Tod Roberrson of the Dallas Morning News attempted to rebut my editorial on payday lending in his blog. I don’t like to make lengthy rebuttals, but I will because Robberson is the first to actually try and take me on point-by-point. For that, I give him credit.

I apologize if I harp on what seem like minor points. I do it because Robberson deserves an equivalent response, as he’s an accomplished journalist. It’s important because I hope readers will find instruction in logical fallacies on his part, the use of emotion over logic, and because it’s a controversial issue. Finally, it’s important to note Robberson’s lack of real world experience in the world of short-term credit. His inability to properly research his article results in false allegations that I make up statistics. Every statistic I provided in my article was cited in footnotes to his boss, Sharon Grigsby.

The Ad Hominem Fallacy (Personal Attack)

Robberson’s original headline referred to me as a lobbyist. I am not a lobbyist. This factual misstatement was not an auspicious beginning. I had to request a correction from the editorial board to have this changed.

Robberson next maligns the description of my business, calling the credit line “gobbledygook…an attempt to sugarcoat the true nature of his industry”. The credit line reads, “Lawrence Meyers is president of PDL Capital Inc., which brokers secure high-yield investments to the general public and private equity.”

I think he was trying to discredit me because this description “sugarcoats the true nature of his industry and paint it in the best-possible light”. So my firm finds financing for payday lenders. So what? His argument makes the presumptive conclusion that the “true nature” of the industry needs sugarcoating. It doesn’t. The facts speak for themselves, and remain loud and clear, especially after his attempts to discredit it in his article.

Lack of Evidence

Robberson claims, “…he uses deception and seeks to minimize the very real, harmful effects of the business he promotes.”

Robberson fails to provide evidence regarding these alleged “harmful effects”. What are these harmful effects? The “cycle of debt”? He has failed to prove it exists, but claims “unwitting, uneducated borrowers” take out loans that “…are structured in ways that virtually ensure the borrower cannot repay”.

What evidence does he have that borrowers are “unwitting” or “uneducated”? He has none.

No Real World Experience

This is where real world experience makes a difference. I was the first stock market journalist to write about payday loans in the United States. I’ve been in dozens of stores, talked to dozens of lenders, talked to over a thousand borrowers, and own a business in the space. I will wager that he has never set foot in a store, never talked to a lender, never talked to a customer, and never used a loan. This skews his perspective, forcing him to rely solely on what he’s read, not what he’s lived with.

Here’s the truth: Lenders hate refinancings because with each refinance, the odds increase that the borrower will default on the principal. On a $100 loan, someone who refinances a loan four times – netting the lender $80 in Texas – and then defaults, results in a $20 loss for the lender. A default rate greater than 9% puts the lender out of business.


The next point concerns how widespread the “cycle of debt” is. My article defines a “cycle of debt” as more than 4 refinancings, consistent with the News’ own definition and that of the industry.

My article actually reads, “How many loans go beyond four renewals? Data from the Office of Consumer Credit Commissioner shows it occurs only 20 percent of the time and the average number of refinancings is only 2.3. Thus, the hard data disputes the notion that this cycle of debt is widespread.”

So overwrought with emotion is Robberson that he misquotes me. “He [Meyers] says, Data from the Office of Consumer Credit Commissioner shows it [refinancing] occurs only 20 percent of the time’.”

See the difference?

My article makes reference to the industry making 100 million transactions last year. Roberston misreads it, and claims refinancings represent 20 million borrowers. It doesn’t. There are only some 12 million borrowers in the United States. Why is this error important? Because his emotion clouds his thinking and causes him to make false statements, rendering his entire argument questionable.

Poor Research

Robberson asks where I sourced data regarding people who use 8 payday loans per year. He claims that he has “…no earthly idea where he gets this figure. I suspect it comes from his very own industry, using manipulated numbers…” Again, he should’ve checked with his boss. I sourced every data point.

This further demonstrates Robberson’s lack of real world experience. He doesn’t even know that this kind of data is best sourced from things like the Annual Report of Advance America, the largest payday lender in the country. But I guess SEC filings contain “manipulated numbers”, since company executives don’t fear being jailed for Sarbanes-Oxley non-compliance.

Robberson screams about “manipulated numbers” but rather comically commits this exact act. I cited a search of to demonstrate the lack of consumer complaints regarding payday loans. What word search might make the most sense on such a website? Think about it. Think hard.

How about….”payday loan”. Just as I said in my article, there are 1,020 complaints over a ten year period. Ten years!

Robberson, however, chooses to use every possible term except “payday loan”. I have no earthly idea why he does this. In one case, he uses “cash services”, and claims he came up with 6,720 complaints! I only come up with 22. Then, using the search term “loan”, he claims to come up with 22,000 complaints (I only find 5,710 complaints), and they are “heavily weighted toward payday lenders and title-loan companies”. Really? How heavily weighted are they? We don’t know, because he doesn’t say. This is what he offers as scientific analysis, yet claims I am manipulating numbers? Come up with an exact weighting of complaints and then we’ll talk. Meanwhile, he fails to address that the Better Business Bureau only fielded 3,300 complaints for a 0.0033% complaint rate in 2012.

More poor research on Robberson’s part? It’s easy to find. He claims he can’t find the survey in which I claim an 88% satisfaction with payday loans. Again, he didn’t ask his boss. And by the way, here it is.

The Big Fallacy

Robberson’s mad pinwheeling concludes with a colossal implosion – the use of a classic logical fallacy. In Robberson’s view, because “the Department of Defense maintains a longstanding ban on the use of payday loans by active military service members”, therefore they could not have possibly been a “great deal” or “helped out people in need”.

It’s a great way to conclude the discussion, because it reveals everything one needs to know about Robberson.

1) He again demonstrates a poor grasp of facts, and every time he botches a fact, it undermines his credibility. The DoD has no such ban. In fact, it was Jim Talent’s amendment to a bill in Congress that placed an interest rate cap on loans to active military. That interest rate cap is so low for short-term, unsecured credit, this made it impossible to lend to the military.

2) It demonstrates that Robberson thinks if the government does something, it must be right. I’ll leave you to conclude what this reveals about his approach to problem solving.

3) His statement is a logical fallacy. Just because a legislative body outlaws something, how does it invalidate the usefulness of that thing?


What Robberson never addresses is the fact that people choose payday loans of their own free will. They are not “unwitting and uneducated”. Americans know how to shop for the best deals, and there are multiple choices for credit available. Robberson fails to address this fact, that people choose these loans over other choices, and return to them (individually, not via refinancings). Nor does he address the tiny complaint rate, regardless of what source he chooses.

So why all the drama?

Because Robberson is an Elitist. Robberson believes that he knows better than the consumer. Robberson believes that only “unwitting and uneducated” people use payday loans. He believes that if even a single person is hurt by something, that thing should be outlawed. It’s the equivalent of treating dandruff by decapitation.

Are payday loans the perfect product? Of course not. They are a choice. They are neither the least nor most expensive one. Choices lower prices. Removal of choices forces people to choices they have already rejected, and are usually more expensive.

I defy anyone to show me a perfect product. I also defy anyone to show me a product that is not sometimes used irresponsibly. Sometimes people make a poor choice. We cannot legislate against that. But Robberson does not believe in personal responsibility. He believes people must be protected from poor choices. This is strange, because if he really cared about that, he’d be better off trying to ban liquor stores (which provide no benefit and cause alcoholism), and state lotteries (a regressive tax on the poor that offers absolutely zero benefit to them), fast food (which are bad for you and create a burden on the state to care for all that heart disease)….and a zillion other things.

The people who matter the most, the consumers, are the only ones who aren’t complaining. Leave them alone. They can take care of themselves.

So to Mr. Robberson, I make this offer: next time I’m in Dallas, let’s visit some stores together. Dinner is on me.

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