Payday Lenders Caught (Again) Using Fake Personal Stories In Attempt to Influence CFPB

WSJ Exposé Isn’t the First Time Payday Lenders Have Been Caught Deploying Underhanded Tactics to Influence Legislators or Regulators

WASHINGTON, D.C. – A Wall Street Journal exposé has caught payday lenders trying to manipulate government regulators by inundating the Consumer Financial Protection Bureau (CFPB) with fake “personal stories” supporting their industry. According to the Journal, the leader of the nation’s leading payday lender trade group claimed he could not “speculate as to why” this had happened:

Told of the Journal findings, [chief executive of Community Financial Services Association, Dennis Shaul] said: “We cannot begin to speculate as to why that is.” He said he had asked member lenders not to use coercion or gimmicks in the campaign and that they generated tens of thousands of handwritten notes. “I’m very disappointed to hear this, and it is not at all the outcome we expected.”

Shaul’s feigned ignorance runs counter to his comments made behind closed doors at a lavish payday lender trade conference. As Allied Progress pointed out in its public comment submitted in support of the CFPB’s payday lending rule:

Who is to blame for these alarming irregularities? Perhaps a recent exposé in VICE has the answer. According to the report, “months before [the CFPB] proposed a new rule threatening the profits of exploitative payday lenders across America, the industry’s leaders gathered at a posh resort in the Bahamas to prepare for war.” During a breakout session titled “Take Action in the Rulemaking Process Comment Period,” attendees were told that “a team of three full-time writers” had been retained to assist with comment writing. By deluging the CFPB with individual comments, the author goes on to note, lenders could “keep the payday loan party going” and force the agency to “wade through hundreds of thousands of comments.” As Dennis Shaul, head of the industry’s primary trade group, explained, the result is a “bogged down” CFPB.

The payday lenders seemed to be willing to do whatever they could to slow the CFPB down by submitting as many comments and stories as possible – heck they even had professional writers on hand to help in the effort. Is it any wonder payday lenders resorted to submitting thousands of bogus, supposedly “personal” stories that were largely made up of the exact same phrasing and circumstances?

“This isn’t the first and it won’t be the last example of payday lenders using dishonest and underhanded tactics to protect their industry. This report demonstrates that the payday lending industry will stop at nothing to undermine, delay, or ultimately repeal the CFPB’s new rule protecting consumers,” said Karl Frisch, executive director of Allied Progress.

He continued, “This is just another reminder of why we need protections to stop the abusive practices of the payday industry that leave millions of Americans caught in a cycle of debt.”

To speak with Karl Frisch about the CFPB and the payday lending rule, please contact Annette McDermott at 202-697-4804 or

More Background on Payday Lenders Trying to Game the System

It should come as no surprise that the payday lending industry might attempt to influence the CFPB’s rulemaking process through potentially underhanded means.

In state-based payday lending campaigns, industry groups have resorted to questionable tactics in an attempt to influence state lawmakers and achieve their regulatory goals. In January 2016, the pro-payday group Arizona Financial Choice Association organized a purported letter-writing campaign of borrowers supporting SB 1316, legislation that would legalize predatory loans with triple digit interest rates in the state. According to State Representative Debbie McCune Davis, who requested a State Attorney General investigation into the industry-backed effort, when letter signers were contacted and told exactly what the bill would entail, many fully opposed it. Signers also admitted that they were told to sign the letters as part of their loan application. Worse still, some did not recall signing the letters at all.

Similarly, the background of those running industry-backed organizations opposed to the CFPB and its work is also cause for concern.

For the better part of two years, while the CFPB was preparing its rule to rein in the worst abuses of payday, vehicle title, and other high-cost installment loans, the industry-supportive astroturf group Protect America’s Consumers was pummeling the bureau with a barrage of inaccurate television and digital ads around the country. The only person publicly affiliated with the group at the time, its CEO Steve Gates, once worked for an organization that was caught faking grassroots activity, even forging letters to members of Congress. That phony activism was subcontracted to Lincoln Strategy Group, which also ended up running the anti-CFPB astroturf operation for Protect America’s Consumers. Lincoln Strategy Group is run by Nathan Sproul, who’s companies have been investigated in multiple states and by the FBI for violating voter registration laws.

As the Cleveland Plain Dealer reported in August 2016, there was deep concern that payday loan borrowers were being pressured by lenders into submitting comments to the CFPB that opposed the proposed rule. The fact that borrowers were being asked to submit comments opposing the rule as part of the loan process, according to the Plain Dealer, “suggests that the letter-writing involves an element of coercion or pressure, directly or implied.”




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