Borrower Beware: They look like Checks but act like Loans.

Nashville’s Fox 17 news asked me to comment on their news story about lending companies that target low income borrowers.

The news report focused on one lending practice as particularly unscrupulous: the unsolicited check loan. These are sometimes called “live loan” checks.  Maybe you’ve received one in the mail. They look exactly like a check, made payable to you, and all you have to do is take it to your bank and, boom, you’ve got cash.

And…you’ve got a new loan that probably has very bad interest rates and onerous terms.

You can click on the news segment above, but, ultimately, I gave this warning:

There’s no such thing as free money, and so if someone has sent you a check unsolicited in the mail, that’s where your radar should go up. They do take advantage of someone who needs something. They have a resource, cash, that these people over here desperately need.

In the end, I’m sympathetic to the borrower, but also acknowledge a really hard fact: These type of credit vehicles may be the only life-line some borrowers have to pay rent, get medical treatment, or obtain necessary goods and services. And that’s not a problem created by an unscrupulous lender, but a part of the income inequality of modern society.

Don’t get me wrong, I’m not defending the lenders here, but I want to make sure that, while most of us are alarmed by these lending practices, we also realize that exposing these practices doesn’t, by itself, solve the deeper issues.

Poor people face a lack of access to funds for essential goods, services, and needs that is completely under-served and ignored. We may scorn the lenders for exploiting that need and call it predatory, but we also lack resources to consider alternate ways to address those needs.

And that’s where I end my tidy little blog post.

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