The Payday Loan Industry Uses Cash to Buy Partnerships with Minority Groups
By Chip Parker, Jacksonville Bankruptcy Attorney on Mar 5, 2007 in Florida, Personal Finance
In the 2006 satirical movie, Thank You For Smoking, Big Tobacco spokesman Nick Naylor convincingly argues that cigarettes are actually good for you. The fictional Naylor travels from Washington, D.C to Hollywood to make a deal with movie executives to get more stars to smoke in movies. If you’ve seen the movie, you know that, as funny as it is, these types of relationships are formed all the time using money as glue.
As proof that truth is stranger than fiction, The Community Financial Services Association of America, the national trade association for payday lenders, is partnering with several minority groups to promote “financial literacy.” In addition to its $10 million advertising campaign to encourage “responsible” use of payday loans, Michelle Singletary of the Washington Post reports that the CFSA is giving $2 million to prominent minority groups to stand by its side.
A payday loan is a small loan that a person is supposed to repay out of his or her next paycheck. Consumer advocacy groups oppose the payday loan industry because its customers are our nation’s working poor, and they are being charged huge, sometimes triple digit, interest rates. As Associated Press reporter, Susanne M. Schafer, reports in her recent article, payday loan customers are supposed to repay their loan with their next paycheck, but often borrowers must “roll over” their loan repeatedly which adds additional fees.
In a curious alliance, the CFSA is teaming up with The National Conference of Black Mayors and the National Black Caucus of States Institute to “educate African-American legislators and community leaders on critical issues regarding consumer credit, and provide community volunteers with resources they need to educate consumers in their communities on how to become credit savvy.” These are the groups that are supposed to be protecting their minority constituents from these predatory lenders! What’s next? Will Mothers Against Drunk Driving work with The Distilled Spirits Council – a lobbying group for hard liquor manufacturers – to promote responsible drinking and driving?
As Ms. Singletary points out, “Using a credit card to buy things you can’t pay off the next month is bad enough, but to borrow against your next paycheck is the very definition of irresponsibility. It’s an incredibly unwise financial move.”
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