- Payday lenders giving advances on unemployment checks, By Robert Faturechi, March 1, 2010, Los Angeles Times: “The payday loan industry has found a new and lucrative source of business: the unemployed. Payday lenders, which typically provide workers with cash advances on their paychecks, are offering the same service to those covered by unemployment insurance. No job? No problem. A typical unemployed Californian receiving $300 a week in benefits can walk into one of hundreds of storefront operations statewide and walk out with $255 well before that government check arrives — for a $45 fee. Annualized, that’s an interest rate of 459%. Critics of the practice, which has grown as the jobless rate has increased, say these pricey loans are sending the unemployed into a cycle of debt from which it will be tough to emerge. Many payday clients pay off their loans and immediately take out another, or borrow from a second lender to pay off the first, and sink ever deeper into debt. Typical customers take out such loans about 10 times a year, by some estimates…”
- Online payday loans pose new challenges for consumers, regulators, By Pat Schneider, February 22, 2010, Capital Times: “Bonnie Bernhardt is proud to have helped nearly 400 Wisconsin residents get back some of their money from an online lender that state attorneys say overstepped its bounds. The 43-year-old single mother from Verona was the lead plaintiff in a lawsuit filed two years ago against online payday lender Arrowhead Investments. After an out-of-court settlement to the class action lawsuit was approved earlier this month, Bernhardt and the others will split $100,000 in restitution. Another $432,000 in outstanding loans will be closed out and forgiven by Arrowhead, and the Delaware-based company is also barred from doing business in Wisconsin for five years…”
Poverty-related issues in the news, from the Institute for Research on Poverty