Payday Loan Industry Mounts PR Offensive

Consumer Affairs
August 31, 2010
Huffman, Mark

As more states crack down on payday loans, the industry is attempting to inundate the media with press releases in order to make a case for itself. For example, after the Colorado legislature passed a measure capping interest rates at 45 percent, a Web site called aboutpaydayloan.com issued a press release taking issue with the bill's provision requiring lenders to give borrower's six months to repay a loan instead of two weeks. However, Uriah King of the Center for Responsible Lending (CRL) asks how a payday customer who borrows $500 is going to be able to repay it from the next paycheck. "The answer is you can't," he says, "so you have to take out another two-week loan. That's the debt trap." It is not clear who operates the Web site that issued the press release, and many of the postings are from anonymous writers. Payday lenders also are trying to link themselves to law enforcement by associating themselves with efforts to rein in fraudulent debt collectors. Charlene Crowell, also of CRL, doubts the media barrage will work. She explains that voters typically reject payday lending practices and legislatures often have trouble getting pro-payday loan legislation out of committee. King advises consumers not to be fooled by payday lenders that offer financial advice. "Unless they tell you 'don't ever take out a payday loan,' I don't think I would be taking financial literacy advice from payday lenders," he declares.
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