Payday lenders got a black eye yesterday when Cameron Blakely denounced in a press conference yesterday the predatory lending practices he engaged in last year as manager of a Washington, D.C., Check ‘n Go. As the Associated Press reports, Blakely said he was trained to encourage people to take out the maximum $500 payday loan as a way to keep them coming back for more money.
“I realized I was working for financial terrorists, bent on financially enslaving as many hardworking Americans as they possibly could,” Blakely said at a news conference. He appeared with John LaCombe, founder of CapAmerica, a group of former payday loan borrowers and whistleblowers.
Check ‘n Go attorney Yancy Deering countered that the company does not lend the maximum amount to people it doesn’t think will be able to repay the loan. “We want the product to work, and for it to work people must be able to pay it back on the date that the loan becomes mature.”
Blakely’s charges, if true, would prove very damaging to the Payday lending industry. It’s one thing to offer emergency loans with high interest rates and high fees — the loans are small, short-term, expensive to adminster and inherently risky. It’s quite another to deliberately entrap customers in a cycle of indebtedness. The Payday people had better present some convincing evidence that Blakely’s charges are either untrue or an aberration, or they’ll lose me, an otherwise consistent defender of the industry, just as they’ve lost many others in this debate.
I would say this, though. Rather than imposing all sorts of restrictions on interest rates and other lending terms and conditions, shouldn’t the General Assembly simply ban the practice of deliberately cultivating indebtedness? I can’t think of how that would be done, but there must be a way that more precisely targets the abuses that Blakely described than the restrictions the Payday foes are clamoring for.