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Civil Rights Groups Defending Predatory Lenders: Priceless
What does Martin Luther King Jr. have to do with payday lenders? Nada, but that hasn't stopped African American leaders from invoking his name as they shill for the credit industry.
Thu Jul. 31, 2008 11:00 PM PDT
Payday lenders and other fringe finance companies are not natural political allies with black political groups. CompuCredit, for instance, was founded by Frank and David Hanna, Georgia businessmen who made a name for themselves in the mid-1990s by turning the nonprofit Blue Cross/Blue Shield of Georgia into a for-profit company and then allegedly plundering its assets. The Hannas have donated heavily to Republican causes, providing some of the largest contributions to former Christian Coalition head Ralph Reed in his failed bid for Georgia's lieutenant governorship. Frank Hanna is affiliated with a group of American Catholics who had lobbied bishops to refuse communion to John Kerry during the 2004 presidential campaign.
Not surprisingly, CompuCredit faced significant obstacles when it came to winning over African American political leaders who tend to be Democrats. But money has helped, as has the strategic employment of African American lobbyists. For instance, CFSA's lobbyist during the Georgia debate last year was Willie Green, a former wide receiver for the Denver Broncos and Carolina Panthers who owns a handful of payday lending outfits. Before the legislature voted on the bill, Green gave an $80,000 loan to Rep. Ron Sailor, an African American legislator who didn't pay it back. Sailor crossed party lines and voted in favor of the Republican bill. Sailor pleaded guilty earlier this year for unrelated money-laundering charges. (The bill failed to pass.)
In 2006, CompuCredit hired J.C. Watts Companies, a firm run by the former Oklahoma congressman, who was the only black Republican in the US House of Representatives when he retired in 2002. CompuCredit paid Watts' firm $60,000 to lobby on its behalf when Congress was considering legislation to cap interest rates on payday loans to members of the military. (The bill passed.) Watts also gave the company entry to the nation's network of historically black colleges and universities, which has been a prime target of the payday loan industry. (CFSA now offers paid internships to students at those schools to work in the corporate offices of big payday lending companies.)
In 2004, Watts and CompuCredit launched a consumer financial literacy initiative through four historically black colleges and universities. The partnership involved CompuCredit's funding market research and the development of a financial literacy curriculum for students. (A call to Watts' company went unreturned.) The notion of payday lenders offering classes on financial literacy is akin to Altria sponsoring anti-smoking classes. After all, as the Center for Responsible Lending's Corbett observes with a laugh, "If they improve financial literacy, black folks would never go to their stores." Yet such programs have been a staple of the industry's PR efforts and they've proliferated with the help of black advocacy groups. ("At this time, CompuCredit is not engaged in any activities directly related to historically black colleges and universities," says CompuCredit's Donahue. "We have never located any services—kiosk, portal, or other presence—on any college campus, and there are no plans to do so.")
In June 2007, when many states were considering bans on payday lending, CFSA launched the "Youth Learn & Save" program, which provides high school and college kids with financial literacy rallies and summits. The programs use a modified curriculum created by the Federal Deposit Insurance Corporation (FDIC) and even feature a workbook that includes a description of a predatory payday loan. Presumably the instructors—payday loan company employees and owners themselves—can offer a unique perspective on that particular subject. A brochure for one seminar held in January this year at a majority black high school in Texas says, "Sharing Dr. King's Dream through Financial Literacy." In June, the National Baptist Congress of Christian Education, the largest and oldest black religious convention in the country, hosted one of the events.
CFSA launched the financial literacy campaign last fall at Jackson State University in Mississippi, along with the National Conference of Black Mayors, which also got money to fund college scholarships. Dora Muhammad, a spokesperson for the NCBM, says that the group no longer works with CFSA. "Once we learned of some of the practices and the impact on the communities, we terminated that relationship," she says.
In addition to the consumer education campaign, CFSA announced that it would partner with the National Black Caucus of States Institute, a public policy research center for black state legislators, to "educate African American legislators and community leaders on critical issues regarding consumer credit." CFSA also recently added a new grant program to its offerings through NBCSI.
Kathleen Moore, CFSA's director of partnering and program development, who previously worked at Habitat for Humanity, insists that such outreach programs have nothing to do with politics or generating business for her members. "I do not promote payday lending. This is part of our giving-back agenda," she says. "None of our outreach is targeted at ethnicity."
Critics can be forgiven, however, for suspecting the worst. Last September, Washington DC's City Council was about to vote on a bill that would cap interest rates on payday loans at 24 percent, effectively banning the practice. CFSA scheduled one of its "Youth Learn & Save" rallies days before the vote. With promises of free food, a rap DJ, and an appearance by Kelvin Boston, the African American host of the PBS show Moneywise, CFSA had gotten several public high schools to let kids out of school for a field trip to a local Boys & Girls Club for a full day of financial literacy training conducted by some of the area's payday lenders. CFSA had also promised to donate $10,000 to expand a Boys & Girls Club financial literacy program at one of the city's poorest, all-black high schools, and to give $100 savings bonds to all the participants. When the DC school chancellor Michelle Rhee got wind of the event, which had not been officially sanctioned, she pulled the plug on it just before it was supposed to take place.
CFSA's Moore, who organized the event, blames the cancellation on industry opponents at the Center for Responsible Lending, who she claims threatened to picket outside. She said CFSA decided to cancel the event rather than endanger the children. "We really did not want young people to be exposed to this ugliness," she says. "It's sad that they would put children in harm's way for a political point."
Moore, who says her group had already spent $40,000 on the rally when it was cancelled, claims that it had nothing to do with the council vote. Did she know about the vote? "Of course I did!" she says, but insists that the DC rally was simply part of the industry's larger community outreach efforts. DC council member Mary Cheh, an original sponsor of the payday bill, isn't buying it. "We're not fools. The timing was exactly right for them to carry on their political campaign," she says.
In the run-up to the DC Council vote on payday lending, the industry continued to reach out to local black organizations. Check 'n Go, a major payday lender, donated a whopping $100,000 to the Anacostia Economic Development Corp., to help minority entrepreneurs. The group is headquartered in the ward of former mayor and now council member Marion Barry, who had been one of the original cosponsors of the payday lending bill. Barry ended up as the lone vote against his own bill, which passed 12-to-1.
Not everyone in the civil rights establishment has signed on with the payday lenders. The NAACP has been active in fighting the industry. In 2003, NAACP chairman Julian Bond told a Utah newspaper, "A drive through any low-income neighborhood clearly indicates people of color are a target market for legalized extortion. Visits to payday stores—which open their doors in low-income neighborhoods at a rate equal to Starbucks opening in affluent ones—are threatening the livelihoods of hardworking families and stripping equity from entire communities." But Corbett says that the industry has succeeded in diluting the black community's response to predatory lending. "Their strategy is to divide and conquer," he says. "If you've picked off Al Sharpton, you've won."
Photo from flickr user pagedooley used under a Creative Commons license.
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African-american. Another label used to promote and perpetuate divide-and-conquer socio-political hyphenated-americanism. I say, 'drop the hyphen, and get down to brass tacks and honest business standards and practices'. Including auditing down all these civil rights groups. Right down to bare metal. Grind away until all the economic 'rust' is gone. I believe Dr. King would have stood for no less than honesty. Nor should we.
CORE and the industry lobby, CFSA, are attempting to overturn an excellent consumer protection bill in Ohio that caps interest rates on payday loans at 28% APR. The industry lobby spent $20 million in Virginia to "buy" higher interest rates. The industry has already spent nearly $1 million in Ohio in just 6 months and it's likely they'll spend nearly $15 million to overturn House Bill 545. For those of you opposed to this predatory and exploitative product, help us in Ohio! Let HB 545 become law!
How about starting with the extortionist practices of the credit cards companies? The high rates quoted for pay day loans are for a year - no one is borrowing money for a year. I've gotten a couple before, and it cost me $14.00 per $100.00, which was more than worth it to avoid having to ask relatives.
By all means inform consumers in large, simple print, but do we need big brother to tell us how we can spend our own money?? NO!! I'm an adult, and I claim the right to make my own financial choices.
Maybe some folks need to focus on the REASONS so many people are struggling financially, instead of trying to further limit taxpayer choices.
Again with the smoke and mirrors, Anna! All payday lenders and their proponents can do is try to change the subject to "bank fees are too high"! I'm with you, sister! Bank fees ARE too high! And 391% for a payday loan is too high! Reasonable limits on interest rates help to prevent payday loan consumers from getting trapped in a cycle of never ending debt. It'd be one thing if everyone used it only once and moved on. However, the average borrower in the great state of Ohio takes out nearly 13 of these exploitative loans per year. Usury is not freedom!
Another example of "predatory reporting." See "Predatory Reporting on Payday Lending" by Donald Rieck, Executive Director of the Statistical Assessment Service (STATS) at George Mason University, a nonprofit, nonpartisan research organization: http://www.huliq.com/64769/predatory-reporting
Even George McGovern opposes the authoritarian price controls, advocated by so-called consumer activists, that would eliminate small loans from the marketplace for millions of Americans by requiring that the loans be offered for a fraction of the cost of issuing them. See http://online.wsj.com/article/SB120485275086518279.html
The opponents of payday lending, in converting the fees for a two-week payday loan into an annual percentage rate and focusing on that, are trying to make it sound as if payday lenders are charging 10 times more for the service than they could be, but that is simply not true. Small-dollar short-term loans (the only type of loan which many people can qualify for) must have a high APR, to be at all profitable, due to the high ratio of the cost of making the loan to the amount being lent. But the APR tells you nothing about how profitable the loan is for the lender or how wise the transaction is for the consumer.
People use payday loans to survive in emergencies or to save money on bank overdraft and other fees which, when calculated as an APR, can be 20 times more expensive. See http://www.cfsa.net/OverdraftProtection.html
Customer satisfaction surveys show that the overwhelming majority of payday loan borrowers are satisfied with their experience and consider the loans to be a useful financial service. See http://www.cfsa.net/customer_demand.html
Any service can be viewed as predatory if you're just looking for a target to criticize. You could say that doctors prey on the sick, accountants prey on those dumbfounded by the tax code, and the entertainment industry preys on the lonely and the bored. Just think how people are tempted to pay huge prices, which they may not be able to afford, to see Billy Joel and Bruce Springsteen in concert - so let's place a cap on the amount Joel and Springsteen can charge for their performances to, say, $100 an hour. Do I need to go on?
And by the way, Ms. Mencimer, were you paid by Mother Jones to write this article?
I would criticize Ms. Mencimer's article in one respect. She mentions an annual interest rate of 300%. In these parts (midwest), 300% would be an atypically LOW interest rate for a payday lender to charge, and rates above 1000% are not unusual.
Here's the core of the problem. At the current rate of interest that banks pay for savings we all lose money to inflation if we try to save. Saving for deferred expenditures has become a sucker's game.
Better to borrow money, buy now, and at least have the use of the goods for a period of time. The banks and the federal reserve have created this mess in which long term planning for consumption is a guaranteed losing proposition. If you get it now and later go bankrupt, at least you had it for a short time. The alternative - the one my Depression era patents would have preferred - of saving for later consumption has been placed beyond the reach of most working and lower middle class families.
The banks, of course, as bankers always do if allowed to, are taking full advantage of this by gouging on interest rates and fees.
It will take a structural change in the economy, directed by the political leaders not bought by the bankers, to change this. But those are exactly the same political leaders who revised the bankruptcy code to please the bankers who are screwing the public.
Mother Jones is performing a valuable service by posting these articles on line. When following the link from my RSS feed, however, I was prevented from reading this article by a giant animated remote control device that waved about on my screen, superimposed over story copy.
The graphic is apparently affiliated with the "Circuit City" banner ad placed above the article. Nice to know who to blame.
All very well to have advertising; it is a necessary evil to support Mother Jones' good work. But they need to stay in the box! I don't need distracting and intrusive graphics that actually cover up the text of the articles.
While some interesting points were made, I disagree with the general tone of the story. Are these companies predatory with their practices? Most definitely, but the fact of the matter is that people sign up with them by choice.
It is the consumer's responsibility to check out the lender before signing up. Of course, Sharpton and Jackson act as shills for these companies - they're little more than common hucksters with little if any care for themselves.
Of course they'd evoke the name of Martin Luther King to peddle their wares; they have such little regard for the communities they purport to defend that they think this to be an effective way of selling their product. And apparently it is.
Instead of pandering stories about the victimized poor, why not do an in-depth report on Sharpton and Jackson, exposing them as the frauds we all know them to be?
Everyone knows PAYDAY lender's are LOAN SHARKS.Well through in Chase, Citigroup and Who knows Who else.People in Chicago are doing some protest against those companies and Corporate America and it is screwing up EVERYONES CREDIT WHO IS GOING TO HELP US? I wrote Owl,Now this one that NO ONE LISTENS.
I did nothing to screw up the banks and I want my money back. Many other WOMEN get run off jobs and THAT SCREWS UP THEIR CREDIT.Big companies can afford to write stuff off I can not.Who is going to set this mess straight???????
If the SCLC really wanted to help the "unbanked," be they black, white, gay or straight, southern or western, they'd start a credit union. That path is fraught w/ peril- the unbanked are often pretty terrible money managers, for a whole bunch of reasons, piss-poor education among them- but better a financial institution owned by its customers than one owned by the robber barons (oops, they're capitalists, not robbers.)
Such an effort would have to include a LOT of member education and some real strict limits on behavior- e.g., "Look, we're all brothers and sisters, and if you don't pay your loans back, you're ripping us off.
PLEASE!!! I am only aware of one American that can honestly call himself African-American. He is running for president. Those so called African Americans(AA) leaders are, unfortunately, a mixture of everything american. They may be black but why call them AA when you never refer to English American, French American, German American, Norwegian American or any other American? So called AA have no other home than American. Slavery wiped out most (easy) trails to any homeland in Africa.
The leaders of the AA community are mostly black pawns recognized by the white(?) press. Black people for the most part, are not being led by these people. When you see them "leading" people, their participation is paid for in order to attractt media to call attention to problems being faced in their communities.
When it comes to laws and bills being passed, they are powerless. So to keep cash coming in to them, they make assinine supportive statements. It is a good game. When the bill passes, they can shrug their shoulders and say, "oh well we tried."
The important thing to remember is that white leaders play the same games with their people and everyone else. They play it even better. Look around then wake up aND SMELL THE COFFEE. The rich are getting richer while they pit the middle and lower socio economic classes against each other to protect their positions. The silly whites in these groups actually identify with upper class, rich whites who don't give a rat's behind about them. Middle and lower class people need to get together to take back their government and make this country of the PEOPLE, by the PEOPLE and for the PEOPLE instead of, of the Congress, by the Congress and for the Congress and their rich contacts who buy them. Forget all of the smokescreens thrown out there to evade the real issues while we continue to loose in every arena of importance.
Gas prices soar and with it the cost of everything else; the nutrition of our food is destroyed, and our work force is decimated. Just think of the number of jobs that will disappear when the effect of high gas prices hits the travel industry. Hotels, restaurants, airlines will all have to cut back. How will our people survive when welfare is only for the the wealthy because they told us how bad it is to provide welfare for the poor. What a laugh. They have the people against the people while the people support subsidies and tax breaks for big business, big pharma, big oil and everyone else who has money. Who cares what Sharpton and SCLC are doing? What your government is doing is far more damaging. Changes here are what matters.
Offering any type of credit card to someone with bad credit simply compounds the problem in the first place. The 'live beyond your means' attitude that permeates the USA and the lending industry's willingness to support it is in large part one of the key reasons why our economy is imploding and our dollar is devaluing at such a rapid rate. This method of self destruction is whole heartedly supported in Washington by demublicans and republocrats alike. Don't worry, if it gets too bad Uncle Sam will just float some more bonds to the Chinese, print some more money, and bail out the idiots in the lending industry again. Only thing is, they'll do it with our money, or what's left of it.
There are people willing to loan money to high-risk borrowers at exorbitant rates. There are borrowers who are willing to accept those loans, for whatever reason. What's the problem? We're dealing with consenting adults here. It's kinda between the lender and borrower, like all activity between adults that doesn't harm others, it's nunyabidniss.
I'm responding to Bob W and Bobbo Max. You've both hit the button. We've gone from a society where thrift was valued- where everyone knew how to 'make do and mend' to one where the advertisers have convinced us that we DESERVE everything we want and we must have it right NOW.Americans pride themselves on being religious but I think this attitude demonstrates a real spiritual vacuum in our country. While I agree that financial education is a key issue (but NOT done by loan sharks!), I think organizations wishing to help Americans who are struggling financially should be setting up credit unions, owned by the communities they serve.
Here we go again, these so-called black leaders who are now getting in bed with the usurious payday lending outfits. No wonder the black community find these people so useless. This shameful shilling for the very people who are putting minorities in greater debt will eventually be repaid. Thanks to MoJo for exposing this type of odious conduct.
You seem to forget (or may not know) that most people who resort to payday loans can ill afford it because few are able to pay back the loan (or its '$14 interest') on time. And many are forced to pay back double what they have borrowed. These lenders are not choices, but predators and for you to defend them on the dubious reason of choice shows an ignorance on the part of those who have learned nothing from the sub-prime mortgage mess.
I do understand the need for short term loans. If one lives paycheck to paycheck & ends up with a unforseen financial need than indeed a high interest loan often places the barrower between a rock & a hard place. However the practice of Usery is never justified. These loan companies must be regulated with limits placed on how much interest they can charge as well as the fees added as penalties. Presently in Arizona there is legislation pending to regulate these loan companies predatory practices without illiminating the companies. There is a need for people to have access for credit for unexpected costs. I truly believe that greed is the driving factor behind these predatory loan company practices. Reasonable profit is fair. There is no point in running a business that does not sustain itself however profiting exsorbently is simply a form of loan sharking & is amoral.
Carol Sue: You said it! What's even more scurrilous is that some of these outfits are owned by banks, which themselves were given free reign by the Republican Congress in their love of deregulation. Now we have a financial implosion that is due in large part to the deregulation of lending institutions, partly because of bundling mortgages into securities and OCDs.
Who upped and made these baffoons leaders anyway? Time for the bwanna appointed "house negroes" to stop the pretense at being leaders, they know what they really are - ass kissing sychophants who are willing to sell their souls for bwanna's greens.
As an African American I want to thank you for your illuminating article. As I read about the involvement of so called black leaders in the "misery explotation market" tears came to my eyes. I guess it goes to show that wolves and sharks come in every hue and color. It has become increasingly clear to me that the battle is no longer one of black versus white. Rather it is a class struggle. And unfortunately, those of us in the middle and lower econmic classes are losing. I only hope that all of us: black, white, brown, red and yellow, begin to realize that we have much more in common than that which divides us. It is high time that we wake up and stop voting for and financially supporting those who do not have our interest in mind. The question is where do we go to have our voices heard? Both major parties in this country have aligned themselves with big business. The media is, for the most part, big business. Our churches have forgotten their mission and are now concerned with building bigger and better monuments as well as enriching the the lives of its leaders, at the expense of its parishoners. We must wake up and take back this country. Or is already too late?
Something needs to be done to expose these civil rights frauds. They are accomplices in the crimes against the poor. Many claim to be gospel preachers. The scripture says he that oppresses the poor oppresses his maker. Jesus said to remember the poor not oppress them. Repent of your sins while there is time. Leadership, especially preachers have the responsibility to be honest and lead the people in the pathways of justice. Stop making merchandise of the people. I pray God will send holy and righteous servants who will tell his people the truth and feed Christ's sheep.
okay mark...explain this then--what is your understanding of the "interest" charged by payday lenders? 391% APR or whatever, right?
thing is, APR is calculated over the course of a YEAR (ergo the "annual" part of those initials). what payday lenders charge, that is a ONE-TIME fee that is stretched out over NO GREATER THAN about thirty DAYS, TOPS! for instance...charging $30 for a $200 loan.
and the benefits? oh, let's start with the ability to MISS OUT on having to use overdraft "protection" from one's bank, especially since it is POLICY for banks to deposit the largest items FIRST in order to capitalize on MANY, MULTIPLE overdraft protection fees, often as high as $25 or even $30!!!
now...which is more predatory??? no, let me rephrase that, because i do NOT believe that giving ppl an option to pay a ONE-TIME fee on a loan to avoid MUCH MUCH BIGGER problems because of overdraft fees and eventually, returned item charges as well.
there is NO WAY we can say that payday loans are even REMOTELY as foul as banks are...ESPECIALLY with the false or misleading advertising going on with these fees. after all, it's ONLY the payday lenders who are forced to post APR. if banks had to do that, we'd be seeing APRs like 1500%! after all, it COULD be considered like a ONE-DAY LOAN, right? that's what it's supposed to be...
IN FACT...i should elaborate a bit.
i am the director of marketing for a collection agency...we have done PLENTY of work for BOTH SIDES (banks/credit cards, and payday loans). i can actually be a neutral observer in this case...and in my objective opinion the public has been GROSSLY misled by so-called consumer advocates, who have fallen in lock-step with the bank lobby, who is hard at work trying to CRUSH the payday lending industry, the ONLY viable COMPETITION to regular "banking" for middle and lower economic strata. they are spouting, word-for-word, the exact, hateful, race-baiting TRIPE that the bankers are TELLING THEM are the true motives behind payday lending.
okay, so we all know that MAKING MONEY is the basis for conducting business of ANY KIND. can we just stipulate to that and move on?
the tricky thing for payday lenders is this: when you choose to provide a loan for individuals lacking decent credit, your RISK is MUCH higher...as is your incidence of default. let's ask ourselves, what is the universal weight used to help even that probability out? that's right...HIGHER RATES or FEES for the use of that money. let's not pretend that banks do not use the same model. hell, they STARTED IT!
so payday lenders charge higher (ONE-TIME!!!!) FEES for their loans. and yes, IF a person were to take out a payday loan each month, it WOULD resemble interest in the classic sense...but isn't that HIS or HER choice to make? whether they should pay THAT fee or pay OTHER, more exhorbitant fees? well, the banks, the bank lobby, so-called consumer advocates (how can they call themselves advocates if they're in favor of RESTRICTING access to financial services for the "under classes" of america???), and apparently even the vaunted mother jones all would like us to ignore those fees, which far surpass anything the payday loan industry is charging. they would like us to ignore the evidence of our own eyes and brains that payday loans provide an OPTION to being more or less FORCED to accept the wretched terms of high-interest, high FEE credit cards (for lower credit scores) and overdraft protection from the banks who will FIGHT, SCRATCH AND CLAW to keep as much of your money as they can, an effort that includes but is not limited to intentionally forcing that larger check through FIRST, even if several SMALLER checks were presented first...because the overdraft fees on three, four, or five SMALL items far exceeds the fee for one LARGE item...and in doing so these banks KNOW that they are beginning a cycle that extends to every payday, as consumers (for whom the advocates are still advocating for, right? except we don't hear their voices on these issues. HYPOCRITES!) often lose the first hundred, two hundred, even three HUNDRED DOLLARS of their checks upon deposit, in large part due to this abhorrent practice.
where are my advocates again?
i want to know what's so wrong with me going to a payday lender and paying $45 on top of that $300 loan that allows me to AVOID as much as 2 or 3 HUNDRED dollars in fees coming off the top of my check in two weeks, all because i THOUGHT i had bounced ONE check for two hundred dollars instead of SEVERAL checks between 20 and 50 dollars...and got KILLED with fees on EACH ITEM. seems to me like i ought to have the RIGHT to choose something different, as long as somebody out there is WILLING to provide that something different.
enter payday lenders. not saying they're my white knights, by any stretch of the imagination. just saying...it's a better option by far. even IF they're forced to post their ONE-TIME FEES as APR...which makes it FICTION, by the way. totally MISLEADING advertising...but it's the government...at the behest of the bank lobby YET AGAIN...who forces this practice upon them.
thing is, any responsible payday loan borrower already knows this, and they STILL choose PDL over the fictional "protection" banks provide against overdrafts.
as for the racial element to this argument...it's a smokescreen. yes, there may be a large percentage of blacks and other minorities taking these loans out...but that simply demonstrates the fiscal UNBALANCE of our SOCIETY in general. there is MORE NEED in these communities, therefore you PLACE yourself IN the communities with the MOST NEED. not saying they don't open up in "middle class" neighborhoods...they DO. in fact, a thorough study was conducted, and the mean income of PDL borrowers was FIRMLY in the MIDDLE of the MIDDLE CLASS incomes. nobody is being victimized, although we all understand that tough times are tough times, and when that happens, no amount of sympathy is going to forestall the progress of destruction if that's just meant to happen. payday lenders understand one important fact: when the tough times REALLY take hold, they are the LAST IN LINE to get paid. again, this is why they MUST charge what they do in order to make money. it is NOT charity, even though payday lenders, maybe as a way to assuage some guilt or maybe not, tend to do a lot of charity work.
and anybody criticizing the motives does not understand the crucial truth to ANY charity: ALL charities rely on GUILT to produce the required funding. ALL of them. so...who cares, just because they're payday lenders.
and so...do i get to be amused and say that all the lip service the bank lobby and their lapdog consumer advocates are paying to look out for the helpless, hapless consumers who just don't know any better than to allow payday lenders to hold the gun to their heads and FORCE them to take the loans out...is that not priceless also?
The major error of your article is assuming that the SCLC and other pro-lending groups are being duped. Your only source for the predatory nature of these loans is "most consumer groups." The only unbiased study I am aware was published by the Federal Reserve of New York (http://www.newyorkfed.org/research/staff_reports/sr309.html). Reverend Sharpton referenced this on his radio show when being criticized for his support of lenders. The conclusion, which is based on states where payday lending was "regulated" out of business, that consumers were worse off. Access to expensive credit is better than access to no credit.
I agree with Reverend Sharpton on this. As an African-American man in the south, I am tired of laws which purport to "help the poor", but at the same time make sure we stay poor. This is exactly what the CRL and many other "consumer groups" want to do.
Payday lenders who loanshark the people are being touted by some as better than no credit at all is a hoax. The advocates of these crooks must be profiting in some way. Don't they see the meltdown throughout the banking industry for making bad loans. People who cannot afford the exorbitant rates are to be denied. To take advantage of people, especially the poor,in desparate straits is first immoral and should be illegal. In some societies it is llegal. A society which permits such exploitation of its citizens is already morally bankrupt. The man on the street knows what goes around comes around. In biblical terms, it means you reap what you sew.
the truth is, the people know about these places.the only reason they dal with them is there is no other option at the time. a change of thought patterns is what is required, but that will never happen. it comes down to this: if someone is willing to take the risk, they will have to pay the price.
you know, CFSA is NOT in the business of defending the industry and the status quo at all cost. in fact, they are often RESPONSIBLE for updated restrictions on payday loans, requirements for consumer financial counseling/education. WHICH, by the way, that was an idea I CAME UP WITH FIVE YEARS AGO...still pished at THAT development...i pitched it at a CFSA conference here in palm springs to several high-level ppl (many of whom were close to billy webster and some of the other bigwigs on the board for CFSA)...and now i see it in practice almost VERBATIM how i pitched it...pretty infuriating. the only real difference is that i was trying to find a software partner to integrate it with payday software. i didn't find a software partner so i couldn't copyright it, and i took a sabbatical for two years, got out of the collection industry for a time...and now look. i'd have been set for life had i been able to deliver a product.
OK, all whining aside...the payday loan industry is vilified for a very good reason (and it AINT what you think it is): they offer a product that is NEEDED...an alternative to just EATING massive repeated fees of $15-$30 PER ITEM covered by overdraft "PROTECTION." it's crap, and if they were ever willing to turn the microscope on THEMSELVES and require THEM to post APRs for overdraft charges, payday loans would look FREE by comparison.
guys, remember, banks all have POLICY that dictates that when an account is close to going into overdraft, they force the LARGEST ITEM(s) FIRST, so that they can apply those charges to NUMEROUS small items...so if there's $300 in an account and a batch of 6 checks comed thru at bill-time, they force the biggest one first, no matter if it was PRESENTED last or not. let's say it's $250, and then the other checks are for trash and water and gas, etc., in the amount of $15, $25, $30, $40, and maybe cable at about $55. NOW...apply the AVERAGE overdraft "protection" fee of $25 to EACH item that bounced (let's say the $55 check was put thru next because it's the next largest...that policy again, even though ANY of the OTHER checks would have been covered had they done the decent thing and put any of THEM thru first)...you have FIVE items, ONE HUNDRED and twenty-five dollars in charges on only $165 worth of checks. AND...had the bank put the smaller checks thru first, our poor consumer would have only had ONE SINGLE overdraft fee on that $250 check or debit. NOW...considering that overdraft fees are assessed in ONE, maybe TWO business days...figure out the APR on THAT and get back to me on what is worse--the $20 ONE-TIME loan fee for a loan of $125 that would have allowed him/her to cover ALL OF THOSE CHECKS.
do not tell me that banks, the source of nearly ALL the bad press about payday loans (bank LOBBY, to be more accurate, who fired up consumer advocates to start this whole anti-PDL PR campaign.)
you gonna tell me that ppl who ordinarily wouldn't qualify for a small loan (nor would the banks want to give such small loans) from a bank--those ppl shouldn't have a place to go, a WAY TO AVOID THOSE FREAKING CRIPPLING FEES.
AND...those fees charged by PDL lenders...they are NOT interest...not according to ANY definition of the word. and if there were not such a high rate of default, they could afford to charge less...but it's just like any store who raises prices to cover high incidence of shoplifting...they have to be able to remain in the black. no different here, and just remind yourselves that these fees from PDL chains are SO MUCH LOWER than overdraft protection charges by banks.
that post about how CFSA was opposing an "INTEREST CAP" of 28% on payday loans??? it ISN'T INTEREST, it's a FLAT FEE. it's actually a proposed CAP on FEES...and no payday lender could survive on that, no way. when your rate of default is anywhere from 5%-12% depending on geography, you can't offer too much of a bargain, y'know? it's a question of...are we elitist enough to think that WE should be entrusted with decisionmaking power over a large portion of our population who make less money (slightly less income than the $50K average per annum) than some of us...and of course we assume (THEY...i don't) that we're smarter than they are and therefore know what's best for them...in this case ppl think that overdraft protection is best for them, rather than the MUCH CHEAPER payday loan product. weird...for a population SO CONCERNED with equal rights not just under the LAW, we sure to take elitist approaches to issues affecting the populations in question, don't we?
sergio...i respect your position, i really do. i just believe YOU have been misled, duped even. you believe what you've been fed, that these ppl are no more than legal loan sharks, literally RAPING our poorer citizens with interest rates that would "SHAME" even credit card companies.
it's just not true, man. do the research, or at least read my post above and challenge yourself to check out my claims.
sure, in a perfect world it COULD be as simple as denying credit to those who live check to check. problem, though. what do you propose to do with those who are about to have power shut off in mid-summer here in my hometown of palm springs, CA when it's 120 degrees with 70% humidity and you need air conditioning to STAY ALIVE???? we have seniors out here on fixed incomes, and if it's towards the end of the month and the cutoff date has arrived and they have NO WAY of getting money...are YOU going to give them money? are ANY of these ppl posting on this thread?
well, we may not, but payday lenders DO IT. and if you don't want to plow through my long post, read the one from joe schultz on august 4th, it says many of the same things (makes the VALID comparison between overdraft protection vs. payday loans...the number one reason we HAVE TO allow the option of payday loans, and with fees that allow the lenders to stay in business and make some money. you think they make as much as banks or credit card companies?
tell you what...my WIFE just paid off ALL her credit cards...know what one of them did? REDUCED her limit. they didn't say as much (used a FALSE rationale, saying she had multiple accts. near limits...when ALL her cards are at zero balance), but you want to know WHY they did it? because if they keep ppl CLOSER to their limits they can charge those sneaky finance charges and overlimit fees. there is no other reason that makes any sense.
anyhow...i challenge you and everybody here who has just fallen in lockstep to supposed consumer advocates to research their claims...the simplistic and repetitive references to FICTIONAL interest rates when referring to ONE-TIME fees (one loan, one fee that never increases, and few IF ANY rollovers allowed, per CFSA lobbying efforts).
and anna: "Again with the smoke and mirrors, Anna! All payday lenders and their proponents can do is try to change the subject to "bank fees are too high"! I'm with you, sister! Bank fees ARE too high! And 391% for a payday loan is too high! Reasonable limits on interest rates help to prevent payday loan consumers from getting trapped in a cycle of never ending debt. It'd be one thing if everyone used it only once and moved on. However, the average borrower in the great state of Ohio takes out nearly 13 of these exploitative loans per year. Usury is not freedom! "--
--look, i respect your perspective, but it ain't a diversion...it's the VERY REASON we NEED payday loans (or SOME alternative for ppl without ready access to limitless cash). come up with a good alternative and i'll jump onboard. but in the meantime...these guys HAVE to charge interest rates that keep THEM in the black, or they lose their shirts b/c of high rates of default.
and it doesn't matter if they take out 50 such loans each year...it STILL beats paying overdraft fees as many as 6, 8, 10 times PER MONTH. costs MUCH more to pay those than to pay the FEE for one payday loan each month. even though i REALLY question that statistic...the validity...know why? because it's really close to the MAXIMUM allowed by law...are we to assume that the entire STATE AVERAGES a number of loans that approaches the very LIMIT that the law allows? i doubt it highly. i always apply my bullpuckey filter to every statistic i see...and if i had seen a number closer to about 7 or even 8 payday loans taken per year i'd be likely to believe it. PDL lenders rely on return business, that's why they pour so much BACK into their communities...guilty consciences or otherwise (ppl who make money ALWAYS feel guilty if they have any conscience). so Anna...do we have access to the research that DEMONSTRATES that 13 per annum AVERAGE??
Subject: Election tools for your state
Comments:
Your state is going to play a key role in the upcoming Presidential Election and our tools will help you in making registration to vote easy and obtaining an absentee ballot.
Please check www.StateDemocracy.org for more information
Dear Madam/ Sir
My name Nhan Van Nguyen and I’m holding a chase credit account but i never received my card from chase yet. I
don’t know how when applied the card from babiruss store. I filled out all my information in the application form already. Then I did not see my card
and the bill send to my home. I got in chase web site and paid the bill, which I have, owned amount: $245.43 to withdraw from my Washington Mutual bank on 02/29/2008 with confirmed # 505021649. I thought that I paid off the bill and did not check my account
again. 4 months later I login in online and saw the amount of this account up to $ 419.06 include late charges and interest for these month even I have not
received any phone call, email or letter from chase let me know my payment was return. Then I called
customer to ask and I got answer my address was wrong that only the street # without house #. I’m concerning
how the way chase approve credit card to customer without house # and never send the card to Customer and still keeping charge for late payment and interest without any note or bill. I’m writing this letter to explain how up set I got. I paid the amount $ 245.43
that I owned already and not going to pay remaining in this account of $ 212.63 because this is not my fault.
I asked them close all chase account I'm holding. Then I sent them a lettler to explain to them, but they continues bill to me for later charges and final. I don't know how to protect my self without going bad credit. Please give me advise.
Sincerely,
Nhan Van Nguyen
BEWARE OF FRONTIER MASTERCARD!
I have had this card for years now and have never been a problem customer, in fact, I just paid my balance in full ($1,425) a few weeks ago.
I went to charge a Christmas gift on my card today and it was declined.
This is how I found out that Barclays had lowered my credit limit. 1 week before Christmas - no notice whatsoever.
I spoke with a colleague and she said her account is always paid in full (monthly) and she was declined at the grocery store yesterday using her Frontier Mastercard. She called Barclays and they said the put a hold on her card because they had charged a camera on it the day before (Christmas Gift). She said they have NEVER done that before.
A lot of us here in my office have a Frontier Mastercard and we are now worried that Barclays is not doing well - maybe going bankrupt, given the current economic situation.
wtf? as a mixed black women i am tired of black people misusing their status as historically disenfranchised people. Predatory lenders are the reason why some black people have really bad credit. Well that and the misguided way we try and spend our money to make up for what we didnt have as a child. But then again, the predatory lenders make it possible to do that.
You do understand what a free market economy is, right? No one forces people to get credit card A, or a payday loan B. People make their own FREE choices. If a consumer thinks an interest rate is too high, go somewhere else! Find a different way to get the loan, something.
Here's a tough concept: LENDING MONEY TO PEOPLE WITH BAD CREDIT IS RISKY, AND IF SOMETHING IS RISKY YOU NEED TO CHARGE MORE TO COVER THOSE WHO DON'T PAY
There, that was not so hard, was it? But if you understood anything about financial services, you would already know that? It's better to just bloviate on subjects on which you have little actual industry knowledge.
How can anyone call payday loans and sub-prime mortgages predatory? When our own black community asked for access to mortgages the lenders gave us and everyone else in America with messed up credit a solution. We got what we wanted but let it backfire in our faces by getting too much of a house that we couldn't afford. We have no one to blame but ourselves. If we want better loans then we need to get our acts together and stop wanting the bling and shine and looking like we got something more than what we can afford. Take responsibility for your actions instead of blaming whitey and everybody else. If you can't afford a payday loan then don't get one. On the other hand, stop blowing all your money at the club on Saturday and you'll have some money. - Jamal (a 6 year American from Jamaica)
Credit Card Processing and Lending Practices
Submitted by Check Processing (not verified) on Tue May. 19, 2009 7:40 PM PDT.
I spoke with a co worker of mine and she was a victim of siimilar lending practices. She eventually solve the problem by working with a community group
16 inch human hair extensions
Submitted by Elvira (not verified) on Sat Oct. 17, 2009 10:48 PM PDT.
Hi all. Man is distinguished from all other creatures by the faculty of laughter.
I am from Bahrain and too bad know English, tell me right I wrote the following sentence: "Combs attained in all horses and batsmen and all part of services removing functions, cheta and pendant."
With love :-D, Elvira.
Predatory Lenders
Submitted by Anonymous (not verified) on Wed Jan. 6, 2010 2:33 PM PST.
Think you have been ripped off? read this story
Predatory lenders find new ways to steal from the elderly Please read our story
About Linear Capital, Barry Silber
America's Mortgage Broker's Llc, Jim Marks
Dale Group, Suzanne Marks of Tampa Florida
Amanda Sigler Realty of Dunnellon, Florida
COMPLAINTS FILED IN HILLSBOROUGH COUNTY, FLORIDA CIVIL DIVISION CASE # 09 13757
PART OF COUNT I, II & III
CRIMINAL USURY,
CIVIL CONSPIRACY,
ILLEGAL LOANS, MISAPPROPRIATED ASSETS, ETC ETC.
UNATHORIZED REAL ESTATE PURCHASES AND SALES,
ESTIMATES BY CONSPRIATORS own statement is 4.5 MILLION.
WAITING FOR RESPONCE FROM SEVERAL
STATE AND FEDERAL LAW ENFORCMENT AGENCYS
NEW COMPAINTS COMING AGAINST MORE PARTIES INVOLVED.
Predatory lenders or Rescue Scamers?
Barry Silber, Jim Marks, Suzanne Marks.
Linear Capital, America's Mortgage Brokers LLC.
Affordable Home Funding, The title Team
Dale Group of Tampa Fl
Amanda Sigler Realty, Dunnellon Fl
324 N. Dale Mabry Hwy
Tampa Florida 33609
United States of America
Phone: 813 514 6200
Web Address:
Category: Was this ORGANIZED CRIME?
NEWS MEDIA TAKE NOTICE... HELP US EXPOSE HOW WE WERE CONNED BY A FAMILY OF PREDATORY LENDERS OUT OF TAMPA FLORIDA
To Whom it may concern,
It is our hope that Law Enforcement and you the media will investigate and expose these people and their companies. they have found a complex way to legally steal from the elderly, if they don't do something about this scam. Why is law enforcement saying that they cant help us? Because the Scamers are not big enough or its not their problem. We have been forced to filed a civil case when I believe it should be a criminal case. ( case # 09 13757 division H ) in circuit court Hillsborogh County, Florida. By the time we are dragged through court they will have milked everything to death and we will be homeless. . My attorney thinks they might have violated some state and federal statutes if they got more then 45% interest. I think its could be as high as 300%. Please read or story and help us stop them from ever doing this again.
Category: Predatory Lending Bait-and-Switch Equity Stripping. Flipping, Steering, Rescue Scamers?
Why Should you Read this story and avoid these PEOPLE and their companies?
Re: Barry Silber, Jim Marks, Suzanne Marks, Amanda Sigler
Here is a comment worthy of note which I found trolling the comments on my blog: Remember if you are dealing with an unscrupulous licensed professional (attorney, mortgage broker, etc.) you can file a grievance with the licensing agency who will investigate, prosecute if necessary, and possibly require restitution.
Comment: [Editor’s Note: If con men looked like crooks they wouldn't’ get anywhere. They always ingratiate themselves and seem like good people interested in helping. They intentionally do not appear to be much different from legitimate lawyers, auditors, debt counseling etc.
A Warning to others having Mortgage problems:
Our family was having some problems with our mortgage, we got behind and were facing a potential foreclosure. We got a lot of the typical rescue mailers telling us that we had the plenty of equity and not to worry. We knew this and we only needed 20 to 50 thousand dollars to bring the loan current. Plus we knew that our family would loan us the money if we needed it, they would sell just one property that would pay off part of our loan at any time. That seemed simple enough,
NOW LET THE BARRY SILBER, JIM MARKS NIGHTMARE BEGIN…
We were approached by a kind broker / lender named Jim Marks out of Tampa Florida who said he could rescue us from a foreclosure and the rates would be very low because we had so much equity in our waterfront home. He said he could find us plenty of money. We were very clear to him that we did not have the income to do any major loan an we only needed a small amount.
THE SCAM: Seeing that we had a lot of equity, Marks gained our trust via some acts of kindness and eventually befriends our family, He showed great concern for our financial problem and found various ways to come to our home. He had lunch many times in our home and invited me out to lunch as his guest many times. He also worked his way into using our boats and waterfront property. He went snorkeling and diving on our boat with his family and we felt that he had a nice family and was sincere. After a while I shared some of our families information regarding investments that had been made. Jim Marks was very interested and wanted to see all the waterfront and residential properties my family had invested in, he also brought out investors to see what we had, later we found out that the investors were his own relatives (Barry Silber the lawyer / hard money lender with LINEAR CAPITIAL of Tampa ). Was Silber directing Marks? Was Marks the front man for either Silber or Linear?
The investor Barry Silber came to our home invited by Marks and talk about a long term Joint Venture and wanted to know if any of my friends had good deals on waterfront properties, I fell for all of it like a sucker and provide what they needed, Silber disappears for a long time but some how comes back as the hard money lender but we did not know that he was Marks relative. Marks is now telling us that we can get any loan from anyone except Silber. I think this is against the law because marks was steering us right into the hands of his relative, Did marks get kickbacks or other profits? Marks got 50% of the corp and many fees after flipping our loans. We shall See about that later during discovery.
I believe that Marks only assisted Barry Silber as a front man who looked for the elderly who had good equity but had problems with a foreclosure. Did Marks and Silber work as a team and structured a deal putting everything into the [deal?] that we already owned, We now believe that everything in the scam was planned from day one Marks even created a corporation for our family. We had no idea what Marks was doing with the company and can only guess that as a JV partner Marks took 50% and gave us 50%, Marks took complete control of everything, sold many lots we had, used the money for other purchases, took out loans without approval from our family. Were Marks and Silber having regular meeting on how to extract more from our family?
Our family was about to sell three of our waterfront lots and an investment home, that would have brought in aprox $300.000.00. Jim Marks said don't do it, put it in the JV and we will do much better later with him in control. So we trusted Marks with everything including the check book. We thought he was our friend and would managed and protect us but boy were we dead wrong.
WAS AMANDA SIGLER INVOLVED? Was Amanda Sigler (a local real estate agent) feeding Jim Marks our personal information as she to befriended our family? Did she assist in taking thousands of dollars worth of personal property without due process. The plan may have been set up from the very beginning to get control of everything we had. How much did Amanda Sigler gain? It is clear now that we were elderly and easily conned, we had a big target on our backs called equity. We were steered by Mr Marks right into what I now believe was nothing more than family of Predatory Lenders.
They tricked me and my family by saying that they could rescue us from a foreclosure but all we got was more flipped loans, prepayment penalties, fees, and high interest rates. All designed to extract equity and get control of our lives. They eventually forced us into a foreclosures, but always stood by with another big loan with additional high cost in order to get them to stop their foreclosures. I think Barry had clauses in the loan agreement that took huge attorney fees if he had to foreclose. He foreclosed and we paid him, stripping more equity from our land. We were trapped.
SETTING THE TRAP: We were forced to meet after hours at their LINEAR CAPITIAL offices in TAMPA to sign more rushed document that we did not really understand. Was this a typical BAIT AND SWITCH? or was the intent to just beat us down? I am very sure that they did not want others to see what they were doing so they had to get us in after hours. (e.s.) We had many questions as documents are being brought to us for signing but Jim Marks was always standing right by our side saying don't worry I got your back and would never let you sign anything that would hurt you or your family. Document were changed for hours by the lawyer/ lender Barry Silber as he re-did document, was this the bait and switch? We were taken out of the room several times and were brought back in when new doc were ready for us to sign. Please note that these two men owned one or more of the Title Company, The Real Estate Company, The Mortgage company and we thought they were the attorneys for everything including the corporation that was created for us.
We did not want to sign anything but we were up against the wall and the mortgages that they gave us were all due again. They took a years worth of payments up front that night and paid themselves many fees. Now we had a new giant mortgage on our home that was due in one year it also had a rider that would take away all our rights to the JV that controlled all our Families properties if we didn't’ pay them back over $500.000.00 within that one year.
We told Marks that we can't pay this loan back and he said don't worry we will sell something in the JV to pay this off or refinance you or the corporation at better rates. We believed that the lawyer Silber would protect our family but we were dead wrong about that too. We now know that the lawyer involved was Mr Mark’s distant relative by marriage who stood to gain a great deal of money if we failed. I believe that this man Barry Silber should be disbarred and put in jail. We were set up to fail because after many months of Jim Marks infiltration into our family, they knew everything about us and our family and knew we had good equity to take.
SILBERS ETHICAL DUTY: It was Silber duty to not let this kind of thing to happen to anyone but was he after our land and equity as was Mr Marks from the very beginning? Barry Silber was also part of the company that gave us one or more of the mortgages. Before that year was up Barry Silber started foreclosure on our home and then said that they could not lend any more money. They got control of the land and the corporation (RSI LLC) via the attached default to our mortgage and started to sell everything. All our future income was now in their hands. What is astounding is that our Mortgage on our home is now over $ 1 million dollars. They sold several of our residential properties and took most of the cash without our permission. How did this happen and when will they be prosecuted?
THE SUCKERS: How did we allow some one to take all our families properties? First: We allowed Jim Marks in because he had all the answers to many problems we had and he was saving us from a foreclosure. We eventually trusted Jim Marks completely as a friend and business partner. But now we see that he was clearly working his way into our family and eventually found out every aspect of our assets and liabilities so that he could make his move and set the trap. Second: We were not very smart with our finances. Third: We were not smart enough to see the scam because we were blinded by his promises and trusted him because he said he could handle everything properly.
Now we see that they were all very smart men and we were conned over and over again into trusting a family of hard money predatory lenders who had one motivation and that was to milk us of all our equity by what ever means possible. We all feel very bad because we let this happen to our families holdings. We believe that state and federal laws have been broken AND WE HAVE BEEN IN CONTACT WITH EVERY AGENCY POSSIBLE Including our Governor SEEKING JUSTICE. FROM LOCAL LAW ENFORCEMENT TO THE UNITED STATES ATTORNEY GENERAL AND EVERYTHING IN BETWEEN. WE ARE ALSO FILING COMPLANTES WITH THE FLA BAR AND OTHER AGENCYS THAT CONTROL THE LIC OF THESE MEN IN THE HOPE THAT JUSTICE WILL BE SERVED. Law enforcement and media take notice...We would like others to give their own story about these people or like kind cases.
The KILL SHOT: This was the last statement from Mr Marks, He strongly advised us that we should quick claim our home to his wife's relatives to avoid another foreclosure. So Don't ever fall for someone trying to rescue you with a hand of friendship. Report Predatory lenders and Mortgage fraud abuse to everyone. Expose these people when found.
Put them in jail if crimes have been committed I can tell all of you that this web site has helped in several ways. Keep it going
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