Data on how frequently borrowers take out payday loans in Oklahoma, their average amount of indebtedness and other data was once public information until the Florida company that maintains the state’s payday lending database lobbied to have much of the information exempt from the Oklahoma Open Records Act.
Under Oklahoma law, payday lenders have to subscribe to a statewide database that tracks the lending activity of borrowers in the state. Lenders use the database to ensure borrowers have no more than two outstanding loans at any time, as well as to track loan defaults and other data. The database is maintained by the Florida-based company Veritec Solutions LLC.
In 2012, the Oklahoma Legislature passed Senate Bill 1082, which made all information in the state’s payday lending database confidential and exempt from disclosure under the Oklahoma Open Records act, according to the language of the bill.
State Rep. Joe Dorman, D-Rush Springs, one of the sponsors of the bill, said he was approached by Oklahoma City attorney Richard Mildren in 2012, a lobbyist for Veritec, about carrying the legislation. The bill was presented to Dorman as a matter of protecting the sensitive personal information of borrowers, he said.
As recently as 2011, Veritec published an annual 16-page report that contained detailed data on trends in Oklahoma’s payday lending, including the average number of times consumers used payday loans, average amount of indebtedness, as well as charts and graphs that showed data such as transaction volume by month and other data.
Because of the change in state law, Oklahoma Department of Consumer Credit, the agency that regulates payday lenders in the state, would release only a one-page summary of data to The Oklahoman from the Veritec database for each year requested. The data the agency will now release includes number of payday lenders in the state, number and dollar amount of payday loans taken out in the state annually, amount of finance charges and other basic information.
Dorman said that the bill was not intended to help payday lenders evade scrutiny.
“If that’s an issue, it certainly needs to be addressed; that was not the intent of the legislation,” Dorman said. “If the industry is using this as some type of shield, then that needs to be fixed.”
But the Oklahoma Department of Consumer Credit has never released underlying consumer information about borrowers from the database, such as the names, addresses and other personal information about borrowers, said Roy John Martin, general counsel for the Department of Consumer Credit.
“We wouldn’t provide anything that identified a particular borrower,” Martin said.
Using open records request, information from Oklahoma’s payday lending database has been used for reports on payday lending activity by the Pew Charitable Trust and the nonprofit Center for Responsible Lending that showed the industry in a negative light.
A 2011 study by the Center for Responsible Lending that relied on Oklahoma data from 2009 found that the typical payday borrowers are in payday loan debt for most of the year, use payday loans with increasing frequency and borrow higher amounts over time.
The study found that Oklahoma borrowers are indebted an average of 212 days in their first year of payday loan use, and a total of 372 days over two years. The study also found that the size of borrower’s loans typically increase over time.
A 2012 Pew Charitable Trust analysis of state data from Oklahoma found that more borrowers use at least 17 loans in a year than use just one.
“The data continues to show over and over again the consistency of the long-term debt trap of payday lenders,” said Diane Standaert, an attorney for the Center for Responsible Lending.
Standaert said the change in Oklahoma law that now shields much of the data that the Pew and Center for Responsible Lending studies was unprecedented as far as she knew.
Veritec has taken issue in the past with how the data it produces, for Oklahoma and several other states that contract with it, to track payday lending has portrayed payday lending. The company has publicly criticized some of the findings of Center for Responsible Lending’s past studies based on the data.
Nathan Groff said Veritec felt that the Pew study in particular had skewed its research by tossing out data on users who used payday loans once or infrequently.
“It was very misleading to report, and we did not consider that unbiased research,” Groff said.
In 2008, Veritec also issued a press release criticizing some of Center for Responsible Lending’s research on Florida’s payday lending industry as “absolutely wrong” and “making unsupported claims.”
However, the Pew and Center for Responsible Lending studies had nothing to do with its lobbying efforts to shield the payday lender database from the Oklahoma Open Records Act, Groff said.
The company lobbied to have the law changed to better protect consumer data, he said. Veritec moved to lobby the Oklahoma Legislature for the bill after receiving public records request for the borrower’s sensitive underlying personal information, Groff said.
“There’s nothing in Vertiec’s agenda to stop information from being released,” Groff said. “Oklahoma decides what the laws are and what the rules are — we simply enforce them.”