Tag: Pay Day Loans

Regulating Pay Day Lenders Is Like Whack-A-Mole

Cross posted from The Stars Hollow Gazette

On HBO’s “Last Week Tonight” John Oliver took on the predatory Pay Day loan scams which he described as the “circle of debt” and is like trying to regulate “Wack-a-Mole.”

Payday loans put a staggering amount of Americans in debt. They prey on the elderly and military service members. They’re awful, and nearly impossible to regulate. We’ve recruited Sarah Silverman to help spread the word about how to avoid falling into their clutches.

On Monday it was announced that New York prosecutors were going to take another wack at them.

New York Prosecutors Charge Payday Lenders With UsuryNew York Prosecutors Charge Payday Lenders With Usury

By Jessica Silver Greenberg, The New York Times

A trail of money that began with triple-digit loans to troubled New Yorkers and wound through companies owned by a former used-car salesman in Tennessee led New York prosecutors on a yearlong hunt through the shadowy world of payday lending.

On Monday, that investigation culminated with state prosecutors in Manhattan bringing criminal charges against a dozen companies and their owner, Carey Vaughn Brown, accusing them of enabling payday loans that flouted the state’s limits on interest rates in loans to New Yorkers.

Such charges are rare. The case is a harbinger of others that may be brought to rein in payday lenders that offer quick cash, backed by borrowers’ paychecks, to people desperate for money, according to several people with knowledge of the investigations.

“The exploitative practices – including exorbitant interest rates and automatic payments from borrowers’ bank accounts, as charged in the indictment – are sadly typical of this industry as a whole,” Cyrus R. Vance Jr., the Manhattan district attorney, said on Monday.

In the indictment, prosecutors outline how Mr. Brown assembled “a payday syndicate” that controlled every facet of the loan process – from extending the loans to processing payments to collecting from borrowers behind on their bills. The authorities argue that Mr. Brown, along with Ronald Beaver, who was the chief operating officer for several companies within the syndicate, and Joanna Temple, who provided legal advice, “carefully crafted their corporate entities to obscure ownership and secure increasing profits.”

Now if they had just done the same with the CEO’s of the Too Big To Fail banks.