As we breathlessly await Monday’s court hearing in the dilatory lawsuit one payday lender has filed to block the interest-rate-cap ballot initiative, let’s keep in mind this example of the sleaziness of the predatory usury industry.
After hearing the usual apologists for big-money predators focusing on the goodness and decency of payday lenders gracing society with a necessary service rather than discussing the legal merits of the lawsuit, I sought perspective on the merits of the industry from South Dakotans for Responsible Lending, the coalition of South Dakota neighbors seeking the 36% rate cap, who unlike the litigant in the lawsuit don’t go erasing their online profile the moment they get talked about online. South Dakotans for Responsible Lending pointed me toward this example of what fine, upstanding neighbors payday lenders can be.
In July 2014, the Consumer Financial Protection Bureau took $10 million out of the hide of ACE Cash Express for predatory lending practices:
“ACE used false threats, intimidation, and harassing calls to bully payday borrowers into a cycle of debt,” said CFPB Director Richard Cordray. “This culture of coercion drained millions of dollars from cash-strapped consumers who had few options to fight back. The CFPB was created to stand up for consumers and today we are taking action to put an end to this illegal, predatory behavior.”
…The Bureau found that ACE used these illegal debt collection tactics to create a false sense of urgency to lure overdue borrowers into payday debt traps. ACE would encourage overdue borrowers to temporarily pay off their loans and then quickly re-borrow from ACE. Even after consumers explained to ACE that they could not afford to repay the loan, ACE would continue to pressure them into taking on more debt. Borrowers would pay new fees each time they took out another payday loan from ACE. The Bureau found that ACE’s creation of the false sense of urgency to get delinquent borrowers to take out more payday loans is abusive [Consumer Financial Protection Bureau, “CFPB Takes Action Against ACE Cash Express for Pushing Payday Borrowers Into Cycle of Debt,” CFPB.org, 2014.07.10].
To demonstrate ACE Cash Express’s intentional abuse of customers, CFPB posted this page from an ACE Cash Express training manual for new employees:
Get low-income folks to take a short-term loan, count on their inability to pay it back, then strong-arm them into taking another loan—doesn’t sound very neighborly or necessary to me.
ACE Cash Express has often teamed with Select Management Resources, the outfit suing to blog South Dakota’s rate-cap initiative, to lobby and donate to politicians to protect their hunting grounds—er, business interests. If payday lenders like ACE Cash Express will deal unscrupulously with their customers, they would seem like to deal unscrupulously with our courts and our local citizen activists.