The payday lending industry has a perception problem. As a payday lender myself, I realize that there are people in the community where I live and work who believe payday loans are a last resort financial option used only by the desperate.
The people who think this have never taken out a payday loan. They have never visited my store or any other short-term loan office. They have certainly never spoken to one of my customers about why they use the service.
When the Mississippi Business Journal recently wrote about anti-payday lending ordinances that have been considered by Ridgeland, Jackson and Clinton, the voice of the customer was, yet again, absent.
But what the customer might tell you is not dissimilar to what state Rep. David Norquist told the editors of the Journal — that by over-regulating short-term loans and limiting their availability “you’re hurting the customer.”
Why? Because payday loans are often the cheaper alternative to bouncing checks and accruing late fees. If the customer had the opportunity to speak, they would likely tell you that payday loans save them money. They might tell you that they have used a payday loan to pay an urgent medical bill or cover an emergency car repair. They would tell you that they often have other options but choose payday loans because it is the best option at the time.
So, if the industry in which I work is so loved by its customers, why does the community’s perception not mirror that appreciation? Why do reputable journalists dub it “predatory” and “unwholesome?”
The answer is not simple. Opponents looking to make a name for themselves or to profit from the over regulation of this industry certainly play a big role. In states that have regulated payday lending out of business, studies have shown multi-million-dollar increases in overdraft fees paid to banks and credit unions. The sometimes gaudy appearance of some stores plays a role, as well.
But perhaps the biggest problem is that our customers — the people who know the most about the industry and its importance to a community — don’t have a voice. Since hard working customers are often reluctant to share their private financial circumstances, the industry’s perception is driven primarily by people working to shut it down. Many of the most reputable companies in the state launched Borrow Smart Mississippi, in part to provide customers with a much deserved voice. You can find some of their video testimonials on our web site, www.borrowsmartms.com.
To leaders considering moratoriums, resolutions or regulation, and to other leaders in the community, I would encourage you to listen to the voice that matters most in this debate, the customer. What you will learn is that perception, in this case, is not reality.
Dan Robinson is spokesperson for Borrow Smart Mississippi. Visit its website at www.borrowsmartms.com.