CFPB Finally Takes the Stick to Predatory Payday Lending Industry

New Orleans   The Consumer Finance Protection Bureau, a beleaguered federal agency much needed by consumers and much despised by the entire phalanx of Republican governmental officeholders, has released new rules for the payday lending industry. It wasn’t the full list of Christmas presents that many of us had sent the CFPB Santa Claus, but there were some pretty decent presents under the tree.

The key gift was a limit on loans to $500 and a cap of eighteen months between loans with a few exceptions that all could only be triggered based on an affordability or ability to pay standard. This is huge. As part of the national campaign ACORN Canada launched more than a decade ago in that country we arranged for an independent report by a recognized academic expert. The study found that the entire business model for payday lending companies – several of which were owned by companies in the United States – was premised on a constant churning of the loans that larded on interest and fees over a cycle of a year-and-a-half before a consumer could escape. This rollover is so baked into the current payday lending business model that the CFPB estimates that it will shrink the $6 billion industry by two-thirds.

The CFPB backed away from the issue of usurious interest rates on these loans, which has been ACORN’s key tool province by province in Canada in our fight with the industry. They also ended up walking away from similar predatory products like installment loans. On the other hand in conjunction with the Office of the Controller of the Currency they did slightly loosen restrictions on banks to allow more small scale personal loans for the lower income families demanding this kind of bridge financial assistance. Credit unions and community banks were largely exempted, and restrictions were lifted on smaller banks doing 2500 loans or less that are not more than 10% of their business. None of that is really enough, but it’s something.

One of ACORN’s most effective weapons in the fight against payday lenders sucking money from lower income families and neighborhoods has been our ability to win restrictive zoning codes, especially in the working class suburbs of Vancouver. The codes require distance from schools and some other facilities, like liquor stores, and from each other, which has limited new openings of such storefront outlets to a mere trickle.

Twenty states already have limits on payday lending in the US, but there is still a Scrooge hanging around these new rules that might protect our constituency in the other thirty states, and not surprisingly that’s in Congress. Elected representatives, long with their hands out for industry contributions and their arms locked with the industry lobbyists, have in some cases threatened to try to gut these new rules. The industry of course has threatened to sue to stop implementation now scheduled for 2019.

We’ve won a battle, not the war.


Google Steps Up and Bans Ads from Payday Lenders

054985500_1441013137-google-headquarters-sign-640x0_digital_trendsNew Orleans   Just because we’re chasing them, doesn’t mean that payday lenders are on the run, but recently we got a break that could end up as a fatal blow and perhaps stiffen the backbone and open the eyes of those unwilling to confront the predatory practices that define the business model of payday lenders. Google or Alphabet or whatever they are calling themselves are one the largest tech companies of the world, and they have now announced that forthwith they would no longer accept advertising from payday lenders. Hooray!

A number of consumer advocates weighted in with congratulations, and, surely, this was a win that undoubtedly came after extensive behind-the-scenes meetings, but no matter how the result was achieved, it’s a significant victory. In the highly competitive online advertising world, hopefully, it will be “monkey see, monkey do,” and followed by Facebook, Twitter, and the hundreds of other sites and applications that worship that almighty ad dollar. The payday lenders association, or whatever that gang of hyenas call themselves at the predators’ ball, cried “foul,” and claimed they were doing a public service in stealing from the poor, but they were left with no recourse. Google is a private company after all, and not some politician they can just ply with a campaign donation or sic their lobbyist on.

All of which calls into play whether or not tech companies might be good targets for more and more campaigns, and that’s worth some thought. Even while we praise Google, we shouldn’t make the mistake of thinking that they will be pushovers if the history and ideology of tech companies is any guide.

Apple certainly waged a huge battle under Steve Jobs and his successors to prevent unionization of its contract janitors, and to this day, unless something has changed recently, solved the problem by simply taking the work in-house as direct employees rather than deal with the union. Many of these tech companies and their execs are Ayn Rand fanboys and hard leaning libertarians. The role of Microsoft’s Gates and Facebook’s Zuckerberg in trying to privatize and charter up public school systems is now legendary, where often their main partners are the Walmart Foundation and its conservative crew. Michael Bloomberg and Charles Koch coauthored an op-ed recently where they wanted to get their two cents in on the amount of free speech on college campuses where they are afraid that administrators and professors are bending over too far to kowtow to minorities, women and others that might built the power to object to some of the baked in dogma opposing their interests. Austin, Texas voters just had to administer a butt whipping to the ride-sharing Batman and Robin, Uber and Lyft, who wanted to allow their drivers to not be fingerprinted like other drivers in that city. Facebook is taking heat as well for slanting its newsfeed and creating an echo chamber. Amazon seems the most Teflon, since it seems to still be consumer crack.

The good thing is that at their current size, none of these tech behemoths can just hunker down and hide in Silicon Valley anymore. To the degree that public perception and buying power still is a major part of what makes them winners or losers, we may have some collective power to punish the baddies, like payday lenders, that we need to exercise even more by putting tech companies on our “must target” list.