Contact: Jen Keavy
Contact: Mike Webb
PROPUBLICA AND AMERICAN PUBLIC MEDIA’S MARKETPLACE LAUNCH INVESTIGATION:
BEYOND PAYDAY LOANS
INVESTIGATION FINDS INSTALLMENT LENDERS PEDDLE SMALL DOLLAR/HIGH INTEREST LOANS, PRACTICE INVASIVE COLLECTION TACTICS AND TAKE ADVANTAGE OF
GAPS IN LENDING LAWS
New York, Los Angeles, St. Paul, Minn. ( May 13, 2013)—A new joint investigative report by Marketplace and ProPublica finds that installment loan companies like World Finance are profiting by providing small-dollar, high-interest loans to low-income Americans. These loan providers use aggressive collection practices and earn millions of dollars on installment loan products with annual percentage rates that can effectively exceed 300%.
Conducted by Marketplace’s Mitchell Hartman and ProPublica’s Paul Kiel, the investigation also found that finance companies continue to cluster near military bases, despite the passage of the Military Lending Act, which banned payday and title loans to military families in 2007.
World Finance boasts 800,000 customers and over 1,000 locations across 13 states, mostly in the South and Midwest, and touts installment loans as a consumer-friendly alternative to payday loans. Hartman and Kiel’s investigation found that World Finance and its competitors sell borrowers unnecessary insurance products and persuade customers to renew their loans over and over again, creating a cycle of debt that often grinds on for years. The average borrower has little chance of understanding the true cost of the loans. On paper, an installment loan might have an annual percentage rate, or APR, as low as 25 percent. In reality, the typical World Finance borrower who repeatedly renews the loan can pay a sky-high APR that effectively exceeds 300 percent.
World Finance and the installment industry say they offer credit to people who often wouldn’t get loans from banks, that they fully disclose the terms of their loans, that they only renew loans with the customer’s consent, and that their collection practices are proper and legal.
The investigation also uncovered that lenders also peddle these loans to American military members. Five years ago, the U.S. military banned payday- and title-loans to military families to prevent financial abuse of low-wage soldiers and safeguard the readiness of America’s military force. Hartman and Kiel’s investigation found that small-dollar, high-interest lenders are getting around the Military Lending Act, clustering outside military bases and taking advantage of gaps in the law.
The full story is online today at ProPublica and at Marketplace. In addition to the full report from ProPublica’s Paul Kiel, Marketplace will air four radio reports from Mitchell Hartman, reporting from the Wealth & Poverty Desk.
Hartman’s first report, which includes interviews with World Finance customers who have been pulled into the cycle of debt, airs later today on Marketplace. In a second radio feature airing Tuesday on Marketplace, Hartman reveals World Finance’s secret for success, explaining the company’s strong financial performance, and lending and collection practices. On Wednesday’s Marketplace Morning Report, Hartman introduces listeners to a military family at Ft. Stewart in Georgia that has ended up in bankruptcy after taking out numerous installment loans, including one from World Finance. On Thursday’s Marketplace Morning Report, Hartman discusses the steps that the Office of the Secretary of Defense is taking to write new regulations aimed at countering the creativity of lenders who target military personnel.
This joint investigation is part of a partnership between ProPublica and Marketplace’s Wealth & Poverty Desk. ProPublica and Marketplace, along with PBS’ FRONTLINE, recently won an Investigative Reporters and Editors Award for “Big Sky, Big Money”, their multi-platform joint investigation into campaign finance in the post-Citizens United era.
ProPublica is an independent, non-profit newsroom that produces investigative journalism in the public interest. In 2010, it was the first online news organization to win a Pulitzer Prize. In 2011, ProPublica won its second Pulitzer, the first ever awarded to a body of work that did not appear in print. ProPublica is supported primarily by philanthropy and provides the articles it produces, free of charge, both through its own website and often to leading news organizations selected with an eye toward maximizing the impact of each article. For more information, please visit www.ProPublica.org.
About Marketplace’s Wealth & Poverty Desk
Marketplace’s Wealth & Poverty Desk is a diverse team of journalists that reports on the causes and consequences of the growing divide in income and wealth in the U.S. The desk reports on the subject across economic class and race and produces original content for all Marketplace programs, including Marketplace, Marketplace Morning Report and Marketplace Money, and across all Marketplace digital platforms. The Wealth & Poverty desk is funded by a grant from the Ford Foundation.
About Marketplace and American Public Media
Marketplace is produced and distributed by American Public Media™ (APM), one of the largest producers and distributors of public radio programming in the world with a portfolio reaching nearly 17 million listeners via nearly 800 radio stations nationwide each week ,in association with the University of Southern California. Marketplace, Marketplace Morning Report, Marketplace Tech Report and Marketplace Money are currently broadcast by more than 500 public radio stations across the United States and are heard by nearly 10 million weekly listeners—the largest audience of any business or economics program on radio or television. Content from Marketplace programs is also available at Marketplace.org, Slacker Radio, Stitcher Radio, Flipboard, LinkedIn and Google Currents. Marketplace programs are well-known for their timely, relevant and accessible coverage of business, economic and personal finance focusing on the latest business news, the global economy and wider events linked to the financial markets. For more information on Marketplace visit marketplace.org. For more information on American Public Media visit americanpublicmedia.org.
Source: Data are copyright Arbitron, Inc. Arbitron data are estimates only