{"id":557,"date":"2007-02-25T18:30:26","date_gmt":"2007-02-25T22:30:26","guid":{"rendered":"http:\/\/blogs.law.harvard.edu\/shlep\/2007\/02\/25\/wapo-on-payday-loans-and-pr-strategies\/"},"modified":"2007-02-26T01:09:49","modified_gmt":"2007-02-26T05:09:49","slug":"wapo-on-payday-loans-and-pr-strategies","status":"publish","type":"post","link":"https:\/\/archive.blogs.harvard.edu\/shlep\/2007\/02\/25\/wapo-on-payday-loans-and-pr-strategies\/","title":{"rendered":"WaPo on Payday Loans and PR strategies"},"content":{"rendered":"

\u00a0\"percent2G\"\u00a0 Two days ago, we wrote<\/a> about the outbreak of legislative battles over payday loans, saying it was a great case study in consumer protection regulation.\u00a0 We noted that the industry had just started a campaign to fend off pending legislation with proposed self-regulation and a major advertising campaign for “responsible borrowing.”\u00a0 Two recent Washington Post<\/em> news stories were quoted in our posting.\u00a0 Today, WaPo<\/em>‘s “personal finance columnist” Michelle Singletary weighed in on the controversy, in “Payday Loans: Costly Cash<\/a>” (Washington Post, <\/em>February 25, 2007).\u00a0<\/p>\n

Although she admits that payday lenders\u00a0“are providing a service the people want,” Singletary leaves no doubt\u00a0how she feels about payday lending.\u00a0 After saying the industry’s new ad campaign purports to be aimed at creating responsible borrowers, she states that “more often than not, any use of payday loans is unwise,” and opines:<\/p>\n

\"SoapBox\"\u00a0 “Using a credit card to buy things you can’t pay off the next month is bad enough, but to borrow against your next paycheck is the very definition of irresponsibility. It’s an incredibly unwise financial move.”<\/p><\/blockquote>\n

Singletary\u00a0explains why\u00a0“Consumer advocacy groups are highly critical of these loans,” and she\u00a0then tries to figure out\u00a0why “several minority groups have partnered with the CFSA to promote financial literacy . . . especially when so many payday storefronts are located in economically depressed minority neighborhoods?”\u00a0 Her answer:<\/p>\n

“Well, it turns out there’s money in it for the minority groups.<\/p>\n

“The CFSA [Community Financial Services Association] is giving about $2 million to fund financial literacy programs for two groups, said its spokesman, Steven Schlein.<\/p>\n

“The trade association is partnering with the National Conference of Black Mayors to host summits ‘to teach young people the importance of building a solid financial future.’ I certainly hope it’s a future that never involves a payday loan.”<\/p><\/blockquote>\n

The CFSA is also “teaming up with the National Black Caucus of States Institute” to — in the Association’s words —\u00a0“educate African-American legislators and community leaders on critical issues regarding consumer credit, and provide community volunteers with resources they need to educate consumers in their communities on how to become credit savvy.”<\/p>\n

\"donkeyS\"\u00a0\u00a0\u00a0 Singletary concludes: “What better way to try to fend off regulation than to partner with minority groups supposedly looking out for the very people their opponents say the industry is taking advantage of?”\u00a0 I wonder if community leaders are\u00a0trying to establish\u00a0more affordable borrowing options<\/a> for their constituencies?\u00a0 I wonder if they sincerely believe that payday lenders would stay in their neighborhoods if they were forced by law to charge a reasonable interest rate?\u00a0 [update<\/em>:\u00a0Ed Mierzwinski at U.S.PIRG Blog<\/a> has some words to say about the tactics of trade associations and PR firms, including “Whether you are a payday lender, a telephone or cable company or even a tobacco company, you can usually find some consumer or community or, in this case, minority legislative group that needs the money and provides you with cover.”]<\/p>\n