A legacy of racial discrimination in housing, lending, banking, policing, employment, and otherwise, has produced dramatically inequitable outcomes that persist today. Communities of color, often largely segregated due to the history of redlining and other racially exclusionary housing policy, experience higher rates of poverty, lower wages, and higher cost burdens to pay for basic living expenses. Payday loans cause particular harm to these communities.
Payday lenders target borrowers of color, in part by concentrating their locations in communities of color. Indeed, the communities most affected by redlining are the same who are saturated by payday lenders today. Payday lenders in California were found 2.4 times more concentrated in African American and Latino communities, even after controlling for income and a variety of other factors.