Tuesday, February 12, 2008

Payday Loans Target Elderly, Disabled Vets

Don't tell the Attorney General! From the Wall Street Journal

One recent morning, dozens of elderly and disabled people, some propped on walkers and canes, gathered at Small Loans Inc. Many had borrowed money from Small Loans and turned over their Social Security benefits to pay back the high-interest lender. Now they were waiting for their "allowance" -- their monthly check, minus Small Loans' cut.

The crowd represents the newest twist for a fast-growing industry -- lenders that make high-interest loans, often called "payday" loans, that are secured by upcoming paychecks. Such lenders are increasingly targeting recipients of Social Security and other government benefits, including disability and veteran's benefits. "These people always get paid, rain or shine," says William Harrod, a former manager of payday loan stores in suburban Virginia and Washington, D.C. Government beneficiaries "will always have money, every 30 days."

The law bars the government from sending a recipient's benefits directly to lenders. But many of these lenders are forging relationships with banks and arranging for prospective borrowers to have their benefits checks deposited directly into bank accounts. The banks immediately transfer government funds to the lenders. The lender then subtracts debt repayments, plus fees and interest, before giving the recipients a dime.
Utah's AG Mark Shurtleff has spoken out several times in defense of Utah's payday loan proprietors, who paid for his most recent trip to the Bahamas.

5 comments:

  1. Hate to burst your bubble on this one but these were not payday loans. To get a payday loan the borrower must go to the lender to repay. Wage assignments, like what was described in the WSJ article are illegal under all 38 payday loan laws across the United States.

    The WSJ has redacted the article.

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  2. Actually, thw WSJ has done no such thing. No redaction has been issued.

    Thanks for stopping by Mark!

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  3. Payday loans bring me peace of mind as I am assured that if something unforeseen occurs, which these days and age often occurs, I can get the money I need in minutes. thus i need not stress out about how to make ends meet.

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  4. Nothing like going back a year to astroturf on a payday lending post. Anyways, yes, they do provide help in some situations, but do they have to charge predatory interest rates to do so? I think not.

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