Letter: Lenders unafraid of sensible regulations

James Gill’s Dec. 8 op-ed “Are payday lenders the new Scrooge?” makes unsubstantiated claims that mischaracterize the payday lending industry and the consumers it serves. The truth is consumers across demographic lines (gender, race, income level) have a need for short-term credit, and payday loans are often the best option to meet that need.

The results of a poll released last week by Harris Interactive clearly ratify the point that payday loan borrowers use this product responsibly and have clear expectations when they take out a loan. Nearly all borrowers surveyed – 97 percent – reported that the cost and terms of their payday loan were as expected or better than expected, and 84 percent said it was very easy or somewhat easy to repay their loan.

Mr. Gill’s skepticism is blind to the fact that this survey sample is representative of only those who borrowed from licensed, regulated lenders — not unscrupulous lenders who seek to commit fraud and scam consumers. In fact, a borrower’s experience with a payday loan can hinge on this very important distinction. Yet, Mr. Gill makes no effort to differentiate good and bad actors, and assumes everyone who uses a payday loan experiences it in the same way.

Every payday loan borrower uses the product differently. Some may need it for an emergency or unexpected expense, while others may use it for more periodic or routine expenses that come due before their next paycheck. Many use it one time only, while others may use it more frequently. None of this undermines the value of the payday loan option or the benefit it provides to consumers.

CFSA has long championed sensible regulations that ensure the balance of access to credit with important consumer protections. For more than 15 years, our members have advocated for the existence of a strong, regulated environment that benefits consumers, but also enables our members to provide consumers the valuable credit options they seek. As part of our efforts we have supported many restrictions and regulations, and we have also instituted many of these in our own Best Practices that include a limit on rollovers and other industry-leading consumer protections. The consumer’s perspective is rarely voiced in the debate surrounding short-term credit, and we hope the Harris poll findings lend themselves to a more well-reasoned discussion about credit products like payday loans.

Dennis Shaul

CEO Community Financial Services Association of America

Alexandria, Va.