-of-the-banking/2286447 5 "Amscot Owner Ordered Out Of Insurance Business," Property and Casualty.com, August 17, 1998. Accessed February 26, 2018: https://www.propertyandcasualty.com/doc/amscot-owner-ordered-out-of-insurance-busines-0001 6 Donor Lookup results provided by the Center for Responsive Politics, accessed February 26, 2018: https://www.opensecrets.org/donor-lookup/results?name=mackechnie%2C+ian 7 "Amscot Financial Presents $100,000 Gift to Urban Leagues in the State of Florida," Business Wire, August 22, 2017. Accessed February 26, 2018: https://www.businesswire.com/news/home/20170822005689/en/Amscot-Financial-Presents-100000-Gift-Urban-Leagues

Table 1. Campaign Money Totals by Election Cycle to Candidates and Committees*

TWO YEAR CYCLE TOTAL 2008 $432,950 2010 $583,750 2012 $448,153 2014 $535,000 2016 $525,930 2018** $449,585 Total $2,975,367

*Party and candidate-affiliated committees **Partial cycle

Table 2. Campaign Money Totals by Payday Donor

DONOR TOTAL SINCE 2007 Amscot Financial $1,687,580 Advance America $765,938 Dollar Financial Group $274,020 Cash America International* $148,500 Check Into Cash $39,280 Checksmart Financial Co $25,350 Ace Cash Express $10,400 Financial Service Center Of Florida $19,300 Community Financial Services Assn $5,000 Total $2,975,367

*Cash America was licensed as a payday lender through 2014. Donations from Cash America through 2014 were included.

$432,950

$583,750

$448,153

$535,000 $525,930

$449,585

$0

$200,000

$400,000

$600,000

$800,000

2008 2010 2012 2014 2016 2018**

PAYDAY LENDER INFLUENCE IN FLORIDA February 2018

3

Like many special interest donors, payday lenders spend heavily at the wholesale level, giving to party committees that can then spend strategically on key races and candidates. The top recipient of payday campaign cash over the past decade was the Florida Republican Party, which took over $1.1 million in donations. The Florida Republican Senatorial committee netted another $112,500. The Florida Democratic Party took at least $412,500. And Let's Get to Work, the PAC supporting Gov. Rick Scott, raised at least $175,110 from payday interests. The state senator championing SB 920, Sen. Rob Bradley, has taken donations directly to his campaign committee (at least $1,500), and he's taken much more through his PAC, Working for Florida's Families ($17,500). Lawmakers often take advantage of larger checks to PACs, since donations to their campaign committees are limited to smaller amounts. Other candidate-affiliated PACs taking large sums from the payday industry belong to powerful legislative leaders, including House Speaker Rick Corcoran's Watchdog PAC ($25,000). When making contributions directly to candidates' campaign committees, payday lenders have again targeted leaders, including Senate President Joe Negron ($10,000), Senate Majority Leader Wilton Simpson ($7,000), and Sen. Lizbeth Benacquisto ($6,000), chair of the Senate Rules committee where the bill will soon be heard in its final Senate committee stop. Also, just shy of the top recipient list is Sen. Oscar Braynon, who is co-sponsoring the payday bill and has taken at least $4,000.

Table 3. Campaign Money Totals by Top Party Committee or Candidate-Affiliated PAC Recipients

PARTY OR CANDIDATE-AFFILIATED PAC* TOTAL SINCE 2007 Florida Republican Party $1,114,953 Florida Democratic Party $412,500 Let's Get To Work $175,110 Florida Republican Senatorial Campaign $112,500 Florida Leadership Committee $34,500 The Conservative $32,500 Watchdog PAC $25,000 Innovate Florida $25,000 Floridians For Economic Freedom $22,500 Floridians For Common Sense $18,500 Working For Florida's Families $17,500 Floridians For Strong Leadership $17,500 Justice For All $15,000 Jobs For Florida $15,000 Florida Grown PC $15,000 Florida Democratic Legislative Campaign $15,000 Rebuild Florida $12,500 Protect Florida Families $12,500 Friends Of Dana Young $12,500 Conservative Principles For Florida $12,500

*Leadership PACs and super PACs. Some may be affiliated with legislators who are no longer in office.

Table 4. Campaign Money Totals by Top Candidate Recipients, Among Current State Legislators

CANDIDATE CHAMBER TOTAL SINCE 2007 Dana Young Senate $10,500 Joe Negron Senate $10,000 Anitere Flores Senate $7,000 Wilton Simpson Senate $7,000 Bobby Powell Jr. Senate $7,000 Darryl Ervin Rouson Senate $6,750 Kelli Stargel Senate $6,500 Ross Spano House $6,500 Chris Latvala House $6,500 Lizbeth Benacquisto Senate $6,000 Dorothy L. Hukill Senate $6,000 Jeffrey R. Brandes Senate $6,000 David Santiago House $6,000 Denise Grimsley Senate $5,500 Jeff Brandes Senate $5,000 Tom Lee Senate $5,000 Wengay Newton House $5,000 Kathleen Peters House $5,000 Paul Renner House $5,000

Note: These totals only reflect donations directly to candidate campaign committees. Total amounts controlled by a candidate would also include donations to leadership PACs.

PAYDAY LENDER INFLUENCE IN FLORIDA February 2018

4

On the House side, the primary bill sponsor, Rep. Jamie Grant, took at least $3,000 directly and another $5,000 through his PAC, Floridians for Liberty and Innovation. House co-sponsor and Democratic leader Janet Cruz also took at least $3,000 to her state campaign committee in the past. This cycle, Cruz is running for a county level seat (Hillsborough County Commissioner). Since September 2017, her county campaign committee has taken another $3,000 from the payday industry: $2,000 from Amscot and $1,000 from Advance America (these are maximum level checks allowed per election, primary or general).8 The $1,000 check from Advance America came on December 4, 2017, the same day the House payday bill (HB 857) was filed, with Rep. Cruz listed as a co-sponsor.9 Cruz mentioned both of these payday lenders by name in her defense of the bill while in the House Commerce Committee.

CAMPAIGN CASH IS BACKED UP WITH LOBBYING Over the past decade, the $3 million in campaign cash from the industry has been coupled with $5 million spent on lobbying, by individuals and firms with close ties to Florida politicians. The Florida Community Financial Services Association, a trade group that includes payday companies, spent more than $1 million on lobbying and currently enlists 16 registered lobbyists.10 Amscot also spent $1 million on lobbying this past decade. Among their 11 current lobbyists are well-connected former Democratic lawmakers: ex-U.S. Rep. Kendrick Meek and ex-Florida Rep. Joe Gibbons.11 Both the Florida Community Financial Services Association and Amscot employ the well-established lobbying firm Metz Husband & Daughton PA, among others. Texas-based Cash America International, licensed in Florida to offer payday loans until recently, spent nearly $1.2 million on Florida lobbying between 2007 and 2014. Cash America was the first payday company the CFPB took enforcement action against in 2013, for overcharging military members (and thus violating the federal Military Lending Act) and deleting or hiding evidence from the CFPB, among other charges.12

Table 6. Lobbying Expenditure Totals By Payday Organization

PAYDAY COMPANY OR TRADE GROUP TOTAL SINCE 2007 Cash America International* $1,175,000 Florida Community Financial Services Assn $1,060,000 Amscot Financial $1,025,000 Community Financial Services Assn Of America $900,000 Dollar Financial Group $420,000 CNU Online Holdings $335,000 Financial Service Center Of Florida $200,000 Total $5,115,000 *Cash America was licensed as a payday lender through 2014. Lobbying expenditures by Cash America through 2014 were included.

8 Hillsborough County Financial Report Transaction Search Page, accessed February 26, 2018: https://www.votehillsborough.org/About-Office-Holders-Candidates/Candidate-Finance-Search 9 Florida Senate legislative information on HB 857, accessed February 26, 2018: https://www.flsenate.gov/Session/Bill/2018/857 10 Florida Lobbyist Registration Office, accessed February 22, 2018: https://floridalobbyist.gov/LobbyistInformation/GetLobbyistPrincipal 11 Gray Rohrer, "Lawmakers back longer, higher-interest payday loans," Orlando Sentinel, January 18, 2018. Accessed February 22, 2018: http://www.orlandosentinel.com/news/politics/political-pulse/os-payday-lenders-bill-20180118-story.html 12 Sheryl Harris, "Cash America to pay $19 million - most in refunds - in CFPB's first payday action," The Plain Dealer, November 20, 2013. Accessed February 22, 2018: http://www.cleveland.com/consumeraffairs/index.ssf/2013/11/cash_america_to_pay_19_million.html

PAYDAY LENDER INFLUENCE IN FLORIDA February 2018

5

CONCLUSION

The payday industry’s power over legislators results in policymaking that allows the industry to trap millions of Florida residents in a cycle of debt that’s hard to escape. While payday CEOs profit, their customers struggle to get by. Public policy shouldn’t be based on how much campaign cash an industry can give, but about what’s best for the public. Lawmakers who’ve taken big bucks from these lenders are rushing the industry-backed bill through the legislature, when instead they should listen to constituents who are expressing opposition to predatory lending. Lawmakers should make these loans safer by capping interest rates and supporting access to alternative products and tools that promote financial capability. And, importantly, we need to overhaul our campaign finance system, which prizes campaign cash and lobbyists over the needs of ordinary people. We need a system that allows candidates to run for office on the strength of their ideas and grassroots support, irrespective of whether they’re wealthy or have access to big campaign donors. Creating a small-donor matching program, or similar system to raise the voices of everyday people in politics, would go a long way toward creating a government that’s truly of, by, and for the people. Florida Consumer Action Network (FCAN) is a grassroots organization which empowers citizens to influence public policy on issues including finance, insurance, utilities, and transportation. Established in 1984, FCAN stands for an America where everyone gets their fair share, does their fair share, and pays their fair share; and where everyone plays by the same rules. Every Voice Center is a national organization that works to ensure that everyone is heard in America’s democracy by amplifying the voices of everyday people and reducing the influence of big money in politics. We believe our government should work for everyone, not just the rich and powerful. Learn more at EveryVoice.org.