Shark Week 2017: a call to action against loan sharks targeting communities of color

“I’m trapped,” Diana Diaz said, her gaze to the ground as her glasses slid down the bridge of her nose. “My debt follows me.”

But Diaz isn’t alone. A Pew Charitable Trust study shows that more than 12 million Americans will take out a payday loan this year​ and fall victim to an industry that survives on taking advantage of a broken system. So what does that number mean for payday lenders? It means a profit of over $9 billion in loan fees at the expense of the most vulnerable communities in America.

According to the Center for American Progress (CAP), payday loan stores claiming to offer credit to underserved communities have blown up in the last 25 years. And often, they’re saturated in low-income neighborhoods.

“I mean, there are four in walking distance from me,” Diaz said, almost shouting. “It’s a not-so-nice neighborhood, you know, and they are all just blocks from each other.”

Predatory payday lenders have long ravaged these communities, and according to CAP, this practice supports the persistent and ever-growing wealth gap in the country.

“They target these communities because they know that’s who needs the payday loans the most, because of factors such as not having livable wages or employers not being regulated fairly,” Progressive Leadership Alliance of Nevada (PLAN) organizer Amanda Khan added.

Payday loans throw you into a revolving door

The cold hard truth is that payday loans are unaffordable for most borrowers.

The average loan will consume 36 percent of a borrower’s paycheck, but Pew’s research shows that most borrowers like Diaz can only afford to give 5 percent back every payday while still covering their basic expenses such as rent and food.

They’re designed to trap people — and they’re designed well. Most lenders will charge the maximum interest rate allowed under the state law just because they can.

Annual percentage rates average a whopping 391 percent, according to Pew.

A human face behind the debt

Diaz is an outspoken 48-year-old New Yorker who’s got the cutting accent and spunk to prove it. But it’s hard to believe that spunk is still there. Eight years ago, Diaz lost everything. And when she says everything, she means it — her father, her home, her car. Gone. So in 2009, she traded in the Big Apple for what she thought was the “more affordable” Sin City.

“I left New York so I wouldn’t have to work three jobs to survive,” she said. “But I got to Vegas and there were no jobs for me here.” By 2014, a little more than five years after she’d moved across the country looking for better opportunities, Diaz was without a job and close to eviction.

She said she was making decent money at McDonald’s, enough to get by each month. But when they traded out store managers, her hours were cut and she went from working five days a week to one. And it happened without warning, leaving her no time to prepare.

Diana Diaz, 48, speaks out about her experience with payday lenders in front of a Las Vegas Money Tree on July 26, 2017. The local protest was just one of many nationwide as part of a call to action for payday lender reform and CFPB protection.

That’s when she turned to Money Tree, Rapid Cash and Check City to bail her out.

And they did bail her out, she said. Until her next paycheck came in and her lenders took nearly all of it from her. She’s defaulted on all three of the loans.

According to Pew, loans are usually due two weeks after they’re taken out and tied to the borrower’s pay cycle. This means lenders have direct access to Diaz’s checking account.

“I don’t know if I’ll ever get out,” Diaz admitted, letting out a nervous laugh. “I really hope.”

So when asked what she would do first if her debt disappeared, Diaz had just one word for me: “School.”

“I really just want to go back.”

Her dream to become a veterinarian one day is a source of hope for her right now. That, and her growing activism.

‘Hey, hey! Ho, ho! These toxic lenders have got to go!’

Armed with bright posters, informational handouts and even a drum to accompany the protestors as they chanted, Diaz and 10 other PLAN activists swarmed the lobby of a Las Vegas Money Tree on Tuesday as part of a national call to action.

But they warn that their mission isn’t to be confused. They aren’t looking to get rid of payday loan stores altogether. Instead, they’re calling for reform by defending the Consumer Financial Protection Bureau (CFPB).

CFPB is an independent federal agency that was created in the wake of the 2008 financial crisis. Its mission is to protect consumers in the marketplace, but CFPB’s own future has been threatened by the Trump administration, who recently announced it would review all financial regulations. CFPB is a likely target, according to CAP, and weakening it would be dangerous to communities of color.

According to Laura Martin, PLAN’s associate director, they’ve already helped pass two pieces of legislation this year, “but there’s still more work to be done to protect consumers.”

“It’s shark week, but today we’re holding loan sharks accountable for the damage they do to our communities. These corporations just extract wealth from our communities and then turn around and brutally attack the people who can’t pay their loans back. They don’t provide any services or make any products, they just take advantage of people. Payday lenders don’t ensure their borrowers can afford the loans they’re asking for, and this allows people to have multiple revolving loans. It’s a really manipulative system harming people, and there needs to be action taken against the industry.” 
 — Laura Martin

So, basically, in a country where there are more payday stores than McDonald’s restaurants (seriously, CFPB did the research), the activists just want to see more checks and balances against big banks and lenders.

“I would tell my lenders to cut their interest rates,” Diaz said matter-of-factly.

“You want your money back, then play fair.”

Money Tree declined to comment.

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