Confessions Of A Former Payday Loan Center Manager

Here’s a video confession from the former manager of a Virginia payday loan center.

She shows how they played down the 400%+ APRs. She talks about about how rather than be the financial tool that the payday loan industry makes them out to be, payday loans actually keep most of their clients poorer. She says she has “no idea” why elected representatives would keep supporting payday loans.

We have some idea: because the payday loan industry is giving them big donations. — BEN POPKEN

Payday Loans Trap Borrowers [Center For Responsible Lending]


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  1. Kifune says:

    I just bailed out my much younger brother and his wife from $3500 worth of payday loans this past weekend. She was off work last year and they got sucked into the neverending hole (and didn’t come to me or the rest of the family for help). They were paying over $800 a month and getting no where in paying the loans off. I’m asking for a much more reasonable $200 a month until my loan to them is paid off.

    I had an envelope of cash and went with my brother to four different payday lenders to close out the accounts. They thought we were coming just to make a payment but seemed almost shocked that we would be there with cash to pay them off. One guy said to my brother “come back anytime” and my bro replied “I hope to never have to again” and the guy seemed angry that we weren’t more grateful for their wonderful help.

    Suffice it to say I’m now working with them to come up with a much better budgeting and savings plan.

  2. “We have some idea: because the payday loan industry is giving them big donations.”

    Translation: “We have some idea: because the payday loan industry is giving elected representatives big BRIBES.”

    I think if I ever win a 100+ million Power Ball payout, I’m going on a big D.C. shopping trip for my own personal politician. I just wish they would quit pretending and post their rates to cut down on the time wasted with euphemism filled negotiations.

  3. Hawk07 says:

    This is a lot more common than people think and I’m glad the Consumerist is taking on the issue. When I was in ROTC, we had USAA come to us for a financial briefing. Although I knew a lot of what they already said, I was fascinated by the scams these early payday shops pull on unsuspecting people primarily because I’m not the type that would ever use their services and I knew little to nothing about them.

    Also, I’m surprised Congress and or the military has done anything about them because they particularly prey on young enlisted personel. The payday loan places know the military has great job security so these people fall into the venus fly trap and can’t ever get out all the while payday knows they got your next paycheck.

  4. Wormfather says:

    When I was about 19 years old I went to a loan shark, I needed about $1800 dollars to fix my car (I know, so dumb). I thought I was being mature and responsible, taking care of the problem my self. Worst mistake ever, I eventually paid it off but eesh, it was tough. From what I’ve read it sounds like the payday loan places employ the same tactics and hook the same people.

  5. veterandem says:

    Here in NC, our AG, the venerable Roy Cooper waged a one man campaign to get the pay-day lenders out of the state. The site of all of those empty store fronts really warms my heart. He went after them for usury, so they folded up and moved over the border to……..Virginia. Down in Jacksonville, NC (Camp Lejeune), there were probably 2 stores on each block. And that is why your state AG is your BEST FRIEND when you’re getting screwed.

  6. JustAGuy2 says:

    We have some idea: because the payday loan industry is giving them big donations.

    Here’s another idea: because it’s not the government’s job to play nanny for people who refuse to learn math. If someone decides it’s a good idea to borrow money at 400%, that’s they’re call. If the loans were truly fraudulent (i.e. they say the rate is X when it’s actually Y), that’s one thing, but they’re just really expensive. We don’t bar people from buying overpriced coffee at Starbucks or spending $17 on a t-shirt from consumerist, when they could get one that’s just as warm from WalMart for $5, so what possible reason is there for barring people from buying overpriced money from PayDay123USAStore?

  7. enm4r says:

    @Hawk07: That’s why every young 2nd LT/Ensign needs to be looking out for his people, and also why USAA/Navy Fed, etc provide so much in the form of education. But once they leave the base, they’re on their own and all the pawn shops, payday loans, and used car dealerships love it.

    I’ve love to see these places eliminated, but I’d rather it be because they are no longer profitable. Specifically around bases because they aren’t being used, but in general because they serve primarily to profit off the people who are most easily preyed upon.

  8. tentimesodds says:

    @Wormfather: A loan shark? What were the terms? Scary.

  9. hypnotik_jello says:

    @JustAGuy2: Who said anything about these people thinking it’s a good idea? The point is, many of these people have very poor credit and can’t get traditional loans. The payday loan is the only alternative for them.

    These payday lenders know this and are taking advantage of these people.

  10. quantum-shaman says:

    These companies are clearly taking advantage of people who are not only already in financial trouble, but also they can’t do the math. The report linked to this story had some interesting figures: the industry started at $10 billion in 2000 and had grown to $25 billion three years later. Even more interesting, 91% of their revenues comes from people who have taken five or more payday loans, often from multiple companies. That being said, I don’t like the assumption that government has an automatic mandate to save everyone from their own stupidity. If that were the case, they’d have to put themselves out of business first. Tighter regulation would suffice, like a requirement for full disclosure. Everybody else is regulated, why not these people?

    For kicks I looked at one of these sleaze-bags’ websites. They had a FAQ, but it was curiously devoid of any mention of interest rates.

  11. dohtem says:

    @Naughty Consumer: lol. Your nick appropriately fits your comment.

  12. @veterandem: “Are you and E-1 or up?” How many of those have you seen? :)

    @dohtem: Thanks for noticing :)

  13. skittlbrau says:


    Don’t get me wrong, it’s not right to kick folks while they’re down with ridiculous fees but…

    People need to exercise a little bit of personal responsibility. If your credit is so poor that you can’t get credit cards or a bank loan, you have done something to earn that credit score, be it not making payments (fastest way to trash your score) or something equally self-inflicted.

  14. mmcnary says:

    I would like to see real banks get into the small, short term loan business. I’ll bet they could charge 1/4 as much and still make a huge profit. Not to mention that they could then sell other services to an otherwise untapped group of people. Like savings accounts or home loans.

  15. WorkingPoor says:

    Re: Hawk07

    Actually, Congress HAS done something about military personnel paying enormous payday loan rates. Congress has actually enacted an interest rate cap (36% APR) for loans to military.

    The Pentagon raised a concern that payday loans posed a deployment risk as troops were losing security clearances as a result of excessive debt.

  16. royal72 says:

    @quantum-shaman: “These companies are clearly taking advantage of people…”

    this is how american business is done and companies take advantage of anyone they can. take the likes cingular for example, i was charged 10 cents here, 50 cents there almost every month for things i shouldn’t have been, but it’s not worth me spending a half hour on the phone to get it reversed every month.

    cingular says they have 62 million subscribers. let’s assume this happens to roughly half the subscribers at 10 cents per (on the low end), that comes out to $3 million they steal every month… the corporate business philosophy is simple, steal as much as can, for as long as you can, and when you get caught, make a peace offering with generic apologies. step and repeat.

  17. bbbici says:

    I would like to know how credit card companies get away with charging interest on the full $1000 even if you have paid back $999.99.

  18. doctor_cos wants you to remain calm says:

    @JustAGuy2: Yes it is the gov’t’s job to play nanny. That’s what the Consumer Product Safety Council is for…”We have to protect even the stupidest consumers.”

    It’s all well and good for someone who has never found themselves in that situation to pooh-pooh and tell everyone else how much smarter they should be.

    This is usury, plain and simple. Predatory practices such as those used by these companies should be outlawed. But it will never happen because it doesn’t affect rich white men.

  19. JustAGuy2 says:

    @doctor_cos: CPSC is there to protect people from things they can’t reasonably expect. (i.e. their Teddy Ruxpin has a “go on murderous rampage and then burst into flame” mode).

    In the world of payday loans, there is no evidence whatsoever that the product being delivered isn’t exactly what the consumer agrees to.

  20. humphrmi says:

    I agree with the commenters who accurately point out that better consumer education would be better than government intervention.

    What I hate about payday lenders is that in their quest for the bottom line, their strip mall store fronts are a blight on my neighborhood that makes everyone around them feel like they live in the ghetto. I would be happy if they closed them all down for that reason alone.

  21. North of 49 says:

    its not the interest rates, its the “fees” that make the loans unpayable. Brokerage fees, fees for transfers to your account, fees for this, fees for that…

    and the best part of it – they aren’t interest. But are what makes a 200$ loan become a 400$ one!

  22. hop says:

    here on the eastern shore, deleware seems to have a slew of those places…..these vultures should be run outta town on a rail….kudo’s to ms flippo for spreading the info….and we all know why the politicos don’t wanna stop this stuff… campaigne donations….

  23. quantum-shaman says:

    @royal72: so cynical! i like it.

    you can switch cell phone providers, and at least you’re AWARE that you’re being ripped off for 50 cents a month, versus these poor ignoramuses who are paying triple-digit interest on a loan, and not even questioning it until they get in too deep even with the loan sharks.

  24. Wormfather says:


    It was 20% interest compounded weekly, the catch was, you couldnt pay down the principle, you either had the interest payment or the interest and the entire loan.

    Who am I joking, the whole thing was a catch.

    I was young, very dumb and it shames me more because I work in finance now.

  25. Me. says:

    I worked at a payday loan place for almost two years. Here’s how it is supposed to work for you: You’re about to overdraft your account pay a $30 overdraft fee per transaction. You get a payday loan for $50 to put your account in the positive. You’re out a $7.50 fee, but you’ve saved at least $30. Two weeks later, when you get paid, you immediately pay back that $57.50

    Unfortunately, no one who gets a payday loan does this. They need $50? They’ll get a loan for $200. Yes, the businesses are scummy… no question about that. But the comsumers are absolutely irresponsible. They never read the contracts. They never asked questions. I had customers who were trapped in their loans who I would try to help. I would offer up numerous solutions to slowly pay down their loan amount, but they would never, ever take it. They would rather bounce a check or let it go to collections.

    I don’t believe that payday loan places prey on consumers, but I know that they definitely use ignorance to their advantage.

  26. kaikhor says:

    As someone who has had the unfortunate luck to have to use one of these places, I can see both sides of the coin.

    We (my husband and I) got the loan, because like most people, we were desperate (even with help from our family). We knew it was stupid but we needed the money to pay the bills AND have food on the table. But, we often took out a little extra, because like so many Americans, we wanted to go out with our friends for dinner, go to the movies, etc.

    What ended up killing us (and ultimately why we stopped even attempting to use them) was that we would pay them back and because we had spent the money we needed for other things to pay them back, we’d end up borrowing again!

    Were we stupid to go to these people and borrow money? Yes. Were we stupid to get a little extra so we could have fun? Yes. Were we used by these people who kept us in a loop of debt? Yes.

    I feel bad for the people stuck in that hole and blame the companies much more than the consumers because the people are desperate more often than not. But I still blame the consumers for taking too much and getting themselves into a hole.

  27. Steven Francis says:

    No problem on lenders front as they are getting richer and richer. The customer should however go for the pin-point details before signing any agreement. The financial bodies are overwhelmed with the response of the lenders and more and more of them are taking intrest in this.