Payday lending spoof

The Predatory Lending Association (PLA) is dedicated to extracting maximum profit from the working poor by increasing payday loan fees and debt traps. The working poor is an exciting, fast growing demographic that includes: military personnel, most minorities, and a growing percentage of the middle class.

"I would liken it to the Colbert Report. Not real or factually-based, but entertaining," said CFSA's spokeswoman Lyndsey Medsker in an e-mail when I asked whether she had seen the site.

She continued:

Our customers are real people who need real options. Payday lenders charge $15 per $100. I'd challenge whoever is behind the site to pull out their pocketbooks and instead of spending their time, money and effort on creating parody websites, start lending money to the millions of Americans who need cash between paychecks.

CFSA announced today it will require its members to disclose fees and annual percentage rates of payday loans on poster-sized displays in its stores and on its Web site. Customers will be clearly aware of all fees before they enter the transaction process, the group said.
When he heard the news, Matt Lerner, the writer behind PLA, was already scheming about ways to mock it. (He hadn't decided yet.)

"Bigger posters won't change the fact that the payday loan industry profits from turning short-term financial pain into long-term financial pain," he said.

Consumers advocates also point out that payday lenders already have to disclose that information in some form or another. "It's more of the same," said Leslie Parrish, with the Center for Responsible Lending.

Lerner, 32, a former Microsoft employee who lives in Seattle, said he and Internet entrepreneur Mike Mathieu "got interested because we started seeing them (payday outlets) all over the place." When they started looking into the issue, they were "shocked" to learn of the high APR.

A 14-day, $500 payday loan with the maximum fee permitted by state law carries an annual percentage rate (APR) of 391 percent. The number of payday loan outlets have nearly doubled in Washington, from 371 in 2000 to 748 today.

While Congress last year capped the interest rate at 36 percent for military borrowers, a state bill that would have done the same for all consumers never made it out of committee in the last legislative session.

"We haven't heard directly from the payday lenders (about the site)," Lerner said, but they've heard from lots of consumer advocates. "It's a good laugh for them, and a good way to educate people."

Yesterday, researchers hired by the North Carolina Commissioner of Banks released a study that found the absence of payday outlets "has had no significant impact on the availability of credit for households in North Carolina."

The study found:

More than twice as many former payday borrowers reported that the absence of payday lending has had a positive rather than negative effect on their household.

The vast majority of households surveyed -- more than three out of four -- said the elimination of payday lending had no effect on their household.

North Carolina was the first state to ban payday lending outlets. The PLA was quick to post on its site: "North Carolina must be stopped."
Source:http://blog.seattlepi.nwsource.com/consumersmarts/archives/126055.asp