Cash USA Gets Key Facts Wrong

September 21, 2010

We can understand why payday lender Cash USA is upset about the newest report on its industry. "The Predators' Creditors" describes how big banks directly finance the loans and operations of at least 38% of the payday lending industry--that's 450,000 payday loans ($16.4 billion) each year.  Many of these banks received TARP bailout funds, and all of them borrow from the Federal Reserve at a 0.5% interest rate and lend to payday firms making 400% APR loans to financially-strapped borrowers.  We're pleased this troubling issue is getting the public attention it deserves.  (The report was published by National People's Action (NPA) and the Public Accountability Initiative, and Cash USA is wrong to say it's been pulled from the NPA website -- it's available via the NPA "Showdown in America" campaign at 

Maybe Cash USA figured that, as long as it was complaining, it might as well throw in some old--albeit bogus--attacks on CRL as well.  Here's a run down of their major mistakes:

  • The "Federal Reserve report" that purportedly supports payday lending carries the proviso that "The views expressed in the paper are those of the authors and are not necessarily reflective of views at the Federal Reserve Bank of New York or the Federal Reserve System."   And the paper is fundamentally flawed because it intermingles data from Georgia and NC--states that outlaw payday lending--with states that allow it.  Read our critique.

  • While payday lending database supplier Veritec may quibble with CRL's view that a payday borrower who takes out many loans over the course of a year is trapped in debt, their data consistently show that borrowers tend to take out another loan right after paying back a previous one—paying a new fee every time.  Clearly the borrower's financial problems were not solved by their current payday loan (or the one before that, or before that). And no surprise that payday lenders depend on this repeat borrowing for the bulk of their revenue.

  • CRL's affiliate Self-Help Credit Union did not push for a payday lending ban in North Carolina so it could expand -- Self-Help does not make payday loans.  The growth in assets cited by Cash USA came from growth in our mortgage and small business lending. (Note to payday lenders, don't bother asking us for financing. We don't want to grow that badly.)

  • Payday lenders are spending millions on lobbying, fake front groups, websites, and other PR tools to attack its critics.  Allegations of CRL conflicts of interest are coming from payday lenders, not objective media sources.

More straight answers: payday lending | Self-Help |