Consumer Law

Preying on the elderly, payday lenders? newest victims

By Nick Slade

How much worse can things get?

According to a new article in the WSJ, those wonderful community financial services people, more commonly know as Payday lenders are increasingly targeting recipients of Social Security and other government benefits, including disability and veteran’s benefits.

But it isn’t just the Payday lenders who are involved in this abuse of our seniors. Because the law bars the government from sending a recipient’s benefits directly to lenders, many of these lenders are forging relationships with banks and arranging for prospective borrowers to have their benefits checks deposited directly into bank accounts. The banks immediately transfer government funds to the lenders. The lender then subtracts debt repayments, plus fees and interest, before giving the recipients a dime.

It is bad enough that a few sociopaths exist that prey on the elderly, but when corporations collude to specifically locate their businesses near the disabled and elderly and specifically recruit (read as target for exploitation) the disabled and elderly, things have gotten pretty bad.

The line from the Community Financial Services Association is a classic. The payday lenders should be able to exploit the elderly and the disabled just like they do everyone else because “It certainly wouldn’t be right for the business to discriminate against them for whatever the source of their income is.”

The article does a good job of pointing out that the disabled and the elderly are even more susceptible to abuse and exploitation because they are on a fixed income and can’t easily get out of the debt cycle that payday loans create and depend on to keep their client base.

The article also has the stories of some of the victims of this wonderful practice.

This is the reality of Payday Lending.

Full post as published by Caveat Emptor on February 12, 2008 (boomark / email).