Tag Archives: remitt

A Corrupt Credit Business Model Travels to Chile and Brazil

New Orleans Cred

ODECU of Chile

ODECU of Chile

it card scams are the bad penny perfected in the United States that is turning up now elsewhere in the world.   These practices are not the foul play of bad actors as predatory lenders always claim, but intrinsic elements of corrupt, exploitive business models.  The economic success stories in Brazil and Chile now seem threatened by the avarice of casual corporate corruption matched as usual with light to non-existent regulation and consumer protection regimes.

In Brazil the debt to income ratio has risen from 22% to 40% in only five years from 2006 to 2011 according to a study quoted by Alexei Barrionuevo in The New York Times. In Chile in 7 years the ratio has goen to 70% according to the Central Bank.   There’s no question the model is predatory with interest annual interest rates reaching 220% in Brazil and no limits anywhere it seems.   The situation is especially intense at retail chain, freely issuing cards to working and moderate income customers to access basic consumer goods, and then routinely adjusting the terms and levels of the interest rates on the debt without any notice to the customer.

These cards were supported by transnational banking big boys like UK’s HSBC and Spain’s Santander and Itau-Unibanco, all of which, especially HSBC, absolutely knew better, but couldn’t resist the rip-off, knowing that they could get away with it.  When confronted by the prosecutor’s office in Brazil, the banks ignored appeals to fully compensate customers.

It was shocking to read that there are no only no limits to the level of interest rates in Chile, but also no way for an individual to be able to file for personal bankruptcy and get their act together.  Unfortunately, when ripped, there’s no way for them to run – or reorganize.  Stefan Larenas of the Organization of Consumers and Users of Chile, speaking about the Equifax-owned, unregulated Dicom credit score outfit in that country, was quoted ominously that, “If you are in Dicom, if you are not in hell, you are on the way there.  It is a true social stigma here.”  Seems a bad score not only bars you from any future loans, but is also seen as a legitimate reason to block you from future employment, creating a debtor’s prison without walls.

Predatory financial injustice is a global issue with most central banks simply burying their heads in the sand, just as our Remittance Justice Campaign has uncovered everywhere, and leaving workers and families nothing but fresh meet for corporate crime.

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Lower Remittance Fees Now!

IMG_0529Ottawa In the final event of the first ACORN Canada Convention members gathered in front of the National Bank of Canada, assembling to raise the demand to lower bank and money transfer fees for remittances.  With Parliament looming over them car after car honked in support of lower bank fees.   Hardly a struggling immigrant driving a cab along the street didn’t lean on their horn, understanding the issue precisely.

A popular radio broadcast on politics on CBC had interviewed Kay Bisnath of ACORN Canada and ACORN International shortly after 8 AM in a national broadcast.  A piece had run in the daily paper, Ottawa Citizen, made the campaign clear.

The nearly 100 protests left the Bank of Canada, responsible for regulations, to make the same demand at the offices of the Finance Minister Michael Horgan.  We didn’t get far.  Police blocked the doors and locked them quickly, as the members chanted below and beat the plastic trash receptacles to a drum beat, calling on the Minister to “come down, meet the people!”

FIMG_0526inally using police as embassaries, Marva Burnett, outgoing president of ACORN Canada and other leaders were able to get their message up and get the answer down.  The deputy finance minister agreed to study the issue and issue a response.  The finance ministry communication director came down and parsed a few words indicating they had read the Citizen and heard the news, and would “study the matter.”

A mild response, but a step forward because truly this is an issue where there is every indication that the government is totally clueless of the issue despite the huge impact.  Back-of-the-envelope figuring had put the cost of excess fees, defined as fees above the G-8 and World Bank target of 5%, sent by immigrant and new Canadians back to families and communities in their home countries as being over $500,000,000 per year!

IMG_0532Members had prepared a “giant invoice” as chant leader, Pascal Apuwa, called it and after the Finance representative slinked away, a chant rose for the giant invoice to be left and collected.  Marva Burnett placed it pointing inside the locked doors of the ministry.  I am categorically clear that a small piece of history was made here, since I am confident that in the history of social movements over thousands of years, these members may have been the first to chant “GIANT INVOICE!”

Nonetheless, the chant makes the point.  This is a huge bill, now past due, that needs to be repaid to the poor and migrant works and immigrant families around the world, being exploited by money transfer organizations and banks on a daily basis at the price of billions.

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