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When it comes to pursuing their prey, sharks are master maneuverers. Loan sharks, that is.
These days, this usurious species goes by the less threatening name of “payday lenders.” But they are no less voracious, targeting folks in rough financial straits and luring them with easy-money come-ons. With lethal interest rates of more than 700 percent, automatic renewal clauses, and other razor-sharp gotchas, a $500 payday loan can sink a hapless borrower thousands of dollars into debt. That’s why states have been restricting the sharks’ interest-rate gouging and entrapment techniques.
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But, with a flip of their tails, many payday lenders are simply swimming around state laws by operating online and offshore from such regulatory safe-harbors as the Bahamas, the Isle of Man, and Malta. From there, sharks can make loans, then begin devouring their borrowers’ bank accounts, even in states that ban such loans.
How can shady operators pull-off billions of dollars worth of these devious – and maybe illegal – transactions each year? With inside help from such pillars of the financial establishment as Bank of America, JPMorgan Chase, and Wells Fargo. Of course, these upstanding corporate citizens don’t dirty their hands (or reputations) by making these predatory loans, but they willingly allow offshore sharks to tap directly into the borrowers’ checking accounts and withdraw unconscionable interest payments electronically… and mercilessly.
There’s a four-letter F-word for what the banks are doing to their own depositors: Fees. Automatic withdrawals by the sharks can cause a tsunami of overdrafts in a borrowers’ bank account – and banks happily collect fat fees for every overdraft.
To help stop this multibillion-dollar feeding frenzy on hard-up people go to www.ResponsibleLending.org.