I was terrible at debate in high school. I didn’t understand how to establish a case, make a plan, attack the opponent’s position, or formulate logical arguments to counter their assertions.
Neither do opponents of the payday loan industry. The difference is, back in high school, there was nothing at stake except pride. Here, in the real world, payday loan opponents, consumer activists, corrupt charities, ideologues, and grandstanding politicians try every trick in the book to avoid discussing the facts. Their refusal to do so has resulted in harming the very consumers they purport to be helping.
Why? Usually because there’s some hidden agenda at work, although sometimes it’s just plain stupidity. By stupidity, I mean it’s literal definition, “intellectually lazy”. Some folks just are too lazy to think.
Because the facts are unequivocal, and that is exactly why they refuse to engage in debate — because they know they will lose. Instead, they create smokescreens designed to confuse the 98% of Americans who do not use payday loans and to advance their own insidious, anti-American, anti-freedom agendas.
Does that sound like hyperbole? It won’t by the end of this article.
I’ve laid out the facts many times in many articles. I source everything. Every study quoted is truly non-partisan with impeccable methodology, as opposed to the alleged Center for Responsible Lending. I have experience in the stores with customers and owners alike. I’ve visited many times with senior management at all major PDL chains. I’ve gone through countless Profit and Loss statements.
It’s all really quite simple, folks.
Payday loans are necessary for people to meet short-term credit needs.
They are reasonably priced given the risk involved for the lender.
When used responsibly, they offer unquestionable benefit to the user.
The number of responsible users outnumber irresponsible ones by at least a 15-1 ratio.
The primary alternative to payday loans are bounced checks, which are 3 -4 times more expensive.
And the list goes on and on.
Yet when you hear PDL opponents talk or read their silly diatribes, they perpetrate every myth possible to serve their own agenda. So it’s time to further expose those agendas, as well as the worst offenders.
A new website at PDLHallOfShame.blogspot.com will launch shortly and it will name names – the hacks, liars, fools, ideologues, grandstanding politicians and the rare honorable person who at least has the courage to debate the issue logically.
Let me offer up just a sample of some members of this Rogue’s Gallery. Note carefully how they vomit up their pre-digested talking points.
Angela “Crazy As My Hair” Martin, of the falsely named “Economics Fairness Coalition” at OurOregon, was a primary driver behind the move to kill payday lending in Oregon. She said that only permitting PDLs to charge $6.50 per hundred would help the consumer. Of course, we all know she wanted to drive them out of the state, which is what happened. In the meantime, bank strategist firm Bretton Woods’ latest study shows households in states without payday loans pay 125% more in NSF/ODP fees than in those that have payday loans. Oh, and it’s also left those who want a short-term loan to get it on the internet, where fees are $25-30 per hundred, more than what they were before the PDLs were forced out of town. Angela’s reply, “It is fantastic for Oregon”. Does she live in Opposite World?
What might her agenda be? Has anyone opened the books on OurOregon? Nope. So demand that they do. If they have nothing to hide, such as massive contributions by the banking industry, then they won’t have any problem.
“Clueless” Kari Chisholm of BlueOregon.org makes our list for being just plain stupid. In his case, he didn’t bother to research the economics of PDL stores. ” It’s rather astonishing, actually, that these places couldn’t survive by making loans at 36% annual interest (and with fees, 154%)”. He also uses the False Analogy Fallacy (basic high school logic there, Kari) to compare “meth addicts” with payday lenders. Oh, brother.
Bill “None in my own convictions” Faith, who runs COHHIO, refuses to engage in debate. When I sent him a note asking to open a dialogue, he replied, “I suggest you ply your loan sharking trade somewhere other than Ohio”. Talk about a fear of facts! Never mind that “The Parrot” is a war veteran too cowardly to engage in debate. Never mind also that the intent of HB545 in Ohio was designed to put 6,000 people out of work with a rate cap. Never mind that The Parrot seems more interested in paying himself a six-figure salary (8% of COHHIO’s budget), and that his organization spends more on salaries than it does on programs to help the poor. What is The Parrot’s agenda? Has anybody checked into the book for COHHIO? I wonder if any banks have been funding it. What do you think? Is The Parrot just stupid, or is he trying to make citizens more dependent on COHHIO’s services by restricting their access to credit? After all, what could be better than creating a non-profit organization to pay yourself a six-figure salary?
Ohio legislators Chris Widener, John Husted, and Ohio Gov. Ted Strickland also make our list. Just your typical grandstanding politicians. Widener claims he “studied and studied and studied” the issue. I guess he must be a complete moron or deliberately chose to ignore what the facts are to advance his own political life. Husted claimed the product was “defective”, which I find amusing considering 154 million transactions were initiated in 2008. I call the Republican Husted a mental defective, for twisting his alleged “belief in the free market” into a law that forces borrowers to now use more expensive options. Nice going (Yes, that’s The Parrot standing behind him in the linked clip). And for Strickland to say, “This is not an interference in the free market”, either makes him stupid or a liar. You pick.
Thomas “Sullen” Suddes is just the kind of ignorant ideologue that fits right in with the anti-business rants of the Cleveland Plain Raw Dealer. Fortunately, the paper is on the brink of bankruptcy. Maybe they should think about replacing their editorial board and slapping some duct tape over Suddes’ mouth.
Former Oregon House Speaker Jeff “I Toast to Putting People Out of Work” Merkeley didn’t even have the courage to pull his media stunt in front of the store he shut down– probably because the soon-to-be-unemployed employees of Check Into Cash would’ve cracked that bottle of champagne over his deserving head. Sources reported that after the toast, the irresponsible borrower in the photo, Maryann Olson, strolled away without the use of her walker. Whoopsie!
Warren “Broken Record” Bolton spends almost all his time writing shrill anti-PDL articles for The State newspaper in South Carolina, without ever actually addressing the facts. He’s your run of the mill ideologue, nothing more, but certainly less.
Sam “Crybaby” Glover is another ideologue who blogs for the Consumerist, which is generally a great website, except for its foolish posts about short-term credit. Crybaby’s feelings are so fragile that when I challenged him via Email on his nonsensical blog post, he refused to engage because I “insulted” him. Suck it up, Crybaby. How do you think the 100,000 people employed in the short-term credit industry feel when you advocate taking their jobs away? That’s something to cry over.
Senator Richard Durbin is grandstanding politician, ideologue, and mercenary all rolled into one. Who else would push legislation that punishes every type of lender, except banks, which offer the most expensive form of short-term credit in NSF and ODP fees.
Maybe that’s why Citigroup has contributed $65,000 to him.
Our most recent addition is Texas state Senator Elliott “Hapless” Shapleigh. He’s been falling over himself every other year to try to kill payday loans in Texas in an effort to call attention to himself as something other than an ineffective statesman, but now he’s hit a new low. He’s so desperate to get a bill passed that he’s trying to link payday loans to toxic mortgages. And the two are linked – say it with me – only in Opposite World.
Also part of our Hall of Shame is Any Blog Comment that contains the following:
“Payday lending is legalized loan sharking!”
“People want heroin and/or prostitution. I suppose you support those, too!”
“Payday loans trap people in a cycle of debt!”
“36% is plenty for lenders to make a profit!”
“Payday lenders are aliens trying to take over the world!”
There’s plenty more folks in our Hall of Shame. Stop by for a visit as we build the page.
Oh, and if you’re going to comment, at least do readers the service of making a cogent argument that doesn’t utilize every fallacy in the book. Stick to the facts, or you too can end up in the Hall of Shame!
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15 users commented in " The Payday Loan Opponent Hall of Shame "
Follow-up comment rss or Leave a Trackback[…] Originally posted from The Payday Loan Opponent Hall of Shame […]
Going to post my comment, wow!!, I feel so enabled!!! Still hawking your American right to rip off the downtrodden? You serve the greater good?
You allow people who simply can’t make it from payday to payday to pay higher interest than ANYONE else! You must sleep so well at night, knowing the good you are doing in the world. You allow the first step onto the cycle of debt for people who can’t get a credit card or a loan from a bank. Well, someone’s got to do it, right?
We could make sure you have to really do a job like produce something, share a skill, sell shoes. You could always open a pawn shop, sounds like it would be just down your alley. You debated in high school? Well, at least then, they gave you something worthy of being debated probably.
Right now you’ve got a dead skunk painted pink and you’re trying to sell it as a Cadillac?
Put me in your Hall of Shame, proud to be there, defending against GREED and Sleezelike Predators like you. You’re so nice, you’d probably give a payday loan to your mother and hoped she missed the payment date. Just think, if you have kids, they’ll be able to get a wonderful PAYDAY loan, too.
Shame on you.
Only a fool would try to call someone out to debate by using the childish technique you used. what was it? “Oh, you’re just stupid if you don’t see it my way.” You justified it with some definition, I believe. You said anyone who sees you for what you really are, let’s see, using smokescreens instead of debating?
Plain language. You want permission to do predatory lending to about 2 percent of the population. You see yourself as some economic saving crusader, doing less harm than banks. While that itself is a stretch morally, in addition, you have built up a vast array, well actually a couple feeble statements, supporting your position. A futile debate at best.
You prey on people who don’t know any better. You prey on people already down on their luck.
You prey on the young, the ill-equipped, the weak, those with fewer survival skills.
In the animal kingdom, those that feed off the sick, weak do a service, they keep the population of an ecosystem on an even keel. Scavangers and decomposers in any ecosystem are important. Don’t go through life thinking you’re an omnivore or a carnivore - by those you choose to prey on, you’re an overhead meeting scavanger or decomposer - depending on how fungi you’re like.
Well, Sheller, your comments simply prove what I said.
The facts are out there, and I have reiterated them over and over.
You clearly didn’t even bother to read the link that lays out the very clear argument from someone much smarter than both of us:
http://www.buckeyeinstitute.org/docs/Lehman_testimony_on_HB545_to_the_Ohio_General_Assembly_senate_5_7_08.pdf
Take some time. Read it. Learn. When you think you can offer a reasoned rebuttal to all the points made, then we can have a discussion.
Your post is exactly what I just wrote about. The facts are there. In your face. Yet you don’t address them. Instead, you call names.
How does that advance your position?
And, by the way, you’ve already torpedoed your position because you still haven’t responded back on this thread:
http://www.bloggernews.net/120186
Again, the facts get presented and you run away, just as I describe in my clearly on-the-mark article.
Check again. And if your position is that plenty of people use your service responsibly, 97 percent pay back on time?
That just means that there are 97% of your customers that with a little effort might never have to use it at all. They could be putting that $8.00 into their own rainy day fund for emergencies. Sounds like what we need are a few classes on managing money in school.
Instead people are bombarded with ways to spend their money foolishly, like needing 100 cable channels, three cell phones per household, making wants more important than needs. This is just my humble opinion. Your conscience is your own as to the good your industry does.
When you tried to insult me, on not having my facts, I was a bit ashamed so… I must admit I checked on your business. Perhaps I spoke from the heart and not from the facts. So, I checked. You stated that 97 percent of people pay back their loans, no problem. Hmmm…not sure where you got that figure, maybe from the brochure?
After checking, Advance lists their total doubtful accounts at 20.1 percent for the year 2008. Are those the loans which Advance assumes are doubtfully going to be able to pay back? Of course, they can sell all those bad loans to collection agencies. The borrowers then contend with, well, you know what collection agencies can do to your credit.
The bad economy is showing with doubtful accounts at 24.4 percent for the last quarter of 2008. That’s up from 23.4 for the same quarter in 2007. A whole percentage point putting doubtful accounts at like 1 in 4?
Yikes, that’s almost one out of four people not able to repay or doubtfully repay their loans.
Wherever did you get that 97 percent statistic you mentioned?
Still in all those other 76 percent of people, those good payerbackers, made $38,500,500 for the company in the last quarter of 2008 alone. Advances take for 2007 was a profit of $174,000,000 dollars.
I have to think your business has a devoted clientelle or perhaps repeat business week after week. Maybe it’s your service or how helpful and friendly your staff is?
I’ll bet these payday loan businesses hope people don’t learn to manage their money. That would be a lot of jingle to give up. Not a bad profit when you look at it.
$174 million dollars in one year, on loans that help consumers make it from payday to payday. Wow.
Took your advice and read the Lehman article, thinking you may have quoted a Lehman Brothers article. Saw he was a professor in Economics at Indiana. I did a little more research and found the following quote on Mr. Lehman in an article in Business Week. Puts a spin on his economic interpretation of the role of payday loans entirely. You might give it a look.
From Business Week: CIRCUITOUS PATH
Sometimes stealth sponsorship of media opinions is more convoluted. Such was the case with economist Lehman’s friendly column about payday loans published last June in The Hill, the thrice-weekly paper aimed at lawmakers and their staffs. Payday lenders offer high-interest loans secured by the borrower’s next paycheck. Consumer advocates say the expensive loans exploit the working poor. “Although payday loans are often criticized for being too costly, my analysis suggests that they are actually less expensive than bank overdraft services for many consumers,” Lehman wrote. He was identified only as a professor at Indiana Wesleyan in Marion, Ind.
But the article’s origins weren’t so simple. Lehman says he had been paid $1,000 to $2,000 by an outfit called the Consumer Credit Research Foundation to analyze payday loans. The foundation has neither offices nor employees. A phone number on its Web site leads to Washington PR man Robert Hoopes, who says the group is funded by the payday-loan industry. Hoopes, a former Democratic congressional staffer, says he repackaged Lehman’s research as an op-ed for The Hill, but he sees nothing improper about it. “We are funded by the payday-loan industry, and we have always been very up front about that,” he says. “Tom’s work for the foundation is extremely well known, including in press releases and among his peers.”
Lehman also insists there was no conflict. He says he disclosed his industry paycheck to his university, which, he adds, encourages professors to publish frequently. He says he was paid only for the initial research, not the op-ed piece.
How does that advance your position?
Sheller:
First, I want to say that I have a lot of respect for you. 99% of people say their piece and storm off, without even engaging in discussion. You read the links, did your due diligence and continue to engage in dialogue. It’s a great example that does you credit.
Now, let’s turn to the issues you raised.
“That just means that there are 97% of your customers that with a little effort might never have to use it at all. …Sounds like what we need are a few classes on managing money in school.”
On this we are in 100% agreement. I believe there should be a federally-mandated class for seniors in high school — personal finance 101. That would do worlds of good in many ways beyond this issue.
However, that is not the world we live in. If we could mandate 100% responsible behavior, there would not be any liquor stores to perpetuate alcoholism, McDonald’s to perpetuate obesity, and nobody would be allowed to do anything while driving a car. All credit cards would be paid in full every month. Nobody would ever bounce a check.
Of course, we know this is folly. We live in reality. And in reality, people need short-term credit. There are several options available, of which payday loans are neither the most nor least expensive.
Your previous post unfairly judges people. “You prey on people who don’t know any better. You prey on people already down on their luck.
You prey on the young, the ill-equipped, the weak, those with fewer survival skills.”
Wrong on all counts. When it comes to shopping around, Americans are the savviest of any nation. They are not stupid. IF they could borrow money from a friend/relative/employer for free, don’t you think they would do it? Same with a credit card cash advance. Or if they want to pawn something. No, Sheller, they CHOOSE not to use those resources or do not have them available.
They DO know better. They know enough not to bounce a check or go to a loan shark. They make a choice: “Is it worth it TO ME to pay $15 for a $100 loan? Yes or no?”
That’s it. They don’t compare APR’s. They don’t struggle over the moral implications of using a payday loan.
They simply ask if the cost of the credit is worth it to them. And in 2008, 154 million times they said, ‘Yes”.
So hopefully that dispels your misconception.
Now, to the default rate. Page 24 of Advance’s Annual Report clearly states [edited for space], “For 2008 and 2007, we deposited 5.9% of checks”. In other words, 5.9% of borrowers did not pay off their loan and their post-dated check was deposited.
THis is entirely different from provision for doubtful accounts, which is defined on the same page, “We maintain an allowance for doubtful accounts for estimated losses….We consider total amounts outstanding, historical charge-offs, our current collection patterns and current economic trends ”
This is to estimate just how much of their defaults they’ll eventually have to charge off in the aggregate, so they do not overestimate their total earnings.
So, the 94% pay-off rate is quite accurate.
Now, to the profit numbers. You are not reading the statements correctly. Go to page 55. You are only looking at REVENUE, not “net income”, which is what the business made after booking all revenue, and backing out expenses and bad debt.
Total revenue is listed as $676,436,000.
At the bottom is net income, or profit. That was $38,471,000 for the full year of 2008.
Next to it is the number 5.7%. That means that for every dollar they made in revenue, their actual profit at the end of the day was 5.7 CENTS.
That’s right. THey profit 5.7 cents for every dollar of revenue.
And that is the part of the argument that PDL opponents never want to discuss. There is a cost of doing business. If rates are capped at 36% APR, they would make $1.50 per hundred borrowed, not $15. Total revenue would dive by 90%. Ninety percent! That top revenue number goes to $67,000,000. Back out the expenses and you have a bankrupt company.
So perhaps now you can see why they must charge what they do.
Good points made. As far as Economics 101, credit cards, poor parenting, easy credit have all contributed to poor economic choices. The horror stories I have heard about this business, I read several examples when I googled Horror Stories about Pay Day Loans last evening. So many that military bases have passed rules against giving them to soldiers. Are those stories all lies, made by big banks, to drive you out of business?
In articles in defense of your system of loans, it is plainly written that your industry does not take it upon themselves to be the moral compass of those taking loans out. They even state they want repeat business, like any business.
It appears to be a treadmill or cycle of debt, with people using two or three different payday loan stores to accomplish staying out of trouble until it snowballs.
This sounds similar to those who get in trouble with credit cards. Is it the credit card companies fault? No consumers have a choice, but easy credit, quick cash, all make it possible. Is it predatory? Personally, morally, I think suckering people in, enticing them with a quick fix, is predatory.
In the stories mentioned as horror stories, there are instances of people being unable to pay off one loan, going to a different check cashing store, taking out loans to cover the previous loans, and ending up paying $500 or $600 over time on a $100 loan. I’m guessing part of those at least are true.
Banks around here stopped making short term small loans when most everyone had a credit card it seemed. I still think Credit Unions will do so. Checking accounts here don’t cost $700 or $800 to have, not sure where you all live. Most banks here have certain types of free checking, where you only have to keep a modest amount as a balance and your checking is free. We even have a bank here that pays 3.3 percent on your checking account balance up to $35,000. A better rate than money markets right now.
I’m sorry for anyone who gets in a cycle of being behind all the time. It is hard on families and on their children. There are plenty of businesses out there to take advantage of them and I’m sorry, in my opinion, I still believe yours is one.
Thanks for replying. We aren’t done yet, though!
Ask yourself this: why did you choose to Google “horror stories about payday loans” and not “stories of how payday loans helped people”?
It’s because you have an inherent bias towards your current belief system. (And, by the way, since the media portrays PDL in a bad light, you won’t find articles about how people have been helped. ) You will find, if you ask customers and not reporters, that the overwhelming majority will say they are grateful — GRATEFUL — that someone was there for them and they do NOT feel taken advantage of.
If you are truly interested in hearing some first hand accounts, I can put you in touch with two Christian store owners in Ohio who will tell you of their experience.
You also make a critical mistake regarding morality. Ready? Here it is.
NO BUSINESS IS MORAL. None. Name any business — any one — and I will show you how it is immoral somewhere in the chain of manufacturing or distribution.
Here’s a brief article on that subject that I wrote as well:
http://www.fool.com/investing/small-cap/2004/11/22/the-myth-of-socially-responsible-investing.aspx
You cannot say one business is moral and another is not. The evidence and logical thought undermine that concept.
I also find it interesting that, despite all the evidence I’ve put to you — that a need exists for the product, that it is reasonably priced, that banks are far worse, that there is no moral issue, that your opinion is based on media reports and not reality — that you still remain steadfast in your opinion.
In that case, you need to read this one article and ask yourself some hard questions.
http://www.bloggernews.net/116580
Great discussion guys! I learned a lot about the PDL industry.
My vote is for freedom, and Mr. Meyers.
Looks like Sheller couldn’t stand the cognitive dissonance your intelligent arguments created, Lawrence. He’s gone!
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