Monday, December 04, 2006

"Preying On The Troops" Payday Loans Prey on Soldiers and the Poor

Ed Partridge had this gem on Part of the Plan. It comes from a DesNews article about payday-loan companies. This is an issue that really gets my blood boiling. These organizations prey on poor, and or desperate people who are taken advantage of in transactions that charge usurious fees and interest. These groups operate legally, but they leave the realms ethical business practices in the dust.

In the tax realm, the scam business plan is to offer loans on large EITC/ACTC refunds that are generally largest for families whose income is in only in the range of 15,000 dollars. These poor families who often stupidly ignorantly sign for these loans end up sucking 10 to 25% of their tax credit funds away because they can't wait less than 2 weeks that a normal refund would take from the IRS. It is of course a large portion of the victim's fault that they lacked needed patience, but for the remainder of those who are sucked into these scams it is completely unethical of these organizations to take advantage of Federal funds that are intended as a supplement to incomes of poor families, or single parents.

Better still, it appears from the DesNews article, an effort to regulate this industry in Utah maybe thwarted by Legislators who lacked the moral integrity to refuse campaign donations from such charlatans. I would be very interested in finding who has accepted bribes campaign donations from these unethical organizations.

1 comment:

y-intercept said...

I am a little bit slower at labeling PayDay and check cashing companies as evil.

It seems to me that the real problem is that bank consolidation and regulation has created an environment where millions of poor are underserved by the banking industry.

The problem is not with the existence of payday loans companies, but with the fact that people get these short term loans to try and patch long term needs.

The solution is not to pile moral outrage and more regulations on companies that try to provide banking services to the poor. The real solution is to find ways to give the poor the banking services that they need so they have a hope of stop being poor one day.