Fraud, Deception, and Business as Usual

American banking interests have long been aggressive in their marketing of loan products to consumers. Some have shown remarkable capacity to increase their profits by utilizing plans for mass market solicitation. Invariably the targets of these efforts are consumers with an immediate financial need that the institutions suggest can be remedied quickly and easily by their easy to meet terms.

Now before I go any further, let me say that I have significant respect for financial institutions and their necessity for both making reasonable profits and their need to cover the risks of their financial lending decisions. What I find striking is the fact that they are willing to offer ever increasing amounts to consumers who do not have the means or capacity or record of timely payment and responsible financial management. That is where there seems to be a rub.

Loan sharks and street lenders who charge exorbitant interest for small loans for short periods are the subject of many dark novels and the back pages of many crime reports. They are joined by many “finance companies” that fall under more lenient lending structures, in terms of commercial banking laws, and in turn move interest rates into the 20-30% plus range. Banks and credit unions began to offer their customers short term loans with warnings about the serious overuse of short term debt in light of its high cost. Similarly, credit card companies stepped in to offer their version of “quick loans”via cash advances and monthly “cash” check offerings. Now we are coming to my point.

Somewhere along the line, the lines between the street loan shark and the corporate institutional lender were merged. Today, the greatest schemes in the world are mass marketed with the names of worldwide lenders attached to them. Banks of high renown are the ones who solicit in the microprint the consumer to use their “low interest”cash availability…only to find in the microprint the statement of immediate 4% fees attached to the availability of those funds. For a short term debt, if the fees are added, the APR moves to astronomical figures…in other words …you have been taken. If bychance that consumer is a vulnerable one financially and circumstances cause them to be late in any payment, formerly “market interest” can be transformed overnight to amounts that sound less reasonable than the thug with the wad of bills and a baseball bat for repayment insurance.

Interest rates in the twenty and thirty percent zone become the consequences of slow payments and some even allowing for that increase in light of any late payments on any of a creditor’s credit reports. Suddenly…the consumer loan user is put over barrel after barrel of legalized “thieves” taking more and more out of their pocket while forcing an ever spiraling increase in costs, fees, penalties, and interest.

The add-on schemes are equally galling. They start with the offering of a service, a form of insurance, or a freebie to be yours simply for signing below…then in the fine print, you are told that this service comes with annual charges, monthly added costs that will be automatically billed to your credit card. In the middle of many of those offers for free things there is a microprint disclaimer noting that if this “Free check” is cashed, you will be automatically enrolled in an offering of one sort or another that will be billed monthly thereafter. People with poor vision would never know they had signed up for anything until after the charges started automatically accruing to their account.

Last week, I received a notice in changes in one of my credit card agreements. It was a multi-paged microprinted document with so much doubletalk, I do not believe a Harvard business school finance major could have understood it. It described its formulas for imposing fees, increased interest rates based on payments, and a new policy regarding the minimum payments for those who only paid minimum payments. It was as confusing a statement as any I have seen in my life. And the gist of it all was simply, some people are going to be taken for a very long cash depleting ride as they use this particular card.

Is all this legal…by current laws?…apparently. Is it right? Questionably not. The scriptures remind us that things hidden will one day be shouted from the housetops. Perhaps this sinister or not so sinister “theft” by fineprint should be regarded as a matter of justice for all and taken to lawmakers for better regulation. Where is the Christian community when it comes to speaking for fairness, clarity, honesty, and integrity in the marketplace? Should we not be making more of a ruckus about such clearly destructive behaviors on the part of corporate entities when the results can be so devastating to so many in our community?

There is another reality at work, as Proverbs 28:8 says so well…”He who increases his wealth by exorbitant interest amasses it for another, who will be kind to the poor.”