Surprise: Study Funded by Payday Lenders Claims Payday Loans Aren’t Bad

Payday lending industry pushes biased research to claim payday lenders aren't bad for consumers...

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The payday lending industry is under significant pressure from regulators and consumer advocacy groups for pushing predatory loans to financially vulnerable consumers.  Payday loans have interest rates from 350% - 600% and only 15% of all payday loan borrowers repay on time. 

Since the formation of the Consumer Financial Protection Bureau (CFPB), the push to bring meaningful change to the industry has gained a lot of momentum. 

With their backs against the wall, the payday lending industry lobby have cited “academic studies” that attempt to prove that payday lending is a viable and responsible form of lending and that it does not in fact create a cycle of debt for its borrowers. 

One of the more cited reports is called “Do Payday Loans Trap Consumers in a Cycle of Debt?” and was conducted by a business professor at Arkansas Tech University.  While the report discloses that it was funded by pro-industry groups, it assures readers that the industry “exercised no control over the research or the editorial content of this paper.” 

Not true.

According to the watchdog group Campaign for Accountability and the Huffington Post, the payday lending industry had tremendous influence over the message and conclusion of the entire report. 

To start, the industry paid the author at least $39,912 dollars to write the paper, as well as an undisclosed amount to his research partner. 

Their involvement didn’t stop there.  Emails show Hilary Miller, the president of the Payday Loan Bar Association, a lawyers’ group for the industry, as well as president of the pro-industry group Consumer Credit Research Foundation, requesting multiple wording changes to sections of the report and omissions of findings that were not favorable to the industry. 

However, the most shocking part of the investigation came in the form of a quote from Mr. Miller himself, writing in an email that “In practice, consumers mostly either roll over or default; very few actually repay their loans in cash on the due date (which you know).” 

This quote perfectly sums up the horrible nature of payday loans, and the fact that it came from one of the industry’s top representatives makes it that much worse.  

It goes to show you that payday lenders are well aware of the negative impact their loans have on consumers, and their only way to cover it up is to fund biased academic studies.


For great alternatives to payday loans, visit our personal loan search to get connected to our network of responsible and transparent lenders.  

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