Friday, October 31, 2008

Misleading Ads Annoy Me

Last year, Ohio had a scandal where an intern left confidential payroll information in his car and it was stolen by a shady crook.

Pretty bad, right?

Last night, I saw a political ad resurrecting the scandal and sharing that Ohio wants to build another database of people who need emergency loans. I was instantly appalled - another database? Whatever would we do? We must stop the madness!

Then, the ad said 'Vote No on Issue 5.' Ugh - the ad was a big fat lying pile of crap - and it almost fooled me.

I've actually already voted Yes on Issue 5. It has nothing to do with big giant databases. It just caps the interest rate on emergency payday loans (from those not-quite-right check cashing places) at 28% instead of the 391% the companies currently enjoy.

Obviously, emergency loan places want to continue taking advantage of poor, down-on-their-luck Ohioans so they'll say anything to get us to vote against tighter regulations. I didn't think they'd be so incredibly misleading, though!

21 comments:

Tiffini said...

how are they misleading? lenders are required to tell the customer everything before the loan is complete. and if that law is passed do you think it will just make payday lending cheaper? no! it will make it go completely away. no compnay can afford to lend money for around 50 cents per 100! that wouldnt even cover electric bills at a store for a month!

Anonymous said...

How are they misleading? Have you ever been in a pay day lending facility? All fees are posted clearly for anyone who enters to read. That is more than I can say for a bank. What is the apr for a $38 returned check fee from your bank on a $4 check? How is a pay day lender the crook here? I would rather pay $15 to borrow $100 and cover my checks at the bank than be hit with returned check fees plus daily nsf fees plus fees to the business that the check was returned to. Which really makes more sense?

Eljabo said...

That's hilarious! Obviously, you both are spammers who work for payday lenders. If you lived in Ohio, you'd understand why the ads are misleading.

Issue 5 has NOTHING to do with big databases or consumer pivacy or naked men (another ad I saw last night.)

Payday lenders are the equivalent of predatory lenders. You're bilking poor, desperate people out of their hard-earned money and charging outlandish interest rates.

It doesn't matter if you're upfront about your fees. You're charging way too much and taking advantage of people who don't have any other options.

Issue 5 puts protection in place for those people so you can't take advantage of them!

Anonymous said...

my thought is this. did anyone force people to do payday loans? NO! we as the loaner know the price it pays. if this to pass than what will i do when i'm short?
my choice NOT THE STATE.

Anonymous said...

At the end of the day I'm voting NO to this issue so that these businesses can charge what they want and put the responsibility on the people for making their own decisions (they know the terms when they agree to the loan) and living with whatever consequences their decisions earn them.

Eljabo said...

Dear lord! This is so funny!

anonymous #3: It's nice of you to say you're voting no on issue 5, but you live in Utah so you don't get a vote in our Ohio legislation. Which payday lender do you work for?

Anonymous #2: Yes, it IS your choice to take out a payday loan. However, would you honestly prefer to borrow money at a 391% interest rate instead of 22%?

No one is saying we need to get rid of payday lenders - they serve a purpose - they just shouldn't be allowed to take advantage of hard-working people.

Issue 5 does not give Ohio the authority to choose who can take out these loans - it just makes the interest rate lower so it costs you less to borrow emergency money.

Sure, the payday lender fat cats want to keep charging you insane amounts of interest. It pays for their mansions and for the misleading ads they're running. If we pass Issue 5, these companies won't go out of business - they just won't be able to charge you ridiculous interest rates.

Anonymous said...

I cant believe anyone who seen those ads and read the issue thinks there misleading.Database,6000 + jobs lost and APR shouldnt be the formula to calculate a two week loan.Infact the only misleading information I've seen on this issue was from the vote yes group who never mentioned APR on there spots.HONEY i know your bitter about life but facts are facts.SMILE YOU WILL MEET SOMEONE SOMEDAY.oh and im from OHIO AND DONT WORK AT A LOAN STORE...........

Eljabo said...

Hey - if you guys want to be swindled, be my guest. Personally, I'd prefer to pay less interest if I were going to borrow money

Anonymous said...

The big misconception here is that payday lenders attack the poor. How does that make any sense. Why would any lending business target a population that cannot pay them back?

Anonymous said...

"This feel-good activism can often have the stench of paternalism and a fundamental belief that working-class Americans are incapable of making their own financial decisions."
“If Wall Street is getting a "trillion-dollar payday loan," then "why can't a single mother have the ability to fix a flat tire or get some medicine for her child? Because Bill Faith wants to save her from herself? It's nonsense." - Niger Innis of the Congress of Racial Equality

Anonymous said...

There WILL BE Job Loss.
Vote NO on 5. Save good paying Ohio jobs!!

Casey said...

NO on Issue 5

“In truth, the typical payday advance customer represents the lion’s share of America’s middle class. A typical payday loan customer is a hard working, family raising adult who does not have savings or disposable income to use as a safety net when an unexpected expense occurs.

1)The majority of payday advance customers earn between $25,000 and $50,000 annually; (hardly low income/poor)

2)Sixty-eight percent are under 45 years old; only 4 percent are over 65, compared to 20 percent of the population; (not weak and ignorant)

3)Ninety-four percent have a high school diploma or better, with 56 percent having some college or a degree; (consenting mature EDUCATED adults)

4)Forty-two percent own their own homes;

5)The majority are married and 64 percent have children in the household; and,

6) One hundred percent (YES--100%!!!!!!!) have steady incomes and active checking accounts, both of which are required to receive a payday advance.”

If you go into a store today & borrow $100, in 2 weeks you will payback $115- so that's 15%, not 300%!

Second, 99% of Americans need to borrow $$ at some point in their lives- student loans, auto loans, mortgage, credit cards, etc. Why should getting a short term loan be anyone else's business? It's a CHEAPER option than paying bounced check or late fees. Or certainly better than doing without gas, electricity, water or food until the next paycheck.

This is a business, just like any bank, store, airline, gas station, etc. We provide a service. If you choose not to use it-- so be it- your choice. If you decide it's the best option for you- so be it- your choice. If you decide to repreatedly use payday loans as a means to survive or supplement your income- so be it- your choice. If I decide to go to a drive thru to pick up beer even though I know I will pay a bit more, it's my right since I find it more convenient .
ITS MY $ & it's MY CHOICE!

Banks are notorious for their EXPENSIVE hidden charges, late fees, bounced check fees, daily fees, minimum balance fees, etc. And the average profit margin for the top 10 banks in the US are 18.5% compared to the top 5 payday lending companies in the country who are at 6.6%!! (PDF- source) Average bounced check fee is now a whooping $28.95!!! So really now, who exactly is profiting more?? But no one is accusing the banksof being "parasites".... interesting, but incorrect

Vote NO on Issue 5

http://www.buckeyeinstitute.org/article/1238

Casey said...

Eljabo--

I find your comments extremely amusing!!
"Sure, the payday lender fat cats want to keep charging you insane amounts of interest. It pays for their mansions..." Seriously?? PD lenders are not profiting any more than a typical industry-- restaurants, airlines, manufacturers, etc. And PD lender's profit (6.6%) is FAR less then a bank (18.5%) and even less than IHOP (12.6%) Suprised?? I guess IHOP is really making a killing on my pancakes and eggs...

"Their mansions"? Are you in touch with how a capitalistic free market place works? Are you saying that any upper level maanagement member is not entitled to live in a large house? If so I hope you apply that same flawed line of reasoning to oil companies, banking executives, and anyone else who has dared to be successful. Companies are in business to make a profit!!!

And oh yes-- I do work in the Industry and am PROUD of it!!

NO on 5!

Casey said...

Elijabo-- you might want to read the following:

(1)“A new report has been released that backs up the claim that the payday lending “reform” legislation passed earlier this year will result in significant job loss across the state. Backers of this legislation deny this, but it seems the data doesn’t support their contention.

The report by William D. Keip, President of Keip Government Solutions, concludes the following:”

10,308 Total Ohio jobs lost

6,000 PayDay Lender jobs lost

$497.2 million Economic Activity

$218.5 million Total reduced earnings

$145.6 million Reduced earnings-direct PayDay Lender jobs

$262.0 million Total reduced spending

$ 16.7 million Loss of state/local Ohio taxes

http://www.buckeyeinstitute.org/blog/2008/10/14/ohio-has-enough-jobs-doesnt-it/

(2) Have you read the Federal Reserve Bank's research regarding the effects the new payday legislation had on Georgia and North Carolina's economy?
http://www.newyorkfed.org/research/staff_reports/sr309.pdf

A few statements from the research..."Compared with households in states where payday lending is permitted, hosueholds in Georgia have bounced more checks, complained more to the Federal Trade Commission about lenders and debt collectors, and filed for Chapter 7 bankruptcy at a higher rate. North Carolina households have faired about the same."

Hmmmmm, doesn't sound so promising for Ohio, now does it????!!!



VOTE NO on ISSUE 5!!!

Anonymous said...
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Lets Talk APR said...
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Eljabo said...

I already voted yes on issue 5 - I (along with most elected officials in Ohio) think it's the right thing to do!

I think it's funny that all these spammers have nothing better to do than comment on my blog! I'm sorry - but the ads are crappy and misleading! That's the deal.

Casey said...
This comment has been removed by a blog administrator.
Casey said...

**Nice censorship Eljabo!!** Way to delete comments that don't agree with yours!!!

VOTE NO On 5

Casey said...
This comment has been removed by a blog administrator.
Casey said...

Rollover PD loans are not allowed in Ohio, but since you are quoting 391%APR let's talk about that. Even if the loan was rolled over for the entire year, the high APR of payday loans **pales in comparison** to the realistic alternatives considered by consumers.

How does a $100 payday loan compare?

$100 payday advance with a $15 fee = 391% APR
$100 bounced check with $54 NSF/merchant fees = 1,409% APR
$100 credit card balance with a $37 late fee = 965% APR
$100 utility bill with $46 late/reconnect fees = 1,203% APR.

Hmmmm, gee I wonder why people use PD loans?? Obviously b/c THEY ARE CHEAPER than the other options!!!

!!Vote NO on 5!!