News Story (NATIONAL)
January 12, 2015
Tags: Consumer Protection, Predatory Lending
Organizations mentioned/involved: Virginia Poverty Law Center (VPLC)
The pitfalls of borrowing from storefront payday lenders — companies that offer short-term loans with high interest rates — are already well-documented. Regulators and consumer groups have long warned such loans can trap people in vicious cycles of debt. Less is known about online payday lenders, which offer the same service with the added allure of the transaction happening completely on the Web.
Consumer groups say these types of lenders may be even riskier for struggling borrowers than brick-and-mortar lenders, leading consumers into even more hopeless financial quagmires.
“They loan to people not even caring whether they can pay the whole thing off,” said Jay Speer, the executive director of the Virginia Poverty Law Center. “They just want a certain amount every couple weeks — as much as they can beat out of you until you default.”