Wall Street Journal doesn’t do it’s homework
February 28, 2008 | Wall Street Journal, media coverage | Comments (0)The February 12th front-page Wall Street Journal story by Ellen E. Schultz and Theo Francis, “Social Insecurity: High-Interest Lenders Tap Elderly & Disabled” confuses payday lenders with other types of small loan services: primarily installment and catalog lenders.
The article describes loan practices that are NOT conducted by payday lenders.
Major errors in the WSJ article:
- The article says payday lenders are “…forging relationships with banks and arranging for prospective borrowers to have their benefits checks deposited directly into bank accounts.” This is patently false. State laws only authorize payday lenders to hold a personal check, deposited on the borrower’s payday.
- The story says: “One-fifth of those without conventional bank accounts are receiving government benefit checks through nonbanks, including payday lenders.” This, too, is blatantly false. Payday lenders do not receive checks on behalf of recipients (state law prohibits this practice) and 100 percent of payday lending customers have a checking account at a bank or credit union.
- The two key anecdotes detailed in the article involve companies that are not payday lenders: Miracle Loans and Money Tree of Georgia
- The article says that the payday lending industry is “clustered” around government-subsidized housing in Washington, D.C. “There are at least four payday lenders within a mile-and-a-half of Fort Lincoln,” the piece says. Washington, D.C., is an urban environment. A mile-and-a-half away from a location in an urban environment does not constitute “clustering” by any known standard.
