Alternative Financial Services Industry: Never Heard Of It?

by Kevin Gipson, New Orleans Bankruptcy Attorney

June 1, 2013

Kraft Commercial

The Alternative Financial Services Industry (AFSI).  Never heard of it?

Well you have probably heard of Pawnshops, Pay Day Loans, Cash Advance Loans and Title Loans?  Believe it or not, they are one and the same.

So, to quote Shakespeare, What’s in a name?  In this case, plenty!

Pawnshops and their like have been trying to change their image.  Unfortunately, they haven’t changed their tactics.

The Federal Reserve notes that the AFSI is used mostly by those who are “unbanked, or underbanked”.

Between the warm and fuzzy commercials by pawnshops such as Cash America and Advance America, and TV shows like Pawn Stars the industry is trying to recreate  itself.

When Kraft Foods did a commercial for it’s macaroni and cheese where a little girl sold her father’s golf clubs because dear old dad kept stealing her mac and cheese, the President and CEO of Cash America, Daniel R. Feehan found it necessary to go online to defend the pawn business, all the while setting in front of a row of TV’s that his company was selling that had been pawned and were now for sale because the individual could not afford to redeem the item they had to pawn.  Kraft Commercial 2

 

 

 

The following is the reality of the pawnshop business:

Cash America.Pawn Ticket

This pawn ticket shown above was from a bankruptcy client of mine.

Fortunately for this client, they were able to redeem the item they pawned while paying 240% interest to borrow the money.  Those not so lucky lose their items forever when they are sold because they were not redeemed.

And unlike reality TV shows such as Pawn Stars and Cajun Pawn Stars, real pawn shops do not bring in experts to examine the items to determine the value of the items to make sure that the seller gets top dollar.

Business like pawnshops and cash advance, payday loan and title loan companies take advantage of individuals when they are at their lowest point.

If you are having financial problems, seek advise from someone such as a family member, friends or an attorney before you take the drastic actions of pawning your possessions.

 

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I've been a consumer bankruptcy lawyer for nearly 25 years. Since that time I have helped many people resolve their financial problems. I have been practicing law since 1986 and I am licensed to practice in all state and federal courts in the State of Louisiana. Because I am a sole practitioner, you know that your debt matters are being handled by me personally. In addition to my work with consumers, I am also frequently asked to speak at local seminars on bankruptcy law. I am member of the following organizations: • Louisiana Bar Association • National Association of Consumer Bankruptcy Attorneys • Bankruptcy Law Network My office is located at: 3920 General DeGaulle Drive, New Orleans, LA 70114 Telephone: (504) 368-4101

Last modified: June 1, 2013