Elderly, disabled fall victim to high-interest lenders
February 12th, 2008From the Wall Street Journal, with a video, an exploration of efforts by high-interest, so called “payday” lenders to target recipients of social Security and other government benefits, including disability and veteran’s benefits. The situation is developing into “a huge national problem.”
Congress calls payday lenders predatory, saying they loan to people who are unable to pay it back, trapping them in a cycle of debt with interests rates that commonly exceed 300 percent.
… Payday lenders are benefiting from the government’s direct deposit program, which requires most social security checks to be deposited directly into recipients’ bank accounts. Direct deposit was intended to make benefits more secure, but it also made it easy for payday lenders to target social security recipients … who are more vulnerable than customers who pledge their paychecks because they are less able to pay the money back.
The payday loan industry has grown in recent years, coinciding with the rise in dirrect deposit among Social Security recipients. These storefront lenders get recipients to sign away control for directing the deposit of their benefits checks. As a result, the lenders can gain almost total control over a Social Security recipient’s finances.
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on Tuesday, February 12th, 2008 at 9:45 am and is filed under disabilities, elderly, law.
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