Allied Progress Presents Its Third Set of Nominees for the Payday Lender Hall of Shame

February 28, 2019

The Trump-Kraninger CFPB Wants To Help These High-Flying Payday Lender Executives Get Even Richer At Expense of Vulnerable Consumers 

---

WASHINGTON, D.C. – Consumer advocacy organization Allied Progress revealed its third set of nominees for the Payday Lender Hall of Shame as the Trump administration still plans to gut a critical consumer protection against the payday loan debt trap.This week, the top executives at Spartanburg, South Carolina-based Advance America have secured the honor.

From a private jet-loving executive involved in nearly a $19 million settlement over his company’s illegally excessive interest rates, to a CEO who led employees to intimidate borrowers at their workplaces, to a VP who dismisses payday lending caps as “arbitrary” while acknowledging Advance America’s average customers take seven or eight payday loans a year, the question has to be asked again and again: Why are people like this getting lucrative special treatment from the Trump administration?

Earlier this month, the Trump/Kraninger-controlled Consumer Financial Protection Bureau (CFPB) rolled out a proposal to undo a commonsense CFPB rule from the Cordray-era requiring payday and car-title lenders to consider a borrower’s ability-to-repay before making a high-interest loan. Without this check in the system, the floodgates will open for millions of consumers – particularly in communities of color – to fall into cycles of debt where borrowers take out new high-interest loans to pay off old loans, over and over again. It is no coincidence that the Trump administration is advancing a top priority of the payday lender lobby after the industry donated over $2.2 million to Donald Trump’s inauguration and political committees and after the Community Financial Services Association Of America (CFSA), the payday industry’s national trade group, came out in early and vocal support of Kathy Kraninger’s nomination to the CFPB.

See the previous nominees for the Payday Lender Hall of Shame HERE and HERE.

CEO Patrick O’Shaughnessy Made $3 Million In 2011, The Last Year Advance America Publicly Disclosed Its Financial Information.

Patrick O’Shaughnessy Made “$3 Million In Salary And Stock Options In 2011.” “O’Shaughnessy, who made $3 million in salary and stock options in 2011, the last year for which data is publicly available, talked at length about Advance America’s customers.” [Chico Harlan, “How a scorned industry of lenders plans to keep the 400 percent loan around,”The Washington Post, 06/09/16]

• O’Shaughnessy Is President And CEO Of Payday Lending Company Advance America. “‘More than four years ago, Advance America and its industry partners took the extreme and costly step of suing federal regulators for attempting to cut off our access to the U.S. banking system,’ said Patrick O’Shaughnessy, President and CEO of Advance America and Chair of the CFSA Board of Directors.” [“Unsealed Government Documents Prove Federal Cover-Up In Operation Chokepoint,” Community Financial Services Association of America, 10/12/18]

• O’Shaughnessy Also Chairs The Board Of Directors For The Community Financial Service Association Of America (CFSA), The Payday Industry’s Trade Group. [“Board Of Directors,” Community Financial Services Association of America, accessed 02/26/19]

Advance America Was Purchased By A Mexican Billionaire In 2012 And Is No Longer Required To File Public Financial Disclosures.

Advance America Was Purchased By “Mexican Billionaire” Ricardo Salinas Pliego For $780 Million In 2012. “Mexican billionaire Ricardo Salinas Pliego is opening for business in the U.S.: his Grupo Elektra announced Monday morning its successful purchase of Advance America—the largest payday lender in the U.S.Stockholders approved the $780 million purchase price Grupo Elektra offered in February, a figure that includes all outstanding shares of the American firm and repayment of the company’s debt.” [Erin Carlyle, “Mexican Billionaire Buys Advance America, Largest Payday Lender In U.S.,” Forbes, 04/23/12]

• Salinas Had Opened Banco Azteca In Mexico Ten Years Prior To The Advance America Acquisition, Offering Loans At “50 To 60 Percent Interest Rates.” “Ten years ago, Salinas opened Banco Azteca branches inside his Elektra retail stores and began offering financial services to Mexico’s poor. Lendees can take out credit to buy a dishwasher, or a personal loan to pay for medical expenses–at 50 to 60 percent interest rates. Obviously, those high rates that wouldn’t fly at banks in the United States. But in Mexico, they’re pretty standard, as I wrote in my recent magazine story on Salinas’ and Elektra.” [Erin Carlyle, “Mexican Billionaire Buys Advance America, Largest Payday Lender In U.S.,” Forbes, 04/23/12]

Advance America, Cash Advance Centers, Inc. Has Not Filed Any Disclosures With The Securities And Exchange Commission (SEC) Since February 14, 2013. [Filings for Advance America, Cash Advance Centers, Inc. CIK#: 0001299704, U.S. Securities and Exchange Commission, accessed 02/26/19]

• “International Companies Are Not Required To File Disclosures With The SEC, But Many Do.” [“SEC Filings,” Harvard Law School Library, accessed 02/27/19]

Patrick O’Shaughnessy Claimed That Advance America “‘Will Never Use The Kind Of Fraudulent And Illegal Tactics Employed By Scam Artists.’”

Patrick O’Shaughnessy Claimed, In Response To Report Of A Scam Involving Scammers Posing As Advance America Employees, That “‘Legitimate Short-Term Lenders Such As Advance America […] Will Never Use The Kind Of Fraudulent And Illegal Tactics Employed By Scam Artists.’” “Advance America, a national provider of small-dollar loans and other financial services, has recently become aware of a new wave of scams targeting consumers in Tennessee. It has been reported that scammers, posing as Advance America representatives, are offering local residents approval for a consolidation loan, a product Advance America does not offer, in exchange for personal information such as banking account numbers, passwords and Social Security numbers. These scam artists are in no way affiliated with the company. […] ‘Scammers often use the reputation of a legitimate, respected business to con victims out of their money,’ said Patrick O’Shaughnessy, president and CEO of Advance America. ‘Legitimate short-term lenders such as Advance America are highly regulated at both the state and federal level and will never use the kind of fraudulent and illegal tactics employed by scam artists.’” [Press Release, Advance America, 01/08/18]

A California Regulator Settled With Advance America In 2018 For $160,000 After The Company Inappropriately Added Motor Vehicle Fees To Installment Loans.

The California Department Of Business Oversight Settled With Advance America For $160,000 After The Lender “Improperly Added Department Of Motor Vehicle Fees To The Amount Of Installment Loans.” “The Department of Business Oversight (DBO) today finalized a settlement with Advance America’s California subsidiary that continues a broader DBO crackdown on lender avoidance of interest rate limits on small-dollar consumer loans. […] The $160,000 settlement requires the subsidiary – Advance America, Cash Advance Centers of California, LLC (AA LLC) – to refund $82,000 to 519 borrowers and pay an administrative penalty of $78,000.” [Press Release, California Department of Business Oversight, 03/12/18]

• “The settlement resolves allegations AA LLC improperly added Department of Motor Vehicle fees to the amount of installment loans, which brought the loans’ total to more than $2,500. That meant the affected loans were not subject to the California Finance Law’s (CFL) interest rate caps, which only apply to loans under $2,500.” [Press Release, California Department of Business Oversight, 03/12/18]

Former Advance America Staff Claim That The Company Ordered Its Employees To Use “Embarrassment And Intimidation” Against Customers Who Were Late On Their Payments—Including Confronting Borrowers At Work.

A Former Employee of Advance America Claimed, “The Key Was Embarrassment and Intimidation” When The Company’s Collections Department Would Confront Customers Whose Payments Were Late At Their Places Of Employment. “One former employee of Advance America explains some tricks of the trade. Speaking on the condition of anonymity (because he and other employees were forced to sign a confidentiality agreement upon leaving the firm), this former shop employee says that many of his clients were on disability or Social Security: ‘They would come in for a small loan and write a check to the company dated the 3rd of the month, when their government checks would arrive. All the Advance America employees were required to come in early on that day, so we could quickly cash their checks and wipe out their checking accounts.’ […]  This employee also worked for a time in the collection department, where he was instructed not to visit people at home, but to go to people’s place of employment first. ‘We would not tell their bosses where we were from, but we would carry a clip board with our name on it in a prominent way. We would request that a person be pulled off the factory floor, not to collect, but to keep them on the hook. The key was embarrassment and intimidation.’” [Mary Bottari, “Bailed-Out Banks Finance Predatory Payday Lenders,” PR Watch, 09/16/10]

Billy Webster Made Over $200,000 As Payday Lender Advance America’s Chairman Of The Board.

Billy Webster Is The Chairman of Advance America. According to his Linkedin profile, Billy Webster is currently the Chairman of Advance America. [LinkedIn Profile for Billy Webster, accessed 02/26/19]

• Billy Webster Has Been Identified As Advance America’s Chairman As Recently As September Of 2018. “William M. Webster, IV is the co-founder and chairman of the Board for Advance America, Cash Advance Centers, Inc. and previously served in the White House.” [“William M. Webster, IV,” Upstate Warrior Solution, 09/17/18]

In 2011, Webster Was Compensated $204,680 For His Work As Chairman Of The Board. “Mr. Webster was paid a salary of $200,000 primarily for the role he serves advising on corporate strategy and assisting our governmental affairs department in the legislative arena at both the state and federal level. In addition, in 2011 we paid: (i) $480 of life insurance premiums on Mr. Webster’s behalf; and (ii) $350 per month for 12 months ($4,200 per year) for office space used by Mr. Webster at an office building owned by George D. Johnson, the former Chairman of our Board of Directors.”[Advance America, Cash Advance Centers, Inc. Form 10-K/A, Securities and Exchange Commission, 04/30/12]

Advance America Was Purchased By A Mexican Billionaire In 2012 And Is No Longer Required To File Public Financial Disclosures.

Advance America Was Purchased By “Mexican Billionaire” Ricardo Salinas Pliego For $780 Million In 2012. “Mexican billionaire Ricardo Salinas Pliego is opening for business in the U.S.: his Grupo Elektra announced Monday morning its successful purchase of Advance America—the largest payday lender in the U.S.Stockholders approved the $780 million purchase price Grupo Elektra offered in February, a figure that includes all outstanding shares of the American firm and repayment of the company’s debt.” [Erin Carlyle, “Mexican Billionaire Buys Advance America, Largest Payday Lender In U.S.,” Forbes, 04/23/12]

• Salinas Had Opened Banco Azteca In Mexico Ten Years Prior To The Advance America Acquisition, Offering Loans At “50 To 60 Percent Interest Rates.” “Ten years ago, Salinas opened Banco Azteca branches inside his Elektra retail stores and began offering financial services to Mexico’s poor. Lendees can take out credit to buy a dishwasher, or a personal loan to pay for medical expenses–at 50 to 60 percent interest rates. Obviously, those high rates that wouldn’t fly at banks in the United States. But in Mexico, they’re pretty standard, as I wrote in my recent magazine story on Salinas’ and Elektra.” [Erin Carlyle, “Mexican Billionaire Buys Advance America, Largest Payday Lender In U.S.,” Forbes, 04/23/12]

Advance America, Cash Advance Centers, Inc. Has Not Filed Any Disclosures With The Securities And Exchange Commission (SEC) Since February 14, 2013. [Filings for Advance America, Cash Advance Centers, Inc. CIK#: 0001299704, U.S. Securities and Exchange Commission, accessed 02/26/19]

• “International Companies Are Not Required To File Disclosures With The SEC, But Many Do.” [“SEC Filings,” Harvard Law School Library, accessed 02/27/19]

Billy Webster And His Family Often Used Advance America’s Corporate Jet.

In 2010, Webster and His Family Used Advance America’s Private Jet.“Mr. Webster also had imputed income of $825 for his family members accompanying him on corporate aircraft when he traveled for Company business.” [Proxy Statement, Advance America, 4/14/11]

In 2009, Webster and His Family Used Company Jet. “Mr. Webster also had imputed income of $5,778 for his family members accompanying him on corporate aircraft when he traveled for Company business and $37 for life insurance premiums we paid on Mr. Webster’s behalf.” [Proxy Statement, Advance America, 4/9/10]

From 2003-2004, Webster and His Family Made Personal Use Of The Corporate Aircraft.“Mr. Webster and his family have made personal use of our corporate aircraft. Although we believe that the value of such use is less than $50,000, we are voluntarily reporting that the estimated incremental cost to us of such use was approximately $9,100 in 2003 and $23,000 in 2004.” [Proxy Statement, Advance America, 5/19/05]

Advance America And Co-Defendant Billy Webster Settled A Law Suit For $18.75 Million Over The Lender’s Allegedly Illegal Fees And High Interest Rates.

In 2010, Advance America And Billy Webster Paid $18.75 Million To Settle A Lawsuit That Alleged They Charged Illegally High Interest Rates.“On September 17, 2010, Advance America, Cash Advance Centers, Inc. (the ‘Company’) along with its North Carolina subsidiary and co-defendant William M. Webster IV, and the class representatives in the class action lawsuit of Kucan et al. v. Advance America, Cash Advance Centers of North Carolina, Inc. et al., entered into a Stipulation and Agreement of Settlement (the ‘Settlement Agreement’) […] The Company will establish a settlement pool of $18.75 million for: (i) payment of all attorney fees, class action administration fees, and other fees and expenses related to the litigation; and (ii) payments to settle all claims by the North Carolina Class Members […]” [Advance America, Cash Advance Centers, Inc. Form 8-K, Securities and Exchange Commission, 09/20/10]

• “The country’s largest payday lender, Advance America, has agreed to pay $18.75 million to more than 140,000 North Carolina consumers under a proposed settlement agreement. The deal would resolve a 2004 class action lawsuit that accused the company of charging illegal fees and interest rates.” [James Limbach, “Payday Loan Lawsuit Brings $18 Million Settlement Against Advance America,” ConsumerAffairs, 09/22/10]

Jamie Fulmer, Payday Lender Advance America’s Vice President Of Public Affairs, Claimed That Caps On Payday Loans Were “‘Arbitrary’”…

Jamie Fulmer Acknowledged That Advance America Customers Borrow An Average Of Seven Or Eight Payday Loans A Year, But Called Caps On Lending “’Arbitrary.’”

Jamie Fulmer Acknowledged That The “’Mathematical Average Is Between Seven Or Eight Loans” Per Year Per Payday Customer And Argued “Folks Are Smart Enough To Make Those Decisions For Themselves.” “When asked afterward how many loans a typical customer takes out, Fulmer said there are ‘lots of customers’ who take out one and many, over the course of a year, who take out two or more. He said the ‘mathematical average is between seven and eight loans’ over the course of a year. ‘We think folks are smart enough to make those decisions for themselves and their families,’ he said.” [Randal Edgar, “Lending; Ferri Bill Would Cut Interest Rates On Payday Loans,” Providence Journal, 04/17/14]

• Jamie Fulmer Called A Limit On Payday Loans “’Arbitrary’” And Acknowledged That Advance America’s Customers Take Seven Or Eight Payday Loans A Year. “Fulmer contends the five-loan limit is ‘arbitrary,’ particularly because Advance America customers take out an average of seven or eight payday loans a year. ‘There’s no reason why you’d pick five. That’s the customer’s decision,’ he said. ‘You don’t put a limit on the number of Big Macs a person can get at McDonald’s in a year; you don’t put a limit on the number of bounced checks a person can write in a year.’” [Doug Denson and Esteban Parra, “House bill would limit payday loans,” The News Journal, 04/30/12]

• Jamie Fulmer Argued That It’s Not For Payday Lenders To “Dictate” How Many Times Consumers Take Loans In A Given Year. “They also do not have a limit as to how many times someone may borrow per year. ‘We don’t believe it’s up to us to dictate the number of times needed,’ said Fulmer.” [Emily Shaprio, “Payday loans provide people with money quickly,” The Porterville Recorder, 07/24/12]

• Jamie Fulmer Has Been Advance America’s Vice President of Public Affairs Since 2010. He Was The Company’s Director Of Public Affairs From 2004 To 2010. [Linkedin Profile for Jamie Fulmer, accessed 02/26/19]

Former Advance America Staff Claim That The Company Depended On Maintaining A “Never-Ending Cycle” Of Debt And Encouraged Borrowers To Take Out Numerous Payday Loans.

A Former Manager of Advance America Said That “An Overwhelming Percentage” Of Customers Re-Borrow Every Two Weeks and Can’t Get Out of The “What Appears to Be a Never-Ending Cycle of Payday Loan Debt.” Stephen V. Martino, “a former manager for Advance America,” wrote in a June 2, 2012 letter, “Payday lenders argue that customers seek payday loans as a ‘responsible way’ to manage their finances. What they tactfully ignore, however, is the high rate of frequency at which customers use the payday loan product. The truth is, an overwhelming percentage of customers pay their loan every two weeks and then re-borrow upon every visit. In many cases, this goes on for years because customers just can’t seem to get out of what appears to be a never-ending cycle of payday loan debt. The fact is, that’s how these companies make their money. Payday lenders make it sound as if their product is a one-time deal. They also claim their fee of $40 for a $400 loan is not only sensible, but affordable. But in my own experiences, I’ve seen customers continue borrowing for years. Time and again I’ve witnessed customers get caught-up in the so-called payday loan debt cycle, and it was my job to restrict customer repayment plan options and encourage the repetitive use of the payday loan product.” [Patrick Luce, “Letter: Payday Lenders Harmful to Consumers,” Patch, 06/02/12]

• A Former Employee of Advance America Said He And Others Would Have To Come in Early On Days When Customers’ Disability and Social Security Benefits Arrived So Advance America Could “’’Quickly Cash Their Checks and Wipe Out Their Checking Accounts.’” “One former employee of Advance America explains some tricks of the trade. Speaking on the condition of anonymity (because he and other employees were forced to sign a confidentiality agreement upon leaving the firm), this former shop employee says that many of his clients were on disability or Social Security: ‘They would come in for a small loan and write a check to the company dated the 3rd of the month, when their government checks would arrive. All the Advance America employees were required to come in early on that day, so we could quickly cash their checks and wipe out their checking accounts.’” [Mary Bottari, “Bailed-Out Banks Finance Predatory Payday Lenders,” PR Watch, 09/16/10]

• The Former Employee Said The Company’s Executives “’Wanted Folks To Pay The Interest Rate And Keep The Loan Going And Going.’” “A primary goal is to get customers to continually renew their loans. ‘We had to call in our numbers every night to Advance America’s corporate headquarters. They were not interested in numbers on who paid off their loans, but on who renewed their loans. They wanted folks to pay the interest rate and keep the loan going and going,’ says the former employee.” [Mary Bottari, “Bailed-Out Banks Finance Predatory Payday Lenders,” PR Watch, 09/16/10]

# # #