By Jim Lardner, Americans for Financial Reform
Predatory payday lenders do not like to be told how they can and can’t abuse consumers, and they fight protections every step of the way.
Months before the Consumer Financial Protection Bureau proposed a new rule in 2016 that threatens the profits of avaricious payday lenders across America, the industry’s leaders gathered at a posh resort in the Atlantis in the Bahamas to prepare for battle. One of the strategies they came up with was to send hundreds of thousands of comments supporting the industry to the consumer bureau’s website. But most of their comments, unlike those from the industry’s critics, would be fake. Made up.
Payday lenders recruited ghostwriters
They hired a team of three full-time writers to craft their own comments opposing the regulation. The result was over 200,000 comments on the consumer bureau’s website with personal testimonials about payday lending that seemed unique and not identical, supporting the payday lending industry. But if you dig a little deeper, you would find that many of them are not real.
Late last year, the Wall Street Journal and Quid Inc., a San Francisco firm that specializes in analyzing large collections of text, dug deeply. They examined the consumer bureau comments and found the exact same sentences with about 100 characters appeared more than 200 times across 200,000 comments. “I sometimes wondered how I would be able to pay for my high power bill, especially in the hot summer and cold winters” was a sentence found embedded in 492 comments. There were more: “Payday loans have helped me on multiple occasions when I couldn’t make an insurance payment,” and “This is my only good option for borrowing money, so I hope these rules don’t happen,” appeared 74 times and 295 times, respectively.
At the same time, the Journal conducted 120 email surveys of posting comments to the CFPB site. Four out of ten supposed letter-writers claimed they never sent the comment associated with them to the consumer bureau website. One lender told the Journal, for example, that despite a comment clearly made out in her name discussing the need for a payday loan to fix a car tire, she actually doesn’t pay for car issues since her family owns an auto shop. Consumer advocates had previously suggested something fishy was going on, and were vindicated by the report.
Another WSJ investigation has identified and analyzed thousands of fraudulent posts on other government websites such as Federal Communications Commission, Securities and Exchange Commission, Federal Energy Regulatory Commission, about issues like net neutrality rules, sale of the Chicago Stock Exchange, etc.
Payday lenders also forced borrowers to participate in their campaign
They had previously used this tactic to organize a letter-writing campaign in an attempt to influence local lawmakers, with forced signatures. The campaign collected signatures from borrowers to support legislations that would legalize predatory loans with triple-digit interest rates in the states. According to State Representative of Arizona Debbie McCune Davis, borrowers were forced to sign the letter as part of their loan application. Some did not even recall they signed the letters.
Fast forward back to the consumer bureau’s proposed payday lending rule, and some trade association websites were used to spread comments praising the industry with borrowers’ names who actually had nothing to do with it. Carla Morrison of Rhodes, Iowa, said she got a $323 payday loan and ended up owning more than $8,000 through a payday lender. “I most definitely think they should be regulated,” Morrison said, after she knew payday lenders used her name to fraudulently praise the industry. The truth is, Morrison’s comment originated from a trade association website, IssueHound and TelltheCFPB.com, which the payday-lending trade group, Community Financial Services Association of America, used to forwarded comments on payday-lending rule, with no clue these comments were fake. “I’m very disappointed, and it is not at all the outcome we expected,” said Dennis Shaul, the trade group’s CEO.
Payday lenders even tricked their own employees
In Clovis, Calif Payday lender California Check Cashing Stores asked its employees to fill out an online survey after too few customers did. In the survey, Ashley Marie Mireles, one of the employees said she received a payday loan for “car bills” to pay for patching a tire. The truth was she never paid the bill because her family owns an auto shop where she doesn’t have to pay.
Fake names, ghostwriters, and forced signatures. Payday-lenders financed a process of driving fraudulent material to stop regulation curbing the industry’s abuses. It wasn’t enough that they’re running an industry based on the immoral notion of trapping borrowers into a cycle of debt where they cannot escape, targeting the most financially vulnerable communities. Apparently, these voracious payday lenders will do anything to fight protections for consumers.
The consumer bureau has since issued a final rule this past October, with protections for borrowers going into effect in 2019.