Predatory Lending: Last Week Tonight with John Oliver (HBO)

we're going to look at one of America's most resilient industries payday loans one in 20 households have taken one out at some point it's a nine billion dollar industry and payday loan outlets are all over the place there are more payday loan stores in America than Starbucks and McDonald's both and Starbucks or McDonald's McDonald's I didn't know there was more of anything in the u.s. than McDonald's including people and grains of sand and the payday loan industry has only been around for just over 20 years even Ebola looks at that growth rate and thinks that's impressive you guys spread fast and it's not just the number of companies it's the variety you've got fast cash cash central speedy cash a quick cash with the word quick spelled wrong and quick cash with both quick and cash run because what could be more reassuring than a business that can't correctly spell either their product or the speed at which they're getting it to you there are so many different options that there are even services to help match you to a lender and you cannot have avoided these ads hi might are here I might owe loyalty hi I'm Martha works for money mutual Colin goddamn money mutual can get up to a thousand dollars in your checking account by tomorrow the card bill bill pay the medical emergency handled extra cash it's all payday done thanks Montel quick question though how the hell are you a financial spokesman everyone isn't that the guy who did that episode on how it's hard to be the less pretty conjoined twin everybody be quiet this guy might have some pretty sound financial advice when something is this popular and this prevalent you owe it to yourself to find out exactly what it is much in the way that I finally gave in and read all for Twilight books I'm on Team Bella by the way team Bella she doesn't need a man to define her that's not the point the point is what is a payday loan what is a payday loan a payday loan is a quick way to get the cash you need to cover an unexpected expense like a car repair or doctor bill it's called a payday loan because the loan balance is typically due on your next payday oh that does make sense I thought it was a loan that you repaid in payday candy bars your ways better your your way is better than mine clearly this lady is psychotically friendly and also seems to have an appealing product so how much might a company charge for this sort of service often it's 300 or 400 percentage points on an annual basis average annual rates of five hundred and seventy percent some of those rates legally are as high as nineteen hundred percent a year nineteen hundred percent even the most demanding abusive football coaches only ask for a hundred and ten put him in the mouth Billy give me the mouth now now to be fair payday loan companies will say these are short-term loans so an annual percentage rate doesn't apply which is true if you pay them off immediately but many customers don't one study showed that three-quarters of the industry's volume was generated by borrowers who have to rebar o before their next pay period basically payday loans are the Lay's potato chips of Finance you can't have just one and they're terrible for you and is when you start missing payments that you're susceptible not just too frightening levels of interest but also too fees that you may not have been aware of and I was like I'd say maybe six thousand dollars like deep you know every payday I was here every time I got paid I would paid off and I would get another one and then what cycle my daddy and I would advise anybody not to I borrowed two hundred and fifty I thought I would pay three hundred twenty-five I actually paid $700 but it would have been eleven hundred dollars had I not gone to the bank and put a stop to this $1,100 it is not often that a metaphorical slippery slope cost as much as an actual ski vacation payday loan companies present themselves as a way for you to get back onto your feet they don't want you to get trapped in debt in fact they'll help you if you fall behind remember the friendly iced cash lady from before what happens if you can't pay back your loan sometimes people have a hard time paying us back and we'll be there to work with you if that should happen yeah no you'll be there for them your business model depends on it because an actual ice cash training manual for employees featured a diagram which starts with the customer applying for an A Sloane moves through them spending the money on that loan being unable to pay it back and then be forced to apply for an ace loan again you'll notice that has a certain roundness to it it's basically a recycling symbol for human misery it's the circle of dirt and it screws us now obviously we must not generalize about this shitty industry some companies hold themselves to a higher standard in fact the Community Financial Services Association of America insists that their members are different from these shady elements of the industry they even brag about it in one of the most boring videos on the Internet in our industry I mean let's be honest there are there some there are some companies out there that don't even follow the law let alone follow a standard of best practices like our member companies do those other companies are awful our member companies are pillars of the community did you know that one of them gave a kidney to a little girl in a hospital she was in there for tonsillitis but now she has three kidneys we're good companies so let's take a look at their wonderful members and their best practices first there's Advance America one of the biggest companies in the industry whose co-founder defends his business like this the consumer demand for the product is overwhelming and speaks for itself okay that's fair although it's also worth pointing out that the customer demand for heroin is also overwhelming and that doesn't mean it's a product you'd necessarily recommend to your friends to get them out of a jam Advance America is a company whose best practice is somehow include agreeing to an eighteen point seven five million dollar settlement in North Carolina after they were accused of illegally high interest rates but but they're just one of the two largest companies in the business the other company is Cash America ok so how did they practice their best practices Cash America was ordered to pay 19 million dollars in refunds in fines late last year for illegally overcharging service members and for destroying documents so what you like about that illegally overcharging service members is a ballsy business practice they must have been the ones driving around with those bumper stickers that say extort our troops but settlements like those are actually something of a rarity and that brings us to why the payday loan industry is seemingly unstoppable they are incredibly good at avoiding regulation just look at one example in Texas they actually tried to rein in the payday loan industry there a few years ago but they faced opposition from one particular state legislature members I just cannot see why this why this this legislation could possibly be necessary unless it is the big the big institutions we've the little guys and the little guys in his analogy are payday loan companies although I've got to say if you spell little guys with a dollar sign instead of an S you've got yourself a pretty good name for a store right there that man is Texas State Representative Gary Elkins and his proud defense of the little guy is about to get a little muddier but isn't it true that you have 12 very successful payday and title loan locations across this state let me answer that question for him it is true it is true he does and they include an outpost of the wonderfully named power financed Texas kind of interest y'all in some power finance but I apologize I interrupted you stand to add to your personal wealth considerably by killing these bills you know what that that is not about the bill do I know it why madam I am the physical embodiment of that term at this very moment you might be thinking that that woman Vicki Truitt is awesome you're fearlessly calling out how the payday loan industry influences politicians which is why it's going to be so hard to tell you that just 17 days after leaving office she signed on as a lobbyist for ACE Cash Express you know the circle people thankfully thankfully Texas also has a Finance Commission which oversees the payday loan industry guess who runs that William J white as vice president of Cash America and was also appointed by the governor as chairman of the state's Finance Commission which oversees payday loan outfits that's right the chairman of the Commission that oversees the payday loan industry is also at the same time a vice president of one of the biggest payday loan companies in the country I call dingo I call dingo on [Applause] so let's just let's just quickly break all of that down if you were hoping to protect Texans from the payday loan industry you would need to approach a commission overseen by the vice-president of a payday loan company and then introduce a bill into the state legislature where the owner of 12 payday loan stores will debate the merits of the payday loan industry with one of the payday loan industry's future king lobbyists apparently even cluster a bigger in Texas but the truly chilling skill payday loan companies have is not how they prevent legislation from getting passed it's how they react when it gets through for instance when Illinois passed an act which applied to loans of up to 120 days companies simply began offering loans with terms of 121 days instead which is like betting a dollar on the price of right on the price is right you're technically allowed to do it but you know you get when Arizona outlawed payday loans many companies shifted to selling title loans instead which are basically the same except they also get to take your car for regulators it's like it's like playing legislative whack-a-mole just when you think you've squashed them down somewhere up they pop up somewhere else wearing a completely different outfit and the most amazing example of all of this took place in Ohio in 2008 they somehow capped payday loan rates at 28% any company licensed as a short-term lender had to abide by that but where one mole force another mole shall rise and as of last year there were no businesses in Ohio licensed the short-term lenders there was however a sudden increase of companies registering as mortgage lenders offering people short-term mortgages of around $300 what now as the lawyer for a company called cash land explains this to a judge so cash land would not be subject then to the short-term loan because it's not registered as a short-term lender exactly you're under the short-term loan Act by the legislative enactment says it applies only to those who register under the short-term loan Act why even bother calling yourselves mortgage lenders why not just call yourselves peanut butter octopus companies you can't regulate peanut butter octopi they don't technically exist and in the rare case where states succeed in imposing stringent regulations some payday loan companies have one final trick up their sleeve now some payday lenders have found a loophole by partnering with Indian tribes that gives payday lenders the cover of sovereign immunity to avoid state regulations that's right some payday lenders are currently dressing themselves up as Native Americans I thought only Johnny Depp was allowed to do that how does that even work this payday lender kashfari has teamed up with the Fort Belknap Indian tribe in Montana and as you can see they're charging online interest rates in the 700 percent range yet you can become affiliated with a tribe and be able to avert local and state laws in my opinion apparently loan sharking is still legal in this country it's true although let's be fair no loan shark would ever go by the name cash ferry hey you better get me that money by midnight are you gonna get a visit from the kashfari - very yes here's the problem payday loan companies are almost impossible to effectively regulate and they are not going anywhere a Pew survey found that a majority of borrowers said payday loans take advantage of them but a majority also said they provide relief and that is why they are so dangerous people sometimes need them but you have to be absolutely sure there are no better options apparently 41% of those surveyed who taken out payday loans ended up having to borrow from family or porn possessions or other things that they could have done in the first place just to pay off that payday loan and yet payday loans superficially do look easier all these commercials they're enticing and they're also everywhere the least we can do is launch a counter campaign with a celebrity spokesperson of our own to remind people to make sure they explore all their better options first hi I'm Sarah Silverman if you're considering taking out a payday loan I'd like to tell you about a great alternative it's called anything else the way it works is instead of taking out a payday loan you literally do anything else sell your sperm sell some blood throw yourself in front of a rich guys car he'll throw money at the problem just to make that go away are you an old person and need money take things your all no one's gonna stop you you're not gonna go to jail go to the grocery store right now fill up a cart with everything you need and walk the data there you know what people will pay you to pee on them that's true duties to duties are more like double I know this for a fact I it doesn't matter but it's something that you have to do every day anyway right by not doing it you are literally flushing money down the toilet it's irresponsible there's money inside of you it's like Dorothy having the power to go home the hold night the point is no decision in your life will be worse than dealing with these payday loan mothers their mother there's their fears of mothers so if you're thinking about getting a payday loan just simply pick up the phone then put it down again and do literally anything else do it now [Applause]

Channel: LastWeekTonight

Views: 13,225,754

Rating: 4.8778348 out of 5

Keywords: john oliver, payday loans, predatory lending, hbo, sarah silverman

Id: PDylgzybWAw

Length: 16min 32sec (992 seconds)

Published: Sun Aug 10 2014

Reddit Comments

[u/Johnsonjoeb]

Ahh....payday loans, liquor stores, pawn shops, and churches: the hallmarks of the American ghetto.

[u/[deleted]]

He's not wrong. These bastards are the new loan sharks. Two years ago my wife was sick and in and out of the hospital for half the year. I had to dump off my kids at my moms for the summer so I could continue to work, but before then I ended up using all of my vacation/sick/personal time.

The result was that we were struggling big time. I stupidly saw no choice but to take out a payday loan, and so began a cycle that lasted half a year. Every payday I'd have to go right back there because half of my check was instantly to pay back the old loan. If I wanted to pay rent/bills on time, I'd have to take out another.

I finally just took out a loan on my 401k to help pay that bullshit off. When I did the condescending bastard who worked there did his usual spiel after I paid it off.

"Are you taking out a new one today?"

"Nope, I'm done."

His actual, 100% true response:

"Hahaha, we'll see you soon."

Fuck these motherfuckers.

[u/Chouonsoku]

Love the Sarah Silverman feature. She seems to get a lot of hate but I've always been a fan. But I also always laugh anytime someone says the word "duty" so maybe I'm just dumb.

[u/littletortoise]

John Oliver has quickly become my favorite late night host. He is at once more incisive than Jon Stewart and funnier than Stephen Colbert. I can only hope he doesn't get mellower once he inevitably gets a lot more successful than he is now.

[u/mtscottcatwork]

I was watching this segment last night and I was all smug, because I thought that we here in Montana had eliminated this shit... Then he got to the part about what's happening on the reservations.

[u/AnaheimDucks96]

Pre-posting the top comments now. 1. "Why does HBO air like half of the episode online" 2. "John Oliver is on the front page every Monday" 3. "Why are his shows so short, they need to be 1 hour or happen more frequently." 4. Something actually about the video

[u/travio]

The most disturbing predatory loans right now are the ones that wall street gave the states for their tobacco settlement money. It is infuriating that some states would be so short sighted.

[u/[deleted]]

Why cant a state just cap any financial loan to 28% and no higher.....

[u/daxpierson]

These segments by John Oliver, where he explores what's wrong with the American economy/society, are both hilarious and incredibly useful for us, living outside the US, to understand how idiosyncratic that country really is.