Sharing the payday lending industry response to the study...

NEWS FLASH: Payday Lending Industry Apparently Targets Everyone
Research Demonstrates Payday Lending Customers Can't be Labeled

WASHINGTON, DC - Payday lenders called a new study that claims to have "conclusive proof that conservative Christian Americans are a prime demographic target of the payday lending industry" preposterous.

This study, "Usury Law and the Christian Right," comes on the heels of prior allegations that payday lenders locate in communities with high populations of military, women, Hispanics, the elderly, African Americans, recent immigrants, young people, Native Americans, social security recipients, veterans, the poor and households with a median annual income of $48,000. A recent BusinessWeek article said payday lenders are now targeting more affluent neighborhoods.

Analysts estimate that 19 million U.S. households used a payday loan in 2006.

"Our industry has been accused of 'targeting' the military, minorities, women, immigrants, the elderly, the poor, the middle-class and now conservative Christians," said Darrin Andersen, president of the Community Financial Services Association of America. "Who's left? This is preposterous."

"The only common denominator is that our customers are people with steady sources of income and bank accounts who sometimes have unexpected or unbudgeted expenses that require cash between paychecks. Our customers are reasonable people who appreciate having an lower cost option that allows them to avoid bouncing checks or accruing late or overdraft protection fees," Andersen added.

"While critics of the industry assign labels to our customers in an attempt to further their political agendas, the fact is that we provide services to a broad cross section of Americans because there is a broad demand for the financial service we provide," said Andersen. "Our customers represent a broad demographic segment and cannot be grouped based on race, sex or religion."

Andersen said the recent report by Christopher Peterson and Steven Graves, which purports to show that payday advance businesses target Christians, was little more than, "advocacy masquerading as scholarship," and questioned what accusations the industry might face next from opponents of consumer choice in financial services.

The report's methodology, logic and conclusions were also called into question. Rather than empirically identifying people of faith, it constructs a 'Christian Power Index,' compares the number of payday advance locations with coffee shops and fast food restaurants, relies on 'Bible Belt' stereotypes and fails to account for the popularity of payday advances in states that do not fit the authors' preconceived conclusion, including California, Ohio, Montana and elsewhere.

Andersen said that research shows payday advance customers to be middle-income, educated, working families, more than half earning between $25,000 and $50,000 annually, 58 percent having attended college, and one in five having a bachelor's degree. He added that payday advance customers are not the "un-banked", as 100% have a checking account at a credit union or bank, but turn to payday lenders for low dollar short-term credit needs.

As a representative of payday lenders, I wanted to let you know about this press release recently released by the industry:

Payday lenders called a new study that claims to have "conclusive proof that conservative Christian Americans are a prime demographic target of the payday lending industry" preposterous.

This study, "Usury Law and the Christian Right," comes on the heels of prior allegations that payday lenders locate in communities with high populations of military, women, Hispanics, the elderly, African Americans, recent immigrants, young people, Native Americans, social security recipients, veterans, the poor and households with a median annual income of $48,000. A recent BusinessWeek article said payday lenders are now targeting more affluent neighborhoods.

Analysts estimate that 19 million U.S. households used a payday loan in 2006.

"Our industry has been accused of 'targeting' the military, minorities, women, immigrants, the elderly, the poor, the middle-class and now conservative Christians," said Darrin Andersen, president of the Community Financial Services Association of America. "Who's left? This is preposterous."

"The only common denominator is that our customers are people with steady sources of income and bank accounts who sometimes have unexpected or unbudgeted expenses that require cash between paychecks. Our customers are reasonable people who appreciate having an lower cost option that allows them to avoid bouncing checks or accruing late or overdraft protection fees," Andersen added.

"While critics of the industry assign labels to our customers in an attempt to further their political agendas, the fact is that we provide services to a broad cross section of Americans because there is a broad demand for the financial service we provide," said Andersen. "Our customers represent a broad demographic segment and cannot be grouped based on race, sex or religion."

Read the study. (the last link the SSRN link [papers.ssrn.com])

The colors on that map do NOT correspond to the "Christian Power Index," they are for rankings of the number of payday lenders. Thus the things being compared on the overlay map are the number of payday lenders...vs the number of payday lenders.

Look on page 29 of the PDF. There's your correlation.

Also, in the first few pages, they explain the CPI. It doesn't sound perfect, but it isn't complete bullshit.

@Trai_Dep: You seem to get upset by people forcing their beliefs upon you but it is OK for you to force your beliefs?

Religion is a system of beliefs. Atheism too is a belief system. Hence, atheism is a form of religion and should be treated as such.

I find it funny when people lable another group and say 'they believe this' when in reality you know nothing about the other group.

Just an FYI for some of you: most religous people believe in evolution and see the bible as a book of parables. Yes, since the book was written by those with the power of the time, gays were not treated well by said book. And most people who have a religion or simply believe in some form of God know this and do not pay attention to it. It is more for the stories of being charitable, kind, etc.

The big bang theory was proposed by a Roman Catholic priest. Hmmm. Guess they are not a bunch of bumpkins after all.

@BookbagNinja: How so? I'm specifically directing my comment to those who feel the burning need to criticize a large section of society based on the actions of a few.

And by the way, I'm not offended, I guess it bothers me when I hear people making statements like the ones I've been reading here, because it is those same folks that are the first to start making statements about the gubmint being unjust to "brown people" when there is even a hint of racial profiling while air traveling (for example). Seems kinda hypocritical (to bring my point full-circle).

I certainly wouldn't be offended if others blamed me for the horrible things done by a sect that got out of control while I sat on my hands.

Don't like being compared, do something about it. Or take your lumps.

So this is an OK stereotype, then? I guess so. I doubt the ACLU will be leaping to the rescue of the Fundamental Christian Right anytime soon.

How is that stereotyping better than any other?

Religion's a great thing, kept inside the home. The problem is, of course, the Bible Thumpers can't seem to embrace this American concept.

You cram it down others' throats, you legislate based on it in a punitive, non-Christlike fashion, you leap on your soapbox pointing fingers while selectively choosing which snips are "relevant", then so as you reap, you sow.

So to speak.

But I will say that my family's business when I was growing up noticed that people who pay with checks that have the little Jesus fish logo on them were more likely to write hot checks. I saw this in effect, especially among people who have Jesus fish on their checks and wanted NET-30 or NET-60 payments (get the product, then pay within 30 or 60 days without interest -- a courtesy to regular retail customers). They type of product the business sold was likely to end up in gift shops in Red States, so we would get a lot of "Jesus fish" checks. (Not a majority of the checks, but a noticeable amount of them.)

Our theory was that people so into Christianity that they would advertise their faith as logos on their checks were more likely to run their businesses under the business model that "the Lord will come through for you in a pinch". Subsequently, they were more likely to write a check for something in hopes the funds would be available when the check is cashed.

Obviously you don't need to be a evangelical to engage in such irresponsible behavior, nor do all evangelical business people engage in this habit. But numbers don't lie, and a disproportional amount of "Jesus fish" checks that bounced.

I guess some Christians have forgotten the concept that God helps those than help themselves, which to me, a Godless heathen, sounds suspiciously tautological: if you help yourself do you really need God's "intervention"?.

While in no way would I, nor am I, comparing Payday Loans conmen and the Ku Klux Klan (since many victims of Payday Loan scams are black), there seems to be the same gullibility in the rabidly christian poor and those who sided with the KKK in the past.

The poor thought the KKK and Payday Loans were helping when in fact the loaners and politically connected were in bed and helping each other.

One thing I don't understand about this crap is why employers don't provide advances to low wage employees. Since it's money already earned, why can't the employer loan it in advance without interest?

And if we're talking about people on welfare, why don't the banks offer short term loans for small amounts to people with accounts at their banks for at least two years? It would eliminate a lot of such legalized thievery.

I suggest that ClayS, petrarch1603 and others take a look at page 19 of the study. It clearly explains wht the Christian Power Index is and how it is assigned. Someone accused this study of being lazy, well how lazy can you be to criticize a PDF you can't even be bothered to go download and read!?

Measuring the power of Christian values in the legislative process is no easy task, especially at the state level, but we believe that we have created a reasonable proxy. This proxy, which we refer to as the Christian Power Index (CPI) was generated by ranking states according to three variables: 1) the per capita density of Evangelical Christians and Mormons, 2) a Christian Political Organization score, for state wide delegations and individual congress persons calculated by averaging the "score" assigned to each member of the U.S. House of Representatives and U.S. Senate by a panel of three conservative Christian political action groups, and 3) an average statewide Congressional delegation voting record on social/cultural issues as published online by Poole and Rosenthal.

You will note that they used the rankings of conservative Christian organizations to develop their own. Once again, the tired complaint of liberal bias is defeated by the facts.

I thought this was Consumerist, not Digg.

I could go on (and on, and on), but son, you're in no position to argue who's slightly-variant belief system is more rational.

That said, the Catholics put on a much better show. I'll give them that.

@PotKettleBlack: Only Catholics believe in transubstantiation. Almost all (if not all) Protestants don't.

2- Maybe hard core Christians are more trusting (and therefore more gullible) than your average American. I mean, hell, if you're a literalist you have to believe in transubstantiation. So, maybe more X-tians buy into more scams in general.
2a- Again, they buy into transubstantiation and a 6000 year old earth. It cannot be too hard to make them believe that a pay day loan is a bad deal, can it?

Reading is hard, people. I GET it.

But breezing thru the comments, then tacking on, "Eww, I don't like the conclusions, so I'll say it's bunk" pretty much supports one of its corollaries: Conservatives are willfully ignorant?

i don't know how many christian conservatives del. has, but they have an awful lot of those cash advance/ payday loans and loans on your auto title places........

I would also point out that a bunch of these "red" or "conservative" states do very little in terms of a safety net for people near the poverty line. For better or worse when you eliminate that safety net people will turn to other means to get by. Payday loans fill that gap.

These states probably have very lax lending laws which allow those companies to charge %500 interest on their loans.

So you have lots of poor customers, and lots of loose laws that don't restrict your abilty to soak them.

It's a match made in heaven!

The real questions is, is this a coincidence or not. Personally, I lean to not. My feeling/experience is that social conservativism doesn't result in a greater sense of morality in other areas, but exactly the opposite. They're doing their duty fighting the gay menance, so when it comes to business that morality thing is covered.

BY DUSTIN EARNHARDT AT 02/15/08 05:46 PM

My argument is not to support payday lenders, or christians (I don't support either), mainly just to point out that this study is complete crap.

That about sums it up.

Most animals won't eat garbage.

[For the record, no, I don't think that most Christians are garbage, but, hey, you kinda asked for it with your post.]

Oh right... they might all be in metropolitan areas.

Why don't you all just get it over with and feed Christians to the lions?

@MissTic: You beat me to it. I think there's more of a link to income and education.

There is a link between faith/religiosity(?) and education - that is, an inverse relationship. Studies have been done on the subject. The one I can find right now was published in Nature magazine Vol. 394, No. 6691, p. 313 (1998) and was used to compare upper level scientists with a belief in a personal God.

Those states, in particular Mississippi and Alabama, tend to come in at the bottom 5 states in education for as long as I've been alive.

Looking at the chart, I have to wonder how the economics part of it works. Are we seeing more lenders in places with less overall affluence, less education, and less industry?

But, regarding the Christian angle, I for one stopped believing that Christians knew anything about their religion a long time ago (but, that holds equally true for most other religions as well--they're more of a social choice than a faith one aren't they).

If I had the time I'd love to do a research study and show better correlations between payday lending and other socio-economic factors. I have to agree with DrGirlfriend here... they were looking for something to justify a conclusion they reached before-hand.

@missbehave: Wow a Socialist on the internet. Crazy.

What a joke. What about Vermont, Illinois, or Iowa? They sure buck the trend.

It's an idea that comes out of the Social Darwinism craze of the late 19th century (funny, because they don't believe in that other kind of Darwinism) and Calvinism. One of the central beliefs of Calvinism is pre-destination and, as it evolved in America (under the Puritans), the belief that people destined for heaven would naturally be favored by god while still alive. In short: people who were rich and successful and happy must be god's chosen people while people who were rich and miserable were all going to hell.

This is a very unfortunate and rarely-discussed theological aspect of American Christianity, but its effects can still be seen to this day in modern Christian thought in America.

Somehow, the belief that rich people are simply better than poor people has become a part of the Christian faith, in spite of all of those things Jesus said in the actual Bible.

I don't know - it's been awhile since I've been in CA, but isn't evangelicism making inroads into the hispanic community on both sides of the border?

This is not to equate evangelicism with ignorance per se, but having lived in the West, Midwest and South, I would tend to believe that large Southern Baptist populations do tend to occur where there is also the worst "for profit" exploitation of the poor - by "rent to own" furniture stores, title lenders, high-roller televangelists, etc. You'll also find very little in the way of state or church supported services like tenant advocacy, legal aid... - more like these are places with near-caste systems, where populations are even more extremely segregated from each other in terms of where they shop, work, pray, than in (relatively) more affluent parts of the West, Upper Midwest, or Northeast.

I will say that it's beyond discouraging to drive through areas where the schools are nearly windowless, prison-like structures on dead ground and then just right down the road you've got acres of pristine manicured real estate, a sprawling church complex, huge crosses erected - in one neighborhood near me, there is a particularly stunning abomination of a $200K (!)"Statue of Liberty maybe 1/10th scale that was recently erected - taller than most of the buildings around there, only this "Miss Liberty" is a slightly modified version, holding up a bible and crucifix...I like to call it the statue of religious bigotry...and the cash to build it came from church members in the most depressed area...$200K could have helped boost more than a few of community based businesses, maybe fund some adacemic scholarships for local kids...this is a digression, sorry, but where religion seems to fall in line with other ways in which a community is fractured with groups walled off from one another, payday lending and anything else that preys on the weak and can be defended legally, won't tend to find any particularly well organized opposition.

For the record, While California is a "Blue State", this comes from its two main population centers: Los Angeles and San Francisco. The hundreds of miles between the two are decidedly conservative, religious and rural.

But it has nothing to do with the states being red or blue, or the cities trending democratic or republican, or the concentration of christians, it has to do with poverty. Areas of high poverty are high in hopelessness and desperation, which leads to the adoption of more extreme versions of religion (like the christian right).

This desperation also leads to more authoritarian power systems in the home, which leads people to find comfort and a positive self image in other authoritarian power structures (like christians, wahabists, and republicans).

THAT is why payday lenders, and christianists are so commonly linked geographically, because they both prey on poverty.

What a moronic, unscientific study which has no place on Consumerist.

How about a map showing all night liquor stores, crack houses, or per capita murder rates. Sockingly, they will most likely all be heavily concentrated in urban, blue states.

Am I the only one whose computer (or should I say computers, since this happens to me at work and at home) freezes when trying to compose posts that are more than a few words long? It only happens to me on this site. Argh.

It's not claiming that Christians are more susceptible. The gist is that states with what they call a high Christian Power Index are suprisingly lenient when it comes to allowing such usury.

The thing is, addressing Chris's post, that I still think that a link was being sought, and I'm not so sure that the data isn't being seen by the people conducting the study through a very particular lens. I admit I haven't pored over the entire report, but what I have seen so far doesn't sway me away from the idea that there is a LOT more to this than Christian states being permissive of usury. Also, I have to admit that the link they are trying to create makes me uncofortable, in that I see it as mixing church and state.

Like the poor blacks in the south, they (for good or ill) believe in the goodness of their fellow man, and that is probably why they believe the big yellow signs - and don't read the contract.

The states in the deep south featured also have a high degree of social stratification among races. In other words: lots of poor, churchgoing blacks.

There's nothing in my experience as a Southerner that would lead me to believe that Christians are more susceptible to payday lenders - in fact, the most uptight Christians seem to network through church and get each other decent-paying do-nothing jobs at places like IEM and West Coast Imaging.

In addition to the article presenting their findings, Peterson and Graves have posted online the charts, maps and tables they prepared for the study. "We believe that these materials graphically and conclusively demonstrate that conservative Christian Americans are a prime demographic target of the payday lending industry," Peterson said.

Peterson explained that the authors of the study hope the results of their work will give lawmakers, as well as spiritual leaders and people of faith, insight into the problem of payday lending. "Our findings should serve as a wake-up call reminding Christian leaders of the Biblical duty to expel usurious money changers from their flocks," he concluded.

This seems like yet another bit of Geography taken out of context and messed with by unscrupulous statisticians. I'd love to see the original document... off to google it...

If you're going to call bullshit on a study, at least read the study first and then give some real, academically sound reasons for why it's no good. I'd welcome that, as I'm not a statistician. But simply "calling bullshit" for a variety of badly argued reasons doesn't make a useful comment. Page 19 of the report explains how they came up with their "Christian Power Index" scores. Anyone care to give knowledgeable feedback on that?

If you're swinging around the "this is leftist" or "this is bigoted" or any other sort of PC club, shame on you for trying to close down a discussion with unwarranted attacks. READ THE ARTICLE if you disagree with the post and THEN form and write an opinion. Better yet, READ THE REPORT that the article is about.

It's quite obvious, if you read the article or the report, that the authors do not intend to attack religious faith—rather they are pointing out a surprising connection between an influential religious movement and the rise of a type of usury that has historically been antithetical to the movement's teachings. (I actually suspect that at least one of the authors is writing from a position of faith.) That is indeed an interesting finding and worthy of discussion.

As a formally-trained social scientist, I've seen too many times that people will almost always completely miss the point of a study (often with the help of the media). People will project their own biases onto the results and irrationally dismiss or exaggerate the study's findings.

At face value, there are a lot of alternative explanations for these findings, and the authors take the time to deal with those alternatives in the actual article.

That being said, however, law reviews are typically not peer-reviewed (I've published in both social science and law journals, and there is a big difference), and so this article should be taken at face value: a collection of interesting data.

And, while I snark at The South in general, I realize that there are great, independent-minded people there. Even if a cruelly persecuted minority. :D

[kspark.kaist.ac.kr]

[kspark.kaist.ac.kr]

@ClayS: I have nothing against their beliefs. They have every right to believe in a giant, celestial santa claus.

What I do think is that people who believe in ideas such as god based on their own desire for order in the universe are probably prone to tricking themselves into believing all sorts of other nonsense which has no basis in reality either. Just because something makes you feel good or safe doesn't mean it's true. Millions of people lose millions of dollars every year to people who sell them crap because it makes them feel good.

Or, to use another term, are stupid.

I live in Portland, OR, and there are lots of payday lenders here. I would not consider this area either the Mormon West nor Conservative Christian-land. And yet look at all those lenders tagged onto that part of the map.

Someone *really* wants to see a link between religion and payday lenders. The map itself clearly shows that it's a combo of population denisty and whether or not individual states even allow payday lending.

As much as I would like to throw some groups (ie Religious Conservatives) under the bus for something or another, and their may be an argument for HOW it got to be such a popular service and why there is limited regulation, but it would appear that, more than anything, this is a matter of populate density, not religion. The best example is seen in southern Cali, the bay area,the northern valley along I5 and along I5 into Oregon and Washington.

Another problem is they are looking at the whole state vs the area where the lenders are actually located -- ya know, where people live). And, though I don't really want to point this out, in the interest of intellectual honesty; the more densely populated areas tend to be more liberal.

Another problem we have with this data is the lack of lenders in the north east. Certainly they would be there if they were allowed. I also questions they way they ranked this; how could Georgia, North Carolina and West Virginia be ranked the same as New York, Mass, PA, etc..? That seems questionable to me.

You could probably do the same thing with fast food restaurants, car dealerships, or Outlet Malls. Though the North East would be included and provided more useful data.

Maybe I'm wrong. Maybe GOD is letting this happen -- ya know, with his "mysterious ways" and all.

Its sad. Here in Missouri.... even in the decent neighborhoods there is now the odd payday loan business. It didnt used to be this way years ago. Back then they were only in the poor neighborhoods.

I hate those predatory lending places. Pure evil IMO.

Outside of strict fundamentalists, few Christians follow the bible literally.
Want to know a little secret? The strict Fundamentalists don't follow the Bible all that carefully either. They're simply into loud self-proclamations, pointing fingers, then skipping whichever portions of The Bible are inconvenient. Words over actions. Sort of like Republicans in general - talk loudly, then do opposite.

@m4ximusprim3:
"I do like the fact that it suggests christians are stupid though."

I don't like that at all, and I'm a Jew. It is very simply, intolerance for the beliefs of others. Do you think bigotry is a good thing?

Or, more concisely: stupid is as stupid does.

By the gods, if these yahoos' shoes weren't velcro-ed to the ground, they'd be arguing the Theory of Gravity is "just a theory".

Wow, just wow. As one who lives in the Chicago area it is quite obvious that neither the purveyors, or the users, of payday loans at least around here, are predominantly "conservative Christians". This article really does not merit space on the Consumerist site. Do ya think it may be just the teensiest bit agenda driven?

But for those who can still think straight---- how does google earth know who are the liberal Christians versus the conservative Christians? How did the "conservative right" suddenly become synonymous with Christian right? And how to account for all those fine folk in the "Bible Belt" (whatever that is) who are not of the Christian faith, or who consider themselves Democrats/liberal Christians? What a crock.

@Dustin Earnhardt: Lol, I was going to point this out as well.

This study is kind of useless, since lots of states don't allow for payday lending.

I do like the fact that it suggests christians are stupid though. I've always held that to be a loosely true relationship. I guess my search for factual evidence continues. So far, all I've come up with is the fact that I bought my second xbox 360 from a guy on craigslist who "gave it up for lent". Whatever that means. Don't you usually start back up once easter comes around?

@Mr. Gunn: Very Obvious

I lived in Alabama for four years and can verify this.In some towns,it seems as if there's one of these places on every corner.

@tozmervo: Good point. After all, Arkansas had a Baptist preacher governor who still has some national political power. I'd expect a stronger correlation from the number of illegal immigrants or military bases.

@Dustin Earnhardt:
It's a case of an academic leftist developing a "Christian Power Index" to suit his very biased viewpoint.

There is little doubt the distribution of payday lenders is most influenced by state regulation first and low-income residents second.

Regardless of that though, if you look at the graph, the states that are marked as having a low "Christian Power Index" that have no payday lenders are [brace yourself] THE STATES THAT DO NOT ALLOW PAYDAY LENDING!! When you take that into consideration, basically all you see is a simple breakdown of population density across the country and no religious correlation at all.

My argument is not to support payday lenders, or christians (I don't support either), mainly just to point out that this study is complete crap.

How do they explain the near absence of these lenders in the very populous Northeast?

@UpsetPanda: I think you would find that population density is the best indicator of crime rates. In fact, you seem to recognize that. But this idea that crime is an alternative to payday loans in funny. Unless there is some correlation between payday loans and drug addiction. Most petty crime is committed by addicts.

What seems to be the typical profile of the local christian conservative here is that they are Republican because of culture warrior issues, they are also anti taxation and totally for free market with no oversight. They also tend to have no concern for the poor and see it as standard operating procedure, this usually also goes hand and hand with a desire to disband all welfare type programs.

So I see this as a plausible connection.

Payday lenders are leeches upon the desperate. Whether they are Christians or not makes no difference. I'd like to see another map, showing the crime rates around the country and crossing them with payday lenders. I don't know what they would be for the South, but in a lot of areas, access to easy crime may replace the need for a payday lender agreement. In a town of 3,000, it's probably not very easy to steal a TV and pawn it, but if you need money right now, payday lending would be available.

It just shows there is a difference between people who know they can afford something or think they can afford something.

I grew up right in the middle of the most "dotted" part of that map in a large city and it's most decidedly "blue" in terms of political power. The Democrats have been the majority for decades upon decades. This is also a heavy "fundamentalist" area yet the voting doesn't often reflect that. Of course Southern Democratic political beliefs are going to be different than East Coast Democratic political beliefs. Just throwing that out there....

Also, I really have to wonder about the poverty link. Or more to the point, the link between blue collar earners and payday loans.

As for usury law and the bible, outside of strict fundamentalist groups, not many average Christians follow the bible literally.

I'm not surprised, based on the correlation between crazy christians and dummies. Just kidding, God, please don't hurt me.