As Pew describes it:
This report, the fourth in Pew’s Payday Lending in America series, examines Internet-based payday loans and finds that lender practices often have serious detrimental effects on consumers. Online payday loans are more expensive than those offered through stores and are designed to promote renewals and long-term indebtedness, and they frequently result in unauthorized withdrawals, disclosure of personal information, threats against borrowers, and consumer complaints. This report reiterates Pew’s recommendations that the Consumer Financial Protection Bureau adopt strong, clear regulatory guidelines that will make the entire small-dollar loan market, including online payday loans, safer and more transparent.
A few key statistics give you a snapshot of the problem:
-1/3 of online borrowers had loans structured to automatically renew
-9/10 payday loan complaints to the Better Business Bureau were made against online lenders
-46% of online borrowers report that a lender made withdrawals that overdrew their checking accounts
-30% of online payday loan borrowers report being threatened by a lender or debt collector
-650% APR is typical for lump-sum online payday loans. They’re usually more expensive online than through storefronts.
Read the full report here. (HT Joanne Faulkner)
