Skip

"What we’re doing is preventing them from being able to get signatures"
August 3, 2013 7:44 AM   Subscribe

Payday lenders target the working poor with quick loans at exorbitant interest rates. When a ballot initiative drive in Missouri threatened this lucrative business, the payday lenders fought back with everything they had--their money. A ProPublica report, published yesterday in the St. Louis Post-Dispatch documents the web of secret donations and intimidation that smothered the reform movement.
posted by Horace Rumpole (59 comments total) 17 users marked this as a favorite

 
It's astounding, the ugly lengths that people will go to in order to gain a nickel by screwing a nickel out of their fellow man.
posted by xingcat at 8:08 AM on August 3, 2013 [8 favorites]


Blockers are always interesting. Usually they have to observe a minimum distance and have to allow people to pass through. So, they get a bunch of guys and make a perimeter around the petitioner facing outward with arms crossed leaving a little more than a person's width sideways between shoulders. Perhaps 15 people will be brave enough to come through in an entire day. Often, campaigns facing this will pay $5-6 for signatures collected in these situations. This attracts professional petitioners from out of state so increases the number the opposition has to deal with, and increases the effectiveness of the campaign especially since the regulars can provide as hoc petitioning training. It costs the campaign a fair bit, though.
posted by michaelh at 8:09 AM on August 3, 2013 [2 favorites]


No no no! This is one of the great things about American democracy—we all have the right to purchase the laws of our choice!
posted by infinitewindow at 8:17 AM on August 3, 2013 [4 favorites]


Part of fixing this has to involve depriving them of their manpower. Make it socially and culturally unacceptable to a hired shill for corporate interests - as bad as being a scab on a strike in a union town. Use techniques like videotaping and shaming them. In order to spend money to quash a democratic initiative, they have to be able to hire people, so find ways to take that away. Similarly, boycott TV stations that accept their advertising dollars. Make it unacceptable for anyone to take their filthy money and they won't be able to undermine democracy with it.
posted by graymouser at 8:28 AM on August 3, 2013 [1 favorite]


Sadly, thanks to federal law, these places can't be banned at the state level unless all 50 states go for it. Arkansas banned payday loans and check cashing "advances" several years back, yet there are still thousands of the places there. Rather than close up shop, the owners just set up a front business in another state where the loan is supposedly originated. The local storefront then is just providing the cash, which is perfectly legal.
posted by wierdo at 8:30 AM on August 3, 2013 [7 favorites]


When I'm king of the world, payday loan people are first up against the wall.
posted by notsnot at 8:33 AM on August 3, 2013 [4 favorites]


Graymouser, that all sounds nice until someone else puts up an initiative to ban how you make a living, then I'd bet you'd want to be able to organize to protect it.
posted by MattD at 8:33 AM on August 3, 2013 [3 favorites]


Fucking payday lenders. A buddy of mine got in hock to some of those vipers. When they made the original loan, they asked for a personal reference, and he gave me. Of course, they made not the slightest effort to check the reference before approving the loan, but once he got behind on the rollovers for it, they started calling me all the time, supposedly to ask if I could have my friend contact them. They completely ignored all my requests to stop contacting me - I think what finally got them to stop was when I threatened to report them to my state Bureau of Financial Institutions (which, fun fact, apparently is run by Ron Swanson?). And this was me who didn't even owe the fuckers any money, I can't even imagine how much worse they harass you when you're actually a debtor.

Doesn't surprise me for a second that they play just as dirty when it comes to the legislative process too. Between them and their astroturfers, it's tough to decide who's the more vile.
posted by strangely stunted trees at 8:34 AM on August 3, 2013 [8 favorites]


Graymouser, that all sounds nice until someone else puts up an initiative to ban how you make a living, then I'd bet you'd want to be able to organize to protect it.

There is a moral difference between writing software and preying on the working poor. Some professions shouldn't be allowed to exist. If a justifiable profession was being threatened, it wouldn't need astroturf shills to defend it.
posted by graymouser at 8:45 AM on August 3, 2013 [29 favorites]


So, you're saying that if someone put up an initiative premised on software writing being morally wrong, you'd be happy to sit on your hands and let them put the initiative on the ballot and campaign for it unopposed, and hope the people just knew to do the right thing, earnest petitioners and 30-second spots notwithstanding?
posted by MattD at 8:48 AM on August 3, 2013


(which, fun fact, apparently is run by Ron Swanson?)

I think it's this guy in a wig and mustache. He isn't trying very hard with the name, though.

posted by Horace Rumpole at 8:50 AM on August 3, 2013 [1 favorite]


So, you're saying that if someone put up an initiative premised on software writing being morally wrong, you'd be happy to sit on your hands and let them put the initiative on the ballot and campaign for it unopposed, and hope the people just knew to do the right thing, earnest petitioners and 30-second spots notwithstanding?

Real causes don't need astroturf.
posted by jaduncan at 8:50 AM on August 3, 2013 [16 favorites]


MattD: I'm saying that what I do is not inherently morally wrong, and if there were a ballot initiative against it there would be a massive backlash against that. This is a false equivalence.
posted by graymouser at 8:51 AM on August 3, 2013 [15 favorites]


I can't believe that anyone could defend these tactics. Not in real life, not in a Metafilter thread.
posted by goatdog at 8:52 AM on August 3, 2013 [17 favorites]


More importantly, I think MattD is deflecting from my original point: that enabling corporate money in politics is a bad thing generally, and should be fought against using pressure at a social level, particularly against people who do "blocking" and similar dirty tricks. It's political thuggery and should be treated as such.
posted by graymouser at 8:57 AM on August 3, 2013 [6 favorites]


These tactics, or the equivalent or comparable, are practiced by every industry and interest group when their opponents make legal or political moves that would hurt them badly, to say the least of ban them. Almost everyone in general, and most likely anyone in this thread, is an employee or business owner associated with one or more these industries or interests groups and participates (or is prepared to participate), if only passively, them should it become necessary. "Lying down and taking it" doesn't actually exist in the real world.
posted by MattD at 8:58 AM on August 3, 2013 [1 favorite]


MattD, I think we get your point, but at the same time, you're defending the worst edge case.
posted by notsnot at 9:00 AM on August 3, 2013 [5 favorites]


MattD: do you think it's acceptable to be one of the people who screams at volunteer petition-takers or physically blocks access by would-be signers, not because you believe in a cause, but because you are paid to do so?
posted by graymouser at 9:07 AM on August 3, 2013 [2 favorites]


Lying down and taking it isn't the only alternative to astroturfing and intimidation. They're not even opposites. And if good causes can't "passively" use those tactics (whatever that and "the equivalent or comparable" means) to achieve their ends it's a good trade off to keep bad causes from actively abusing those tactics with all the force money can buy.
posted by jason_steakums at 9:09 AM on August 3, 2013 [2 favorites]


But if you need cash immediately, other than a payday loan, what are you supposed to do?

What I'd like to see is some numbers. What is the actual default rate on payday loans, and how does it compare to other sorts of loans (personal or commercial)? How do the rates compare? I'd like restrictions on the fees and interest charges, not a complete ban on the idea of a payday loan. (Which is, I gather, what the protestors wanted as well.)

Of course, what the payday loan people want is no restrictions at all, except against people campaigning against them.
posted by jeather at 9:11 AM on August 3, 2013 [1 favorite]


MattD: Of course I wouldn't lie down and take it. Nobody is saying they should. They should not, however, be allowed to use blocking tactics and other shady methods to prevent petition gatherers from doing their work. It's not as if gathering the requisite signatures immediately passes the initiative into law. It's still got to win at the ballot box.
posted by wierdo at 9:12 AM on August 3, 2013


What I mean by passively is that when an initiative banning your livelihood is put up, it will be revenue you generated or dues you contributed that will be funding the effort to keep it off the ballot and defeat it if it makes it there. Because you feel less likely to be attacked than a payday lender doesn't change what happens if you are.
posted by MattD at 9:24 AM on August 3, 2013


Weido, that's exactly what some people said: you should have to take it if your line of business is immoral in their opinion.
posted by MattD at 9:25 AM on August 3, 2013


Right, but that's just what lobbying and advocacy is supposed to do, and is a far cry from what happens when there's no line and that money goes towards astroturfing and intimidation tactics. It's a matter of degrees.
posted by jason_steakums at 9:27 AM on August 3, 2013 [1 favorite]


you should have to take it if your line of business is immoral in their opinion

For fuck's sake. We've already put contract killers and highwaymen out of legal business due to our "moral objections."
posted by Ickster at 9:33 AM on August 3, 2013 [27 favorites]


A couple of weeks back I was watching some you tube videos and for some reason, I decided to click on a Milton Friedman PBS lecture from the early '80's.

A few minutes later I clicked on some jazz number video and I was fed a skippable ad from American Banker magazine. Two white dudes in shirt and tie were talking about payday loans and bemoaning regulation. They described pay day loans as "bridge financing" and felt themselves to be great purveyors of good. A total stomach-turner.
posted by Ironmouth at 9:35 AM on August 3, 2013 [9 favorites]


Between this and today's NYT article about Missouri actively preventing the Fed govt from implementing the ACA health care exchanges, I'm feeling pretty ashamed to live in MO today.
posted by jferg at 9:35 AM on August 3, 2013 [2 favorites]


I think it's important to separate two things:

1. The problem of payday lending, a predatory and immoral business practice.
2. The practice of shutting down petition drives through paid political intimidation.

The former needs to be shut down by law. The latter should be stopped through social and, where applicable, economic sanction. Both are wrong, but they're different.

The problem with MattD's position is that he is not addressing the fact that (2) is not an acceptable way for even legitimate corporations to defend themselves. The fact that it's payday lenders doing it just compounds the ill.
posted by graymouser at 9:46 AM on August 3, 2013 [5 favorites]


So, you're saying that if someone put up an initiative premised on banning limb-harvesting, you'd be happy to sit on your hands, or someone else's?

C'mon. It's a living.
posted by benzenedream at 9:48 AM on August 3, 2013 [1 favorite]


No one is trying to put payday lending out of business, they are attempting to regulate the interest rates. From the first paragraph:

The interest rate on short-term loans has an average APR of 455% statewide, when the national average is a still-horrific 391%. When a coalition of churches, unions, and community groups tried to cut the maximum interest rate to 36%, the effort failed miserably.

Stop saying people are trying to put them out of business.
posted by The Hamms Bear at 10:19 AM on August 3, 2013 [12 favorites]


Even IF they'd be able to change the interest rates, wouldn't the payday loan companies just scurry off over state lines, or heck, to The Cloud™?
posted by slater at 10:38 AM on August 3, 2013 [1 favorite]


In most of Canada (Except, as I recall, Ontario and BC) these type of interest rates are banned as loansharking. I wonder if there would be so many people defending payday loans if we called them loansharks instead?
posted by Canageek at 10:44 AM on August 3, 2013


As wierdo points out, if you outlaw loan sharks at the state level they just move to Delaware; this is how middle class credit institutions work now... look at the return address on your last credit card bill. Any attempt at the state level to prevent them operating a storefront in your state would be attacked at the Federal level under the oh-so-handy Commerce Clause.
posted by George_Spiggott at 10:59 AM on August 3, 2013


According to Wikipedia, nowhere in Canada are you allowed to charge more than 60% APR and BC just ruled that fees are calculated as part of the interest rate. Most provinces restrict the APR to 25% or so.

I don't know enough about US law to know why the federal government cannot have laws against usury.
posted by jeather at 11:15 AM on August 3, 2013 [1 favorite]


jeather: "I don't know enough about US law to know why the federal government cannot have laws against usury."

There's no restriction on the Federal government; it simply doesn't have a usury limit and hasn't been able to pass one into law.
posted by fireoyster at 12:09 PM on August 3, 2013 [1 favorite]


If social engineering worked; MeFi would have repaired the world already.
ARMS, balloon loans, Short Sale real estate, banking buy outs; very similar to the payday loan; just on a larger scale.
posted by buzzman at 12:14 PM on August 3, 2013


Graymouser, that all sounds nice until someone else puts up an initiative to ban how you make a living, then I'd bet you'd want to be able to organize to protect it.

Good thing I don't make a living stealing money from poor people, then.
posted by spitbull at 12:46 PM on August 3, 2013 [13 favorites]


Everyone grouses about payday lenders but the real money is in the big banks which charge overdraft fees which amount to interest rates of over 1000%. The fees collected by big banks dwarf the payday loan industry. The big banks are fine with a diversion that takes attention off them and perhaps offers the elimination of a competitor.
posted by JackFlash at 12:49 PM on August 3, 2013 [2 favorites]


JackFlash: Who do you think finances payday lenders? This is all about moving money from working and poor people into the hands of the financial oligarchs.
posted by graymouser at 1:11 PM on August 3, 2013 [1 favorite]


Meanwhile in the UK, the Church of England is hoping to compete a major payday lender out of business:
http://www.theguardian.com/money/2013/jul/25/church-england-wonga
http://www.theguardian.com/commentisfree/2013/jul/26/crush-archbishop-canterbury-justin-welby-wonga
posted by Bwithh at 1:37 PM on August 3, 2013 [3 favorites]


Bwithh: "Meanwhile in the UK, the Church of England is hoping to compete a major payday lender out of business:"

That's...bloody awesome. A church using its vast money to do good. WWJD indeed.
posted by notsnot at 1:46 PM on August 3, 2013 [1 favorite]


I don't understand why there's no competition for payday lenders to have lower fees and interest rates. If I set up shop and charged only, I don't know, 250% APR, why would that not be successful?
posted by jeather at 2:02 PM on August 3, 2013 [2 favorites]


That's...bloody awesome. A church using its vast money to do good.

Eh. Once they get big and independently wealthy, the crown'll crush 'em and one of Dan-goddamned-Brown's descendents will write a peel-n-stick transdermal book patch about the hunt for the treasure.
posted by codswallop at 2:30 PM on August 3, 2013


I don't understand why there's no competition for payday lenders to have lower fees and interest rates. If I set up shop and charged only, I don't know, 250% APR, why would that not be successful?

Not if you followed the payday lender business model. They have a very high default rate of about 10%. This means they lose 10% of their money every pay period. So they need roughly 250% APR just to break even.

Filings for publicly owned payday lenders indicate that they run profits of about 10 or 11%. This is high but not extraordinarily high considering the high risk business.

The problem with payday lenders are their abusive sales tactics. They do their best to conceal the real cost of their services and do their best to suck customers into becoming repeat business, continuously rolling over their debt and building up ever-growing balances so that they collect an increasing amount of each paycheck.
posted by JackFlash at 2:59 PM on August 3, 2013 [1 favorite]


jeather: "I don't understand why there's no competition for payday lenders to have lower fees and interest rates. If I set up shop and charged only, I don't know, 250% APR, why would that not be successful?"

Partially because the profit margin is only 12 percent, on a good quarter. So if the market is efficient, you'd go out of business. Payday loans have a reliable yet notoriously hard to predict default ratio. The company I linked to in their annual report says they expect to write off 20 percent of their loans under management. Essentially 1 in 5 customers who walk through the door are going to screw you over, but you can't tell which. Technically it's more like 1 in 10, but 75 percent of people who default are repeat business, so the debt has snowballed larger than average, sometimes after revolving the debt between multiple lenders.

But Planet Money did a report a few years ago year looking at them.
posted by pwnguin at 3:08 PM on August 3, 2013


There's a pretty huge geographical component to the business: when you're working with people struggling to pay for basics, having a branch CLOSE to where they live makes a difference. Thus, wandering through poor neighborhoods, you see three or four payday loan shops.

And every one of those shops has rent and staff.
posted by kaibutsu at 3:22 PM on August 3, 2013


But Planet Money did a report a few years ago year looking at them.

Derp. The point was they found that pay day lenders didn't compete on price, via implicit collusion.
posted by pwnguin at 3:22 PM on August 3, 2013 [1 favorite]


Then how do payday lenders in Canada function?

The Planet Money podcast suggests that the high rates are due to (possibly unspoken) collusion, and that rates suddenly increased when laws having maximum rates appeared.
posted by jeather at 3:52 PM on August 3, 2013


jeather: "Then how do payday lenders in Canada function?"

I don't know. How do they function?
posted by pwnguin at 4:19 PM on August 3, 2013




canageek, they actually ARE illegal in BC, but the law is specifically worded so that the law can only be enforced if the provincial courts actually want to. The 'justification' for this is that they want to be able to enforce the law against 'evil loan sharks' but allow 'businesses that provide a needed service' to survive. Fuck that, seriously. 10% on a 2 week, $200 loan is the 'introductory' price of the place closest to where I live.
posted by WaylandSmith at 6:46 PM on August 3, 2013


Back when I was working class poor, and right after I filed for bankruptcy, payday loans were the thing that got my truck a new head when the old one blew. Or helped me cover some other significant and unforeseen expense.

I don't hold them in high regard, and they are predatory, but they tell you upfront what the costs will be and if you cannot manage the terms one should avoid them.

Banks on the other hand... Those fuckers can all burn in a fire made of fires. I recall once when TCF Bank (now Anchor Bank) somehow let someone else's ATM transaction deduct from my account. 350 bucks, gone. Every check I wrote bounced and and bounced again. I owed them nearly 400 dollars just in fees, never mind the 300 dollars in checks. And it was their error - they even admitted it to me. But, nevertheless, Mr. ManagerMan wanted me to pay that 400 dollars because I should have been prepared for them to screw up.

I was super pissed. I left and got a payday loan - of all things - to straighten out the mess. They sent it to collections and some other noise, but I managed to dodge it and they eventually gave up when they got bought out.

Point is, Payday loan places suck but at least you know where you stand with them. Fuck banks.
posted by Pogo_Fuzzybutt at 7:15 PM on August 3, 2013


Payday loan places suck but at least you know where you stand with them. Fuck banks.

Sing it, brother. Payday lenders have some slimy practices, but they actually perform a useful financial function for short-term cash emergencies. Wall Street bankers, on the other hand, are a thousand times more destructive in their greed, deception, immorality, illegality and political corruption. They are ruining the country.
posted by JackFlash at 7:50 PM on August 3, 2013 [1 favorite]


i read a rather lengthy article a few years back about the payday loan business. it focused on in the 90's how they ran ads and back politicians promoting "freedom of contract" to overturn ant-usury laws against charging excessive interest rates.

sure the argument runs both ways, these are adults who know the terms when they take out these loans. but the point of usury laws is to prohibit taking advantage of people who have no other recourse. as a short term fix i'm sure they're great, but most people get in over their heads with the interest and come back month after month. basically you're agreeing to give 1/4 of your income to these industries until the day comes when you finally get your finances together, if that day ever comes. the end result is a handful of people getting filthy rich off the misery of others, and often ruining lives, which contributes very little to the public good. which is why anti-usury laws exist in the first place.
posted by camdan at 1:22 AM on August 4, 2013


basically you're agreeing to give 1/4 of your income to these industries until the day comes when you finally get your finances together, if that day ever comes.

There is a reason they are called payday loans. They are meant to be short term loans. If someone is using them as revolving credit, they are doing it wrong. As someone above mentioned, these services have a place in society. If you need the car fixed right away so you can get back to work, you gotta do it. The alternative can often be losing the job or having to get the money in some even worse way.

That doesn't excuse strongarm political tactics, however.
posted by gjc at 3:25 AM on August 4, 2013


There is a moral difference between writing software and preying on the working poor.

As a programmer I bet you've helped put people into low-wage jobs and into bad credit situations. You, indirectly, create demand for short-term, high interest loans. (I'm a programmer too.)
posted by michaelh at 6:02 AM on August 4, 2013


@graymouser: Some professions shouldn't be allowed to exist.

You mean like "abortion doctor"? "Muslim cleric"? "Agricultural geneticist"? "Female professional of any kind"? Because I see a helluva lot of folks that think those professions shouldn't be allowed to exist, and it's just as much a moral issue for them.
posted by kjs3 at 7:01 AM on August 4, 2013


pwnguin wrote: Partially because the profit margin is only 12 percent, on a good quarter.

That is not what I saw, but I've only seen the books of one regional player. It probably helps when you only have a 6 person back office.
posted by wierdo at 6:24 PM on August 4, 2013


That's whats reported on yahoo finance at least. The annual report says a lot of revenue went to general administration, in the form of executive bonuses. So it's likely a lot better. I guess these executives are as fond of shareholder democracy as they are political democracy...
posted by pwnguin at 8:19 PM on August 4, 2013


« Older AAAH-HAHAHA HEYYY-AAAYY-OH GOOBA GOOBA GOOBA...   |   Flash Bang Wallop Newer »


This thread has been archived and is closed to new comments



Post