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How the Payday Loan Industry is Obstructing Reform

In June 2016, the Consumer Financial Protection Bureau proposed new guidelines to protect consumers from payday loan traps. These traps help perpetuate the cycle of poverty and prey on individuals in low income communities who are unable to obtain loans from a bank. The multi-billion-dollar payday lending industry has garnered influence with both Republicans and Democrats in order to inoculate itself from legislations and reforms that could potentially hurt its profits.

The call from progressives to reign in this industry has put political pressure on the Democrats who have traditionally protected and pushed its interests as they benefited from big campaign donations. Disgraced DNC Chair Debbie Wasserman Schultz earned the nickname “Debt Trap Debbie” from a progressive group in Florida due to her longstanding ties to the payday loan industry before she flip-flopped on the issue in June 2016 preceding her first Democratic Primary race ever since she first entered congress in 2004.

Hillary Clinton announced her support for the CFPB guidelines when they were proposed. Bernie Sanders went further in his proposals, calling for a 15 percent cap on all consumer loans and ambitiously proposed returning banking services to postal offices, reducing the demand for these services in low-income communities that pay day lenders often fill.

In March 2016, Vice News uncovered a meeting of payday lender industry leaders in the Bahamas in preparation of stopping any reforms proposed by the CFPB from being enacted. “The industry plotted to bombard the Consumer Bureau with comments and studies suggesting regular people would be the real losers—even if their own oversized profits were obviously the focal point,” wrote David Dayen for Vice, who noted thousands of these comments have already been submitted. The deadline for public comments on the guidelines is October 7th. Dayen cited the reasons for flooding the CFPB with comments is to put pressure against changing any rules, provide a basis for follow-up litigation against any rule changes, and to delay any rules from being enacted.

Many of the comments already submitted appear to be plagiarized and duplicated, according to the non-profit grassroots organization, Allied Progress. “Payday lenders cannot be trusted to deal honestly with the Consumer Financial Protection Bureau. We have found sentences and entire paragraphs that have been reused verbatim in hundreds of supposedly personal testimonials opposing the CFPB’s proposed payday lending rule,” said Allied Progress executive director Karl Frisch in a press release. Frisch wrote a letter to the Director of the Consumer Financial Protection Bureau, Richard Cordray, outlining several examples of duplicated phrasing in many of the comments in opposition to the CFPB proposal. “Someone needs to explain how so many individuals could have the exact same experience and come up with the exact same words in the exact same order to describe that experience with just a few unique passages sprinkled in an apparent attempt to throw off suspicious readers.”

Some of the duplicitous comments cited by Frisch include;

+ “There are no other products out there that give you the freedom that a pay day loan can give you,” appears in at least forty-three different stories.

+ “It was a very efficient process and definitely the most reasonable option for me,” appears in at least eighteen different stories.

+ “Medical bills can be very difficult to get under control and are very confusing. This loan was a great solution for me,” appeared in at least twenty-eight different stories.

+ “After doing a little research online, I found that payday loans were exactly the option I needed. I was able to walk in and sit down with someone who explained everything easily to me and I got my money in no time,” appeared in at least fifteen different stories.

+ “To avoid bouncing a check, I turned to a loan to help pay some bills. I found that it was a great choice for me and I was able to pay my power bill on time and without penalty,” appeared in at least forty-nine different stories.

+ “These can really put a hurt on our wallet but after getting a short-term loan, we do not have to worry as much about the payments and can focus on staying healthy,” appeared in at least thirty different stories.

+ “I’ve recommended pay day loans to people and used them myself, and everyone I’ve talked to has had a good experience and is grateful for the small loans they get. I’m not sure what many of us would do if we could not take out these loans any more. The government should leave them alone since they help so many families,” appeared in at least seventeen different stories.

+ “I work long hours and do not have time to get to a regular bank or wait for my paycheck to clear so I can pay bills. I do not have confidence that the bank will work with me when I’m in a pinch for cash, but I know that a payday loan shop will. They get that I need money right away and will pay the advance back as soon as I can, without a bunch of paperwork or surprises,” appeared in at least twenty-two different stories.

In an era of ever increasing corporate power, the tactics being utilized by the payday loan industry to quash reform or rule changes that would benefit the public, but hurt their profits, is the modus operandi of corporate influence on public policy. The money, size, and scope of this industry, and others like it, enable them to resonate their own opinions and interests into government policy meant to be created for the greater public good. With the CFPB proposals, the payday loan industry is not only asserting its own interests to stop the reforms contrary to public interest, but they are manufacturing public opinions to distort popular consensus on the guidelines in their favor.

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Michael Sainato’s writing has appeared in the Guardian, Miami Herald, Baltimore Sun, Denver Post, Buffalo News, the Hill, Alternet, and several other publications . Follow him on twitter: @MSainat1

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