Comedian John Oliver Produces Remarkably Strong Piece of Journalism (Albeit Completely Profane) on Payday Lending
By Paul Bland
Nearly every scholar and academic who has seriously studied payday lending has concluded that this is a terrible financial product that drives many economically struggling people right into desperation.
John Oliver has taken the industry on in the most insightful and hilarious way. My hope is his rant will enable people to understand this rapacious business.
People take out these incredibly high interest loans – almost never less than 300 percent per year, and surprisingly often more than 1,000 percent a year – thinking that they will be able to pay them back quickly. But the fact is the industry depends upon the fact that most borrowers will not pay back the loans the first (or second or third) time, and instead will have to “roll over” the loans.
The upshot is the creation of a debt treadmill that just destroys families. Consumers make bad decisions and then the industry has set up an ingenious system that capitalizes on those bad decisions, causing desperate borrowers to take on more and more debt until they have nothing left — and often even end up losing their homes.
Despite brilliant work from the Pew Foundation, and thoughtful advocacy by the Center for Responsible Lending and other leading comsumer groups in the United States, very little seems to have sunk in to regular consumers about payday loans, as millions of these transactions take place each year.
Why do consumers keep purchasing a toxic product that devastates people? Maybe it’s because every thoughtful study gets buried in tens of millions of dollars of cable ads and promises of cheap and easy cash that suck people in. So who better to break through the advertising haze than someone really skilled in media?
In the embedded video, John Oliver completely takes down the crooks of the payday lending industry. At first you might think that this is an epic rant by a trained comedian, and it is. But it’s fueled by a series of hard facts – internal industry documents, enormous bodies of data taken from the leading scholars in the area, facts drawn from litigation and government investigations, and video tapes of industry advocates peddling lies – that is like one of those book-length New Yorker stories in its power and integrity, but just very funny. Wildly profane, not safe for work, not for polite company or your relatives who admire discretion. But authoritative nonetheless.
Among other aspects of payday lending that deserve hard scrutiny, Oliver pounds the industry for hiding behind false connections with Indian tribes. This is an area of particular interest to us, as we are currently involved in extensive litigation against rent-a-tribe scams and have written a good deal on the topic.
As evidence that Advance America, the biggest company in the field, is a bad actor, Oliver points to an $18.75 million settlement in which Public Justice was co-counsel. Unfortunately, as we have noted here, ugly U.S. Supreme Court decisions expanding the scope of forced arbitration clauses have made such cases impossible in the future.
Payday lenders are like giant leeches on the neck of low-income working Americans. This corrosive product, that drains the resources of so many people until they have nothing left, survives because the industry spends crazy amounts of money on political influence and is able to convince consumers of a bunch of false premises. Kudos to John Oliver for shining light on this problem in such an incredibly effective way.
I just wish that I could rant half as well.