Years ago, when I began providing tax services in Washington, DC, I was approached by a bank or two to offer cash advance services for those obtaining refunds.

By and large, this service is aimed at the lower middle class to the working poor of America.  Because how it really works is that the bank provides a check (or prepaid credit card) to the taxpayer for something like 90% of the refund, pocketing the rest.  The tax provider keeps part of the refund, too.  (There also was an origination fee- but I don’t recall how much that was.)

Back when I was approached, it would be typical for the IRS to refund the taxpayer’s cash in under 20 days.  So, the loan would  be for a duration of less than that period.  Meaning the interest rate was at least 185%- on a sure thing.

These folks also wanted to put me up in the business of check cashing.  This predatory practice means that someone would come in with a paycheck, which they wanted to convert to cash.  Because they didn’t- or couldn’t- have a bank account.

Why no bank account?  Here’s a bunch of reasons.

And, the fees for this service are about the same as that “cash advance” provided those who are desperate to get their tax refunds right ‘f-ing’ now.

But, even these two services are benign (yes, at 185% interest) when compared to payday lending.   (I’ve written about this practice often- here’s one from 2015 and another from last year.  Oh, and the official [read: bureaucratic] name for this loan is STSDC or  short term, small dollar credit products.)

Before TheDonald took office, the Consumer Financial Protection Bureau (the one designed by Elizabeth Warren who was never allowed to head the agency, so Richard Cordray ran it) had developed a series of regulations that would control the STSDC industry.

As you can guess, TheDonald and his minions have evaporated the regs.  Claiming there was no need to regulate these ‘fine’ folks.

Sure, after the STSDC lobbyists invented a whole slew of “facts”.  (Don’t be surprised- this is exactly what TheDonald is doing now for climate  control- where he is convening ‘experts’ [yeah, like I’m an expert on marriage, because I’ve been married twice] to ‘prove’ that climate change is a hoax.)

Hilary Miller, an attorney (read: lobbyist, with a ‘non-profit’ organization) for the payday industry hired Dr. Jennifer Lewis Priestley (Kennesaw State University, Georgia) to prepare a report on the payday industry.  (Oh, wait. Miller was involved in the editing of the “unbiased” study- including changing data analyses! Even though the cover page of the report claims there was no editorial control or censorship of the document.  [The Washington Post has reported that- and the fact that Priestly wanted to have Miller be designated a co-author.)

What a surprise that Dr. Priestley determined that payday loans were not deleterious to consumers!  (Anybody recognize the similarity to David Neumark [you can search for him via the index in the upper right of the blog page] with his plethora of “associations” and “groups” that always produce reports ‘proving’ that the fast food industry is fair to its workers and there’s no need to a change to worker compensation?)

These “facts” were among the prime reasons to reverse the proposed CFPB regs.  The ones that stipulated that payday lenders verify borrower’s income- and for them to ensure that the loan can be repaid in a timely fashion.  Claiming the reports (like the one Priestly made under Miller’s tutelage) prove there is no justification for such requirements.

This, despite the fact, that the average payday loan is $ 350.  With an interest rate exceeding 300%.  And, that each payday loan is paid off by another, yet larger loan, to accommodate the interest accrued.  As such, when and if the loan is ever completely paid, it’s primarily fees and interest- the principal borrowed is inconsequential.

So much for consumer protection.

 

P.S.- The title?  Those were words that Dr. Priestley was told to NEVER use in the report!