Payday, Title, and Installment Lenders Show Signs of Strain


Given the many ways in which payday lenders have been able to transform themselves  into title lenders and installment lenders, and to otherwise avoid state law,  l try not to get too optimistic that high-cost lending practices  will be curbed. Yet I feel a bit hopeful after reading Paul Kiel’s recent ProPublica article  The Payday Playbook: How High Cost Lenders Fight to Stay Legal.

In this piece,  Kiel continutes his superb coverage of these products by chronicling the citizen’s ballot initiative undertaken by  Missouri consumers once they realized that their legislature was “bought and paid for” and would not be outlawing high-cost credit in Missouri. According to this article, citizens leading and participating in the ballot initiative, which included many religious organizations and non-profits, were tracked down, sworn at and yelled at by employees of  Missourians for Equal Credit Opportunity (“MECO”), a non-profit formed by the high-cost credit industry. And that is not the half of it. Clergy organizing the ballot initiative (many from African- American churches) received a “legal notice” in the mail from  MECO, threatening criminal sanctions for “the collection of signatures for an initiative petition.” Say what? Then MECO filed a lawsuit to try to stop the organizers from collecting signatures for the ballot initiative, under grounds that were, well, groundless.  As many of you know, ballot initiatives have been used in many states to eradicate payday lending, among hundreds of other purposes. Finally, MECO ran television ads featuring clandestine figures in dark suits instructing voters that “if someone asks you to sign a voter petition, just decline to sign.” When none of this seemed certain to kill the ballot initiative, 5,000 ballots were stolen out of one organizer’s car.

When did the usual efforts of transforming loans (from payday to title or installment) and lenders (from payday lender to CSO to tribe to off-shore) become not enough to survive? Am I the only one catching a whiff of desperation here?