(Picture: Hrag Vartanian)BILL QUIGLEY FOR BUZZFLASH AT TRUTHOUT
Lots of see households in poverty and seek to assist. Others see families in poverty and see chances for revenue.
Here are six examples of billion dollar industries which are built on separating poor individuals, especially individuals of color, from their cash, the reverse Robin Hood.
Inspect Cashing Businesses
Inspect cashing companies. Money a $100 check? At Walmart that will be $3. At TD bank non-customers pay $5 to cash a check from their bank.
Nearly 10 million homes containing 25 million individuals do not have any bank account according to the FDIC. The majority of because they did not have adequate money to keep a minimum balance in their account.
Examine cashing business are part of a $100 billion industry of more than 6,500 check cashing businesses in the US, many which also supply money orders, energy costs payments and the like, according to statement provided to Congress by the industry.
More than 30 million individuals make use of pawn store loaning services for an average loan of $150. One company, Money America, has 84 check cashing centers and 859 financing areas in the US, over 260 in Texas alone, crossing $1 billion in pawn loans. In their 2014 annual report they disclose that 30 percent of individuals never go back to redeem the product they pawned and the sale of those items makes up over half of the company incomes. The business paid millions in penalties in 2013 for overcharging members of the armed services and filing incorrect court pleadings in thousands of cases. The CEO was provided $6 million in 2014.
Overdraft charges, when there is not enough money in the bank account or charge card to cover all purchases, is an $11 billion industry for banks, according to the Customer Financial Protection Bureau. A current New york city Times post describes how banks in some cases charge overdraft costs even when the customer has sufficient cash in their accounts to cover the purchase and were compelled to pay more than a billion dollars for manipulating the order of purchases to take full advantage of the chances that their clients will have to pay additional charges.
Payday loans are used by individuals over 15 million times a year and can result in deep debt problems and normally involve amazing percentages of up to 391 percent according to the Customer Financial Protection Bureau. Bench Charitable Trusts reported pay day loans are a $7 billion dollar a year industry. The Federal Trade Commission won a $300 million case versus two payday lenders who were tricking customers, who, for example, got a $300 loan thinking it might be paid back for $390 when in reality the loan provider was charging $975 to settle the $300 loan. The United States Department of Justice arraigned previous race car motorist Scott Tucker on criminal charges for running a $2 billion nationwide payday advance operation which regularly charged interest on loans for over 4.5 million individuals of 400 to 700 % per year. The country’s biggest pay day loan business, Advance America, charged nearly 140,000 people in North Carolina yearly percentageinterest rate exceeding 450 percent until it was stopped by the state.
Automobile Title Loans
More than 2 million individuals utilize car title loans every year, paying about $3 billion in fees each year, with typical annual percentageinterest rate of 300 percent, according to the Pew Charitable Trusts. The Center for Responsible Loaning approximates there are over 7000 companies which lend cash to individuals based upon holding the title to their automobiles, normally charging up to 300 percent yearly interest, which they market as 25 percent per month. The average borrower gets a loan of $951 and pays off $3,093.
Financial obligation collection is a $13 billion dollar a year market employing more than 140,000 employees in 6,000 companies, according to the federal Consumer Financial Defense Bureau.
Financial obligation collectors make more than 1 billion (yes with a b!) contacts with customers each year, according to their own industry newsletter. Twelve million individuals (5.3 percent of consumers) are at least Thirty Days behind on their payments, according to the Urban Institute. Thirty-five percent of all grownups with credit files, 77 million individuals, have debt in collection reported in their files. Pro Publica reviewed five years of court judgments and discovered the rate of judgements was twice as high in mostly black neighborhoods as it was in white ones.
The Customer Financial Protection Bureau has over 74,000 grievances about inappropriate financial obligation collection, its number one grievance, according to a current report of the Alliance for A Just Society.
These are not simply small companies but huge names like Citigroup, Capital One, JPMorgan Chase, Bank of America and Wells Fargo, in truth the Alliance for Just Society reported the big companies in financial obligation collections have made almost $100 million in contributions to federal prospects and celebrations given that 2001 and another $280 million on federal lobbyists.
Citibank was taken legal action against twice by the federal CFPB over falsified files and supplying inaccurate information in financial obligation collections and agreedaccepted settle the case.
The debt collector with the largest variety of problems, Encore Capital Group, concentrates on purchasing up financial obligations from other creditors and after that filing numerous thousands of lawsuits was required to cancel more than 4,500 court judgments against debtors in New York after it was charged with filing shoddy lawsuits.
JPMorgan Chase paid over $130 million to settle a case against it brought by lawyerchief law officer from 47 states for improperly collecting financial obligations under what is called robo-signing, where legal files are authorized and submitted without proper review. JPMorgan earlier paid $389 million in fines and refunds to credit-card customers for issues with financial obligation collections.
These businesses target households with earnings below $35,000 and people of color are 3 times more most likely to receive violent loans than whites. Individuals with blemished credit are often passed over when looking for jobs.
There is some good news. Democrats developed and entered law the Consumer Financial Defense Bureau which is now starting to acquire some traction in tracking and regulating these predatory practices. Bad news is that Republicans like Ted Cruz are attemptingattempting to kill it and some Democrats are attemptingaiming to hobble it. There are likewise excellent groups like the Center for Responsible Financing which offer exceptional information on the abuses. However in the meantime making moneygenerating income off bad individuals stays a growing company.