Ohio Payday Lenders Lie, Bribe The Homeless In Attempt To Overturn Usury Limits
Ohio payday lenders, still smarting from their punch in the face, are turning to lies and deceit to qualify a ballot initiative that would overturn the state's recently approved usury limits. The industry's petition gatherers are telling people that the initiative would "lower interest rates," even though it would raise the maximum allowable APR from 28% to an astounding 391%. They're also giving dollars to illiterate homeless people who sign the petition.
Serve City director Kay Waldo said she felt the people at the shelter were victims of a crime.
"Absolutely," she said. "I think they take advantage of the people here. I really do."
Waldo claimed that some of the people at the shelter don't even know how to read.
"They're being asked to sign something without even being able to read it," she added. "It's a crime as far as I look at it."
"If something was said incorrectly, let the circulator's name be obtained and we will take swift action to investigate and remove that employee if necessary." Norris added.
The payday lending industry, of course, has plenty of experience taking advantage of people.
WCPN produced a segment on the dirty industry's dirty campaign:
We're won't feign surprise that payday lenders are resorting to underhanded tactics. Usury laws, election laws, ethics; it's all the same crock of unreasonable bullshit to them.
Ohio Payday Lenders Caught Lying in Ballot Initiative Signature Drive [Consumer Law & Policy Blog via Caveat Emptor]
Payday Loan Petitions Doubted [WCPN]
Ohio Payday Lending Law Change Battle Heats Up [WCPO]
PREVIOUSLY: Ohio Passes Legislation That Will Punch Payday Lending Industry In The Face
Ohio Senate Passes Strict Lending Legislation, Prepares To Punch Payday Lenders In The Face
Ohio Punches Payday Lending Industry In The Face, Breaks Its Nose, And Laughs
(AP Photo/Seth Perlman)
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Comments:
@Pylon83: I disagree. These guys are barely legal loan sharks. And besides, these are not "legitimate" businesses if the state passes legislation stating the highest "legitimate" APR is 28%.
These guys are predatory vultures. They don't "help out single moms". That's a cop out and a lie.
@Pylon83: That sounds like some load of crap their petition gatherer's would throw out. Sure you're not one of them?
Payday lenders would not exist if there was not a demand. Ohio putting them out of business is anti-capitalistic and anti-American.
@Nakko: well said.
payday lenders are a scam. they operate here in SC with the ridiculous %300+ rate and get away with it. the law in SC puts a limit on how many loans you can get at a lender in a certain period of time, so they open new branches under different names right near each other to bypass this law and allow more frequent repeat loans.
if they weren't so involved with the local government, i believe that they would already be out of business altogether.
@Pylon83: Assuredly that 391% APR is crafted with the suffering single mother in mind. Sounds really helpful.
Wow... we have two Payday Lender Trolls this morning.
Full disclosure, laserjobs and Pylon83: which payday lenders do you work for?
@laserjobs: but they prey upon the poor who don't qualify for a decent loan or don't read the fine print. it is deceptive and shady to advertise a rate and then stack in various fees to jack it up to nearly %400.
%29 is a perfectly reasonable price gouge for a higher risk loan considering that someone with good credit can get a loan for %4 to %7.
I would think that paying a high interest rate is better than not getting the money at all. The problems with Payday loans don't stem from one time or occasional users, they stem from those who repeatedly use the services. The government isn't supposed to be a babysitter to protect people from themselves. That said, I don't necessarily believe that loan sharking should be illegal, save for their unsavory collection methods. It's simply a contract. If one party doesn't like the terms, walk away. Freedom to contract is a pretty basic right that the government shouldn't be dabbling in. It's all about personal choices and responsibility.
@Caroofikus: It is the same load of crap that the petition gatherers are spewing.
They're even putting out commercials with that crap in it.
It's annoying, to say the least.
News reports indicate mainstream banks are already filling the gap for low-income borrowers. Currently, if your only option sucks -- you still have to take it. Saying 'free market' doesn't excuse the practice any more than 'might makes right' does. Sure, there's risk for the lenders but that doesn't excuse the debt spiral oftentimes incurred by the lenders.
@williehorton:
I do not currently nor have I ever worked for or had any financial stake in a Payday loan service. I've never used one nor do I know anyone who has.
I do not have anything to do with Payday lenders in anyway. I am fairly sure Ohio is putting them out of business for some political reason, not because they are preditory. My guess is the banking lobby is behind it to snag up this business with lower APRs but huge application fees. If there is a demand, someone will supply it if it is profitable. If payday lending is so profitable, why are the payday lenders not undercutting each other? If anyone thinks it is good to throw the payday lenders out of business, just wait until your taxes get raised because these people "need help" and the risks are now backstopped by your local government.
@mechfluff: oops, I was wrong about my comment on SC regulation.
SC has NO regulation on these loan sharks. I was mis-referencing a fed restriction.
However, when do we know when enough is enough with government interference? Where do you draw the line?
It seems that many of us are shocked by the supporters of this industry. I certainly am. Taking advantage of those least able to recover seems reprehensible at all levels. That there are defenders of such practices is about as ludicrous as the existence of people that don't like pizza -- though they also exist (I met one!).
@ReidFleming:
I don't support the practice of people taking advantage of others per se. I support peoples and businesses ability to freely contract. It's not the governments place to step in and dictate business practices like this.
@Pylon83: I guess that's where we differ in opinion. I absolutely believe that's one of the government's jobs.
My local credit union offers payday loans. (They have a big sign out front advertising it.) Not sure what the fees are, but according to this article, average fees are $35 a year plus $3 a month. Googling "Credit union payday loan" shows hundreds of credit unions offering low-fee payday loans.
So if the Credit Unions can offer payday loans at reasonable fees, why do payday lenders need to charge 300% APRs?
@Pylon83:
Governments have an obligation to protect and serve. (Sounds like a police motto) Protecting us from harm, whether bad food products or dangerous banking & lending practices is well within the releam of good business.
I am disappointed in Ohio for not screwing down all the potential sewer caps that will allow this slime to continue to flow.
The free market zealots that support the payday lenders right to operate are the same people behind Reaganomics and a trickle down economy.
Payday lenders hurt people much more than they help. Yes, in some instances there is a hypothetical single mother with bad credit whose car broke down and she needs a loan which she will immediately be able to repay at the next paycheck. But in most cases people who patronize payday lenders are at or near the poverty line and desperate, they won't be able to repay the loan and it will quickly accumulate and cause more problems for them.
It sucks that the government has to regulate to protect people from themselves but in most cases people caught up in the cycle of payday lending will soon be destined for government aid, so better they receive it before becoming thousands of dollars in debt in high interest loans.
@Pylon83: I don't support the practice of people taking advantage of others per se. I support peoples and businesses ability to freely contract. It's not the governments place to step in and dictate business practices like this.
Should they be allowed to sell crack too?
@EarlNowak: Because they're completely unsecured loans to people in the subprime credit section? Because tons of people end up defaulting on the loans and they have to recoup their money from somewhere?
I know I've heard this before, wherein people with little/no credit get a loan with a high interest rate and default/get behind on it, then Good Government comes in and tries to save the day in one way or another.
Hrm, where have I heard this before?
There's a reason people with bad credit have bad credit. They WILL default on the loans, and they WILL get that APR hike and get screwed by these people.
Of course I realise there are some people that have shit credit due to divorce or whatever, but for the majority of people this holds true. It is those people these companies are preying on, and depending on a person's despair and circumstances for profit.
I don't care if it's illegal or not, it's certainly not right.
Out of curiosity,what's to stop the scummy lenders from just writing a bunch of fake signatures on the petiton?
@Pylon83: There was a story here a couple weeks ago about a middle-aged man who entered into a contract with a woman allowing him to sleep with her two teen-aged daughters in exchange for money. Should the government not have gotten involved in their right to freely enter contracts?
I saw one of these bullshit commercials the other day.
A guy dressed up to look like some wholesome farmer talks about how the government is taking away peoples rights, and goes on about the poor guy who can't fix his truck because the mean old gub'mnt won't allow him to get any money. And then tells people to support their proposition.
They don't even mention that it's about payday lending.
@laserjobs: Payday lenders would not exist if there was not a demand. Ohio putting them out of business is anti-capitalistic and anti-American.
Child pornography would not exist if there was not a demand. The government putting it out of business is anti-capitalistic and anti-American.
@brent_r:
Haha, yeah, I was going to say the same thing, the commercials are a crime to anyone with an ounce of common sense.
Single mother auto repair, indeed... The people who take out payday loans live pay check to paycheck with no savings. My best friend took out one not to long ago to pay for car repairs. Because this slated his next paycheck for the payment of the loan (which is could not afford to give up entirely) he was in a bind and could only pay a portion of the loan back within the week. They added fees to extend the payment terms. Another week unable to pay it off in full... more fees... and so on and so on. It took him months to climb out of the hole they put him in. He would have been better off (by his own admission) saving up the money for the car repair and coming up with alternate ways to work. That $300 loan ended up costing $1000 over the course of it's life and he received threats and was bullied during the entire process.
These companies KNOW how little money their clientele has... they know because they make sure to only set up shop in poor neighborhoods. They know that people living hand to mouth can not repay their loans in such short periods of time and will rack up fees that they can't afford. They know it will take them months of paying fees and extending deadlines for them to catch up. They bank on it. It is predatory and wrong. And I'm glad they are gone.
You can spout capitalism and free market all you want but there is a reason these laws are in place. History has proved that these types of practices are bad for the overall economy and must be pruned away like dead and rotted branches.
Don't petition signers have to be registered voters? I don't want to presume too much, but what are the chances that homeless people are even registered to vote?
@laserjobs: You've got it backwards, I think. Removing these payday loan places is not going to raise our taxes. The people that patronize these businesses are already in need of help, whether it's today or two years from now. The difference is that in two years time they will have done considerable damage to other businesses by not paying other bills that need to be paid in order to pay back the payday loans. The people that get into trouble due to these rates are the same ones that end up declaring bankruptcy, which contributes to lost income at other legitimate businesses.
Personally, I don't use payday loan stores, but they should charge fees up front with a low interest rate after the fact instead of just charging interest. That way, they still make their money off the people that need an emergency loan without putting people into the poorhouse through exorbitant rates.
Isn't the consumer ultimately the one who should make the decision and NOT the government?
Why is big government always the answer to all of our problems? Keep in mind, this is the same government that some want to cover all of our healthcare needs. After bankrupting social security, it's just further proof the government screws up anything it gets its hands on.
I do have to admit this - I have gotten a payday loan a few times. In CA the max you can get is $255 and the fees are really high - but I have been in a bind a few times. When I have done it I made sure I had enough money to pay next payday so I could be done with the loan ASAP.
The payday lobby has been spending big money trying to dupe voters into thinking they need 391% interest. They spent $8.7 million on a similar initiative in Arizona and $20 million in Virginia to buy higher interest rates. Now they are spending about $100,000 a day to try to convince voters to sign their petitions. If they think people really want 391% interest, they should be willing to let voters have the facts.
They've been running ads on TV here in Ohio for a month. Unfortunately they seem very effective on people who aren't educated in Payday scams.
I totally see how someone could support these payday loan organizations' right to continue operating on the basis of "Not the government's business." They have a contract that their clients sign, and the people going there DO make that choice. As a fan of small government, the idea of Uncle Sam stepping in and saying that people can't enter into such an agreement bugs me.
However, these people ARE scum. I think that they should be put out of business, but not by government action.
I don't know the answer to the problem, but more laws being put on the books is hardly ever a good solution.
@Pylon83: If a lender's services are truly needed in those situations, they can probably make a ton of money lending it at 28% (Ohio's cap rate) or 36% (Oregon's cap).
No, the payday lenders are a bunch of greedy fuckers who consider desperate people ripe for the plucking. They make B of A blanch with their chutzpah.
@mechfluff: If it's South Carolina, it's Advance America territory - I send so many notices to their HQ in my bankruptcy practice.
One of the happiest days recently is seeing Advance America shutter its office near my house after Oregon capped the payday loan interest rates at 36%.
Seems to me like somebody needs to get some advertisements out there to educate those who don't know any better about the payday loan industry's real goals, and the "almost 400%" APR.
What strikes me funny about the "free market" and "capitalist" apologists in this scenario:
They say it's not the government's job to help out people when they make "bad decisions" by taking out usurious loans, because these people "ought to know better."
So let me ask you this: if one of these payday loan companies was broken into and the employees held at gunpoint and robbed, would you also say it's not the government's job to provide police protection to protect the employees and track down the criminals? By your logic, I would blame the loan company for not investing in better privatized security! You can't yell "free market, no government intervention" and then cry for the protection of the law (government) when things go sideways for you, unless you want to be branded a hypocrite.
And before you say, "Well, the business pays taxes!" Yes, and so do individuals.
I was happy to see a lot of these stores shut down. Right after the law went into effect.I think I only know of one left and it is part of a check cashing service. The rest are gone.
They used to be everywhere in the poor(er) side of the metro.
@JollyJumjuck: Apples and kumquats. People enter into these contracts. They have made a (bad IMHO) choice. No one I am aware of enters into a legally binding contract to be robbed at gunpoint.
@laserjobs: Drugs and prostitution are capitalistic entities and yet we as a society feel that they should not be allowed.
These payday loan places prey on the most economically vulnerable. Consumerist reported on a study some time back ([consumerist.com]) that spoke about the death cycle created by taking a pay day loan companies. Check out [www.predatorylendingassociation.com]
If the law forces them to shut down, then good riddance!!
@quail: The law didn't force them to shut down. The way they did business made it harder for them to operate. So most of them just vanished.I guess if they can't operate with massive interest rates. They seen no legitimate need to keep open.
Serious, most of them are gone here in Ohio. So the law was very effective in ridding Ohioans of this shady thing.The lenders who were legit. Are left operating and never even see the impact. Just more for them.
The Max APR law in Ohio is total BS. They are forcing legitimate businesses out of business. Where are the people who need payday loans going to go when Ohio forces all of them out? When the working single mother's car breaks down and she doesn't have credit or family to to help pay for it? There is no reason for these laws other than protecting some people from their own bad choices. Unnecessary.