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Payday Lending: A practice whose end has come…

Posted by Stephen on May 25, 2007

I can assure you that at the time that Benjamin Franklin wrote “at the working man’s house hunger looks in, but dares not enter,” he had never heard of the predatory practices of Payday Lending….However, he could have been describing them when he stated that “men who live by sharping and robbing…are often very lousy.”

I am very thankful that this great man had never heard of a business so vile in nature as to take advantage of all that the free market offers while establishing a practice that claims to provide a service, but whose sole intention is to exploit a need.

The free market argument used by supporters of these predatory practices is baseless. The question of whether people would be better off with no loan option rather than payday lenders that lock them into long term debt traps has been answered. Yes, people would be better off wallowing in debt and struggling to keep their heads above water rather than being sucked into the depths, anchored to the bottom of the ocean and left to drown by what can only be described as modern day piracy.

I should know. I was the captain of one of the most devious, exploitive vessels on that dark sea. I was a professional assassin and my singular responsibility was to take as many prisoners as possible.

As a manager of a payday lender the task bestowed upon me was to build a customer base that would allow my business to flourish, and I was good at what I did. How do you build a customer base in a business like this? Let’s remember that we are combining a lending institution with a retail outlet, and we all realize that the success of a retail store is based on the return customer.

This industry could not survive if the goal was for the customer to be ‘one and done’. Their survival is based on the ability to create the need to return, and the only way to do that is to take the choice of leaving away. That is what I did.

As a manager of a payday lender, my job was to trap people into a long term cycle of debt that they could not get out of. Of course, it was made easier by policies that include no credit checks, no ‘debt to income ratio’ which addresses a person’s ability to repay the loan, and an application process that my middle school students could complete, and qualify for, in ten minutes. When I put my two week’s notice in and trained the next manager, I was leaving the most successful payday lender in my region.

As a manager of that payday lender, I participated in the systematic destruction of the financial position of my customers who were the working poor, families trying to survive check to check, and senior citizens.

My accomplishments included the forfeiture of one home (a doublewide), 12 bankruptcies (10 of which took place after I resigned because they could not break the cycle of debt), 27 closed checking accounts, two divorces, and one court appearance as a result of a customer that snapped under the pressure of the situation because I would only approve a partial loan for him.

I received a phone call from my customer service representative (CSR) stating that there was an irate customer in the store. He had taken 9 consecutive loans and had defaulted for the third time. The directive I received was to cut the loan amount in half. My CSR asked me what she should do. I told her to stand strong and to understand that we must uphold our policies.

I heard the screams of my friend and employee. I heard him throw her against the wall. I listened as he destroyed a computer and monitor, while damaging other property in the store. By the time I got to the store the police had arrived and they were working on an arrest. We later convicted him.

While I realize that there was no excuse for his actions, I also understand that I put him in that position. Every legislator that voted for the law that allowed payday lending into the Commonwealth assisted in placing him in that position. We contributed to changing a crisis in his life into desperation, and desperate people will do desperate things.

For my efforts I received certificates of accomplishments and high praise from a headquarters located in another state. My customers were not stupid or ignorant – they were in crisis. I ended any ability they may have had to overcome that crisis by putting the final nail in their financial coffins. Unfortunately, my ability to keep my job depended on my ability to collect the money owed to my store.

The collection practices that I as a manager were trained and expected to follow were questionable at best. Our first option was to call the customers home. Seems innocent enough until the fifteenth call of the day at which time we turned our sights on their place of employment. We would contact personnel managers and supervisors each day. If that was unsuccessful then we turned our attention to their friends, families, and neighbors if needed. Those numbers were provided by the customer under the guise that they were needed as references to approve the loan. If attempts to reach the customer failed then we were pressured to go to their homes and attempt to retrieve the money.

Our actions may have not been illegal, but they were certainly unethical.

During the last session in Richmond one of the ‘changes’ that was proposed was the creation of a database that could track a customer’s lending practices within the payday industry. This was nothing new to those of us that worked in the business. I worked with such a program on the first day I opened my store. I could not only tell how many loans a person had and where they were taken, but I could tell if they were in a store while I was looking through their account. I would pick up a phone and call the manager of a lender and ask if one of my customers was there. If they were I would drive to the store, stroll in and say hello, and then ask the customer if they were heading over to see me. We pressured, threatened court actions, and generally intimidated customers that wouldn’t ‘work with us’ which essentially meant that they didn’t come in on payday and so we bounced their check.

My district manager supplied me with a list of 1-800 numbers for banks. I dialed the number of a customer’s bank, entered the customer’s checking account number, and in an instant I knew exactly what their account balance was. If the money was there-off in my car I went to collect on the check.

Our actions may have not been illegal, but they were certainly unethical.

The position that our current leaders in the Virginia Senate have adopted is unconscionable. I realize that is not a politically correct statement to make while people are trying to gain support for change, but after nearly four years in this fight I’m tired.

I’m tired of watching elected officials tip toe through the garden of leadership unscathed. I’m tired of conversations where the truth is substituted for language that allows leaders to duck for cover and save face. This legislation was wrong the day they passed it; it is wrong today, and they should be ashamed of themselves for allowing this wrong to continue one day longer.

Abraham Lincoln once said “I shall try to correct errors where shown to be errors, and I shall adopt new views as fast as they shall appear to be true views.” Sadly, it is clear to me today that no Lincoln-est heart exists in the chambers of the Senate or within the halls of this great Commonwealth, but we shall continue our search. We must.

This conversation, this commitment we make, will define us. Will we be remembered as a society, a Commonwealth, a community that forfeited our responsibility to protect the greater good for the sake of promoting the singular liberty of those whose existence is based on exploitation, or will we stare principle in the eye, lift our chin, stiffen our resolve, and then, with God and all people alike watching in wonderment take on the simple courageous task of turning a wrong into a right?

Each of us better know this: The answer to that question; the choice we make will define us as either arrogant, compliant, and unwilling to acknowledge the truth, or honorable, principled leaders that support the notion that all people have the right to equal protection under the law.

Stephen Winslow is the executive editor of Conservative Viewpoints and a former manager of a Payday Lender.

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3 Responses to “Payday Lending: A practice whose end has come…”

  1. Phil said

    In my comment to your first article on PaYday loans I said we must protect consumers from unscrupulous lenders. It was the behavior that you described that I meant. There is nothing wrong with a loan and 30% interest for an emergency need. The problem arises when we have lenders collecting numerous unwarranted fees. It is also a problem when we have lenders who make repeated loans to individuals who are unable to pay back the cash. That is a government problem
    Conversly,consumers who take repeated loans to finance a higher lifestyle than their salary permits will eventually crash and burn. That is not a government concern.
    I believe in transparency and truthfulness. Clearly borrowers should be advised of the facts of what they are borrowing.They should be made aware of the costs. The truth in lending laws should be utilized.

  2. David said

    I don’t understand why the DuPont Community Credit Union doesn’t offer loans to these borrowers and put the cash advance companies out of business. My guess is: A. lack of vision, B. extreme regard for increasing DCCU paychecks and little regard for helping the poor.
    Once, the WDECU was known for promoting home ownership.
    And don’t ask me why the DCCU gave Delegate Steve Landes a job or even what he does or what it pays.

  3. […] 7 Winslow, Stephen, Payday Lending: A practice whose end has come, Conservative Viewpoint blog entry for May 25, 2007 […]

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