Predatory lending is nothing new, and the recently released Ferguson Report gives us an inside look at the impact of predatory lending on a community like Ferguson and the St. Louis, Missouri area.
The payday loan industry in Missouri has been especially resilient; their lobby forces pour millions into an effort to make sure their industry is largely unregulated. The reasoning is simple: the money is quite good.
Imagine another industry where loaning $80 can get you a return of $19,643 and change.
The Ferguson report specifically discusses economic issues, specifically minimum wage, judicial fines and yes, Pay Day Lending.
The fight over payday lending has been hard fought in Missouri, where many of their state Representatives and Federal Representatives have been seen as some of the strongest defenders of payday loan practices, but agencies from around the country - including next door Kansas - have profited from the misery created.
The Kansas City metro was recently rocked by a payday loan scandal in which a large Johnson County (Kansas) firm which offered payday loans in many states was found to float loans illegally to individuals who didn't even request them. The strategy, which pulled people into debt against their own wishes resulted in a federal investigation and numerous fines.
What didn't happen? No one went to jail.
http://www.kansascity.com/...
If anyone tried to contest the unauthorized transactions, the companies would “misrepresent to the banks that consumers authorized the transactions,” according to the FTC’s complaint.
The companies even produced bogus loan applications or other phony documents as proof that people had agreed to borrow the money, the FTC said.
“For example, instead of paying $390 for a $300 loan (as stated in the loan’s disclosure documents) some consumers have paid defendants more than $1,000” in automatic charges that would occur every two weeks, according to the complaint.
In a single year from 2012 to 2013, Coppinger and Rowland’s companies issued $28 million in payday “loans” and withdrew more than $46.5 million from bank accounts, the FTC says.
After committing more than $48M in theft, the end result:
http://www.kansascity.com/...
Phil Greenfield, an attorney for Rowland, said his client already had stopped his lending activity voluntarily, long before the FTC filed the case.
“Mr. Rowland fully cooperated in the FTC investigation, and there was no evidence Mr. Rowland participated in, or knew about, any of Mr. Coppinger’s or his call center’s challenged lending practices,” Greenfield said in an email.
He said Rowland accepted the FTC offer to settle the case “simply to move on with his life.”
Coppinger could not be reached for comment.
The settlements were filed with the U.S. District Court for the Western District of Missouri and are subject to court approval.
What the Ferguson Report tells us is that while Mr. Rowland can "move on with his life" for those put into a life long debt, who didn't make millions off the backs of those impoverished, "moving on" isn't quite so easy, and the consequences can be severe.
Payday loan reform will be a hard fought battle for many, but we continue to see the predatory practice act as a reverse Robin Hood; stealing money form those who need it most and returning it to those who can ruthlessly pursue it.
http://www.theguardian.com/...
“Here’s a client of ours,” he says, showing me a legal brief. “She borrowed $100. She made one instalment payment, couldn’t pay the rest, and was sued. Since then they’ve collected $3,600 in payments by garnishing her wages. That’s 36 times the hundred bucks she owed. They told her she still owes $3,600 more. The wage garnishments are reducing the debt slower than the high interest, which is 200%. She called her attorney and asked ‘When will I be done paying this?’ And he said: ‘Never.’ It’s indentured servitude. You will never, ever be done.”