Unreckless Lending

Credit Slips readers may recall my earlier academic article on reckless lending in the University of Illinois Law Review, which is now available on SSRN here.   So hopefully that will give me "street cred" as being no patsy of the consumer credit industry.  But I flatter myself as an academic to be even-handed.  And when I was visiting Florida recently (yes, my parents), I was happily surprised by an ad running on TV.  It was for, basically, a payday lending service, but the ad was full of disclosures and cautions.  It said that you shouldn't take out a loan if you won't be able to pay it back, or think you'll have to roll it over shortly, etc.  Sadly, I can't remember the name of the lender (a bad ad then?).  But the warnings were real, not a rushed filibuster of high-speed gibberish at the end.

I wonder whether this is good-spirited self-regulation, or whether Florida has a state law regulating payday lenders requiring these sorts of warnings (in which case, bravo Florida).  More cynically, it could be the former animated by fear of the latter.  But in any event, I thought this was good, responsible lending practice, at least based on my (literally) arm chair analysis.

So hurrah for (at least) one Florida payday lender!

Comments

[Sam Glover]

It wasn't this one--http://sjglover.com/blog/?p=239--was it? Too little, too late, if you ask me.

(Also, why no HTML in comments? It's nice to be able to provide in-text links and text formatting.)

[Diane]

They are running ads here in TN too, so it's not just FL. I have to agree though, too little, too late - and until there are laws in every state to limit or outlaw them (the latter being my personal preference), they're just not credible enough.

[Jim Hawkins]

The Community Financial Services Association ran an ad in Texas emphasizing the short-term nature of payday loans. I think it is responsible self-regulation. Retailers never say: only buy this HDTV if you really need it, so payday lenders seem to be going beyond what normal retailers do to disclose info to consumers.

The end of the ad included a plug for payday lenders in the CFSA, telling customers only to get payday loans from CFSA providers. I think this is a marketing ploy to drive out mom and pop providers who are less likely to be part of this organization.