It was no surprise when Mick Mulvaney’s new and improved “no-budget” Consumer Financial Protection Bureau announced it was ending its investigation into installment-loan lender World Acceptance Corporation on Monday. Mulvaney and the Trump administration are known to be friendly to the payday loan industry, and World is no exception. Based in Mulvaney’s home state of South Carolina, the company made multiple donations to Mulvaney’s congressional campaigns, going back to 2013.
Sure, that’s not sketchy.
The folks at Citizens for Responsibility and Ethics in Washington (CREW) disagree, and on Thursday, they filed an FOIA request demanding any and all correspondence between World Acceptance Corporation employees and Mulvaney–both before he joined the CFPB, and after.
It’s important to note that while they may look like evil twins, all predatory lenders are not equal. World isn’t a payday lender; they’re in the business of “installment loans”—and while the terms are used interchangeably, the rules are different in installment world.
The federal probe was launched in March 2014 and sought to determine if World’s marketing and lending practices were in line with regulations created under the Obama administration to regulate predatory lenders from destroying the lives of low-income borrowers. The investigation began after a 2013 ProPublica report (that everyone in this country should read) shed light on the realities of World’s business model.
The installment industry promotes its products as a consumer-friendly alternative to payday loans. (The industry) has survived recent efforts by lawmakers to curtail lending that carries exorbitant interest rates and fees.
While payday loans are usually due in a matter of weeks, installment loans get paid back in installments over time — a few months to a few years. Both types of loans are marketed to the same low-income consumers, and both can trap borrowers in a cycle of recurring, expensive loans.
World and its competitors push customers to renew their loans over and over again, transforming what the industry touts as a safe, responsible way to pay down debt into a kind of credit card with sky-high annual rates, sometimes more than 200 percent.
And when state laws force the companies to charge lower rates, they often sell borrowers unnecessary products that...can effectively double the loan's annual percentage rate.
As major banks continue to find new ways to make more money off of low-income folks and the prepaid debit card industry continues to grow, there doesn’t seem to be a shortage of companies ready to make a profit off of the poorest people.
Now that those companies own a little piece of the White House, there’s nobody left to protect them.
The payday lending industry has aligned itself with Trump since the president's 2016 electoral victory. Advance America, the nation's largest payday lender, donated $250,000 to Trump's inauguration. Rod Aycox, a title loan executive, contributed $500,000; his wife kicked in another $500,000. The payday lending industry's trade group, the Community Financial Services Association of America, will hold its 2018 annual conference and expo at the Trump National Doral resort in Miami.