Payday Lenders Lobbied Minnesota Legislature with Fake Petition Signatures

With the Sioux Empire Fair wrapping up today, Lisa Furlong’s fake petitioners will have to take their decoy effort on the road. Watch out for their obviously fake 18% petition at the fairs and on the streets.

If the Attorney General and Secretary of State issue the necessary approval for Furlong and the payday-lender lobby to circulate their trick petition for real, we’ll want to keep a close eye out for fake signatures. The Minneapolis Star-Tribune finds that when payday lenders organized a petition drive to persuade Minnesota legislators not to tighten rules on payday lenders, many of the petition postcards turned out to be fake:

Last year Payday America launched what it said was a grass-roots campaign of customers willing to personally attest to the value they attached to their ability to access short-term loans.

But that effort appeared to become problematic.

Legislators have twice received thousands of signed petition cards as a way to demonstrate that Payday America customers opposed reform efforts. Store employees solicited customers’ signatures when they applied for or repaid outstanding loans.

The Star Tribune obtained more than 200 of the cards. Dozens of them contained only names or e-mail addresses, making it impossible to verify their authenticity. One was filled out by a store manager who did not indicate she worked for the company.

Legislative staff for Rep. Jim Davnie, DFL-Minneapolis, encountered similar problems responding to postcards when he sponsored a failed payday lending reform bill in 2010.

“What my office discovered was that any number of those postcards were fraudulent,” he said. “We had postcards coming from people who, when contacted, said they didn’t sign postcards. One was from a juvenile, who by law is prohibited in engaging in payday lending. We had postcards that clearly were fraudulent return addresses.”

One postcard reviewed by the Star Tribune was signed with the name Titus Stroman. Stroman is an inmate at the Faribault prison and said he never filled out the postcard and has not taken out a payday loan. Another postcard contained information for a St. Paul man, who, when reached by the Star Tribune, said he had never taken out a payday loan. He said he recognized the handwriting as his late brother’s.

Told of the apparently suspect petition cards, Rixmann expressed surprise and said his company would conduct an internal investigation. “We focus on running our business on the high road,” he said. He added: “I can tell you in no way, shape or form was anyone instructed to fraudulently put signatures or addresses on these postcards. I would be extremely disappointed in our staff for doing something like that” [Ricardo Lopez, “Leader in Payday Loans Makes His Presence Felt at Minnesota Capitol,” Minneapolis Star-Tribune, 2015.08.08].

Expect South Dakota’s payday lenders to be shaking down customers for petition signatures on top of their triple-digit interest payments come September. But I wonder: just how many petition signatures could payday lenders legitimately collect in their South Dakota stores this fall?

The Pew Charitable Trusts estimates that the payday loan usage rate in “permissive” lending states like South Dakota is 6.6%; if that’s a percentage of all adults in the state, then payday lending customers constitute about 42,500 South Dakotans. Furlong’s constitutional amendment petition requires 27,741 signatures to make the ballot. However, if Attorney General Marty Jackley doesn’t complete his review and explanation of the fake-rate-cap proposal until the statutory deadline of September 11 (and remember, AG Jackley, you should take all the time you need, since the payday lenders are deeply concerned that you choose your words carefully), the payday lenders will have not quite two full months to circulate their petitions. That’s one-sixth of the year, which would mean access to maybe one-sixth of their customers. If we take a wild swing at guessing returning customers (and the payday lenders rely on returning customers), maybe in that two-month period the payday storefronts will see a third of their customers. That would be only 14,000 possible signers, and not all of them will be registered voters. I calculate that currently 78.6% of South Dakota adults are registered to vote; that registration rate is likely lower among the lower-income folks whom the loan sharks lure into their shops. Assume a still-generous 70% registration rate and 100% willingness to sign (if you’ll sign a loan for 500% interest, you’ll sign anything), the customers the payday lenders see from September 11 to November 8 (the day before the initiative petition submission deadline) could provide about 9,900 signatures, 36% of what Furlong needs to get her decoy amendment on the ballot, or 31% of the 32,097 signatures she needs to achieve the skin-of-our-teeth 15.7% cushion we submitted on SB 69/Referred Law 19.

Hmm… in addition to their brutish rubes threatening reporters on the street, I think we’ll see an extra advertising push from Dollar Loan Center and other payday lenders this fall to bring more customers to their stores.