sell

Payday Loans - The Perfect Way to Exploit the Poor

i'm sure i've said something that is

going to make some people want to smash

the dislike button

[Music]

hello everybody welcome back to another

brand new episode of business blaze now

this one payday loans the perfect way to

exploit the poor

obviously what goes on here is if you if

you're new to business plays

which in this case welcome you might

enjoy it you might know it's a little

bit weird it's probably not like

something you've seen before

i have a script that danny writes i read

it

never seen this before and react to it

and then sam edit it

and throws in a ton of memes what does

me mean

you know how they um meme this one

payday loans the perfect way to exploit

the poor this is a

viewer suggestion thank you richard

sanchez you legends

the other day in one of these videos i

said i'm a capitalist

but not a piece of you know like there's

capitalism where it's like there's a

great reddit sub forum called late stage

capitalism

and it's like yeah i like capitalism

it's grown some pretty incredible

economies and given everyone a wonderful

chance

at uh you know i was i was just checking

if my shirt's untucked it is

remember brian the meme accountant

untucked uh that you know

let's you know capitalism's great just

let's not be a piece of [ __ ] business

plays

life lessons okay imagine that you're

broke

that might be a bit easier for some to

imagine than others

this is definitely true maybe you're not

completely and hopelessly broke without

the

faintest flicker of light at the end of

the tunnel you're just experiencing

a cash flow problem you found yourself a

bit short

you're expecting some more money coming

in later but that's not going to help

you eat today

and put a packet of fun dinosaur-shaped

chicken nuggets

on the family dinner table now normally

in these videos i'm like danny

what is up with this you eat but i mean

still i mean that you eat but i've also

had fun dinosaur-shaped chicken nuggets

they're pretty nasty um but i'm sure my

children will one day

love that [ __ ] because they're shaped

like diner who thought up with that it's

like yeah yeah

what should we shape the chicken nuggets

like let's shape them like dinosaurs

because people

love eating dinosaurs under these

troubling circumstances you might be

tempted to grab a quick

payday loan the enticing headline in the

shop window poster

or the online ad seems reasonable enough

fast and friendly

no credit checks same-day service any of

those things should be throwing up red

flags

check the mother interest rates because

you're gonna get

financially raped it seems like a piece

of piss to borrow about four hundred

dollars and gain the peace of mind and

these are not just american like these

were a big deal in the uk

and they particularly piss me off and

gay you can gain the peace of mind that

you can live like a king for the next

couple of weeks

what 200 a week and

stuff yourself silly with enough tinned

hamburgers in onion gravy

oh my god danny is tinned hamburger an

actual thing

er they make you pass out from the sheer

culinary pleasure of it all

what is going on dany but of course

looking

beyond the marketing headlines and

delving into the fine print

reveals the devil in the details when

that devil

is you getting financially the general

idea behind a payday loan is that you

generally need to pay it back pretty

quickly as the name seems to suggest

these loans

are apparently aimed at workers who have

found themselves unexpectedly short

halfway through the month and need a bit

of help to tide them over

until they next get paid ah so loans for

desperate people

we're off to a fantastic start there's

obviously i'm gonna sh

so hard on this concept and i'm sure

you've heard of companies that i'm not

gonna mention

but just imagine that i'm saying those

companies there's obviously gonna be a

bit of interest for you to pay out as

these businesses sadly aren't doing this

out of the kindness of their hearts

but when you dig out a magnifying glass

and study the terms and conditions of

the loan you'll find that the interest

rates

and fees on payday loans can be

eye-wateringly high the apr

is typically 400 percent

although it can climb even higher than

that and this is the big question

how is this legal now if you're in a

position to pay back that 400

loan in the agreed two weeks you'll

usually get away with about paying

an extra 100 dollars in interest and

if you know i have mentioned in these

videos before when there's a ponzi

scheme and they're like yeah you get

back 10

a month that have been like that's

absurd well here you go this is how you

do it

25 in two weeks so if you want

unattainable returns on your money that

are basically impossible to get

payday loans uh that's high enough for

most people

but it gets far far worse if the deal

dragged out for any length of time

and this is the deceit that lies at the

very heart

of payday loans despite the friendly and

encouraging marketing which seems to

imply that these companies are just here

to

lift you out of a temporary hole the

truth is that they're largely aimed at

low-income workers

with a poor credit history who can't get

a conventional loan elsewhere

and will struggle to pay back the debt

in full yeah and there are also as as

well as that they're also targeted at

people who are too desperate to read the

terms and conditions or the terms and

conditions are like

buried deep in that [ __ ] page

of tiny stop hiding

the insane uh percentages i paid the

hospital bill but now i need twenty

thousand dollars to pay the loan shark

i'm gonna get so much

being a socialist on this one but maybe

i lean to the left on this issue the

next payday may just be around the

corner but then

so are the usual stack of other monthly

bills and expenses that need to be

covered

on a tight budget it's estimated that

only around 14 percent of borrowers will

be

in a position to pay back the loan in a

full and walk away

this obvious so like that 25 in two

weeks is just not enough for them and

they know this

86 will go over that and they will pay

more this obviously means that an

overwhelming majority of borrowers have

ended up digging an even

bigger hole and have now become trapped

in an endless cycle of debt

even if you manage to pay back the debt

within months it's not uncommon to end

up paying over 800

in interest for that 400 loan an

alternative outcome

is to pay back the debt in full on time

but then almost immediately take out

another loan to cover your other bills

and expenses for the month ahead if you

get stuck in this kind of loop for a

full year

you could end up forking out 1 200 in

interest for that original 400

loan and that's if you do it properly

and that's if you play the game

and you still [ __ ] lose and it's gone

and the story may even not be over as

you head back to the payday loan company

throughout the following 12 months and

beyond payday loans are certainly a big

business the industry is worth about 46

billion

a year in the united states alone and

it's been reported that over 774 million

dollars worth of consumer spending is

pissed away

every year on paying the interest and

it's an industry which seems to be built

on the principle of sucking

poor people dry as we've commented

before on business plays it's always the

rich people that either get the things

for free

or get offered the most amazing deals

while the people with no money

are the ones expected to pay through the

nose for everything and this is so

true like as a it seems bizarre in

a way that an entire industry has been

built around the idea of leeching

excessive amounts of money from the

sector of society who simply don't

have any to begin with but is this a

harsh assessment

of a perfectly legitimate business model

charging reasonable fees

and how did we ever get to this point

what are you talking about danny no it's

not

and they're not reasonable fees and how

did we get to this point anyway because

we're all

business place is normally like amusing

this one

is 90 percent rant and i'm not sure if

it's actually amusing is it amusing

american businessman and former wrestler

alan jones is largely to blame

the concept of salary purchases in which

a lender effectively buys a worker's

next salary for

less than the full value of been

knocking around since the early 1900s

that's very clever and also shitty but

it was alan jones who went on to take

the title

of the father of the payday loan

industry when he launched

the check into cash company in 1993.

a few years earlier banking deregulation

had caused many local community banks to

go out of business which

meant that low-income customers had

suddenly lost all all access

to short-term credit the payday loan

industry was alan jones's proposed

solution

to fill the vacuum it actually stolen

the idea from a former credit bureau

manager

who was running a very similar operation

from a local small local service station

i can see

how this is a good idea which can be

done to be profitable

and not super exploitative because you

can reduce the risk

because you can have the worker sign

over the next paycheck ahead of time

much like you'd sign over a check if you

cash it

and then you can charge a reasonable

money say five percent

and that is i'm only saying that's

reasonable because it's so

low compared to where the current payday

lenders

sit and but five percent for like two

weeks

is still so far above the 1.6 percent a

year or let's say you know more

reasonably three and a half percent

that is you know offered on things like

secured

loans but maybe they didn't follow that

sort of ethical solution

and in ted stead turned into late stage

capitalists

let us see the idea behind the

traditional retail business model is

that the borrower writes a post-dated

check to the lender for the full value

of the loan and fees which the lender

keeps for a while

and then submits to the bank after the

borrower has received his or her next

salary packet

just like i said if the check bounces

additional fees are accrued and the loan

continues to generate interest for the

lender

i once bounced to check by accident and

i had to pay a fine

of like seven pounds fifty and i was a

little bit upset about that because

i guess it was my own fault because i

just didn't have enough money

but yeah no that was embarrassing

variations on this model have sprung up

since then and many loan companies now

inviting borrowers to submit a simple

online application and fax through the

relevant documentation

they're going to purchase a fax machine

from somewhere with this money

i've made fun of fax machines before

that people are like we still use them

in the medical industry and i was like

well that's

backwards with the repayments and

charges getting automatically deducted

from the borrower's bank account on the

agreed date

one minor problem that allen jones

encountered during the early years of

check into cash was the legality of his

business was often brought into question

in many u.s states loans with sky-high

interest rates were downright illegal

so what has happened but jones got

around this by donating huge amounts of

money to multiple state legislators

which encouraged them to see allen's

perspective

so allegedly some people might describe

that

as bribery thor's that had previously

placed tight caps on interest rates were

charged and new ads were introduced

which identified the sky-high interest

rates as perfectly legal fees

rather than perfectly illegal sky-high

interest rates

what's that great movie about lobbying

um thank you for smoking

that's a great movie worth checking out

lobbying is all kinds of shady uh it's

often been alleged by critics and i

stress the word alleged

not in fear of simon getting sued but

nineveh allen jones looking like one big

tough

bastard the land jones effectively

bought the slate legislation that

allowed him to carry out his business

what allegedly who's saying that

definitely not danny or me

but however he went about it there's no

doubt that jones became

incredibly wealthy and was able to lead

a wildly extravagant lifestyle by

squeezing

every last crumb from the poor and

desperate allegedly

don't sue me and he was certain that the

man

and he was certainly the man who

kick-started a whole

new massive industry within a decade of

check into cash opening

the first of its many stores ten

thousand other payday loan officers

sprang up around the u.s by the year

2008 payday loan stores even outnumbered

branches of starbucks and mcdonald's on

the streets of america

now we don't have any money and our

feelings are hurt

that is all kinds of depressing

all this does beg the question

if we all know they're a bit of a scam

how are they making so much money and

who exactly is still using them we

already know this the poor and desperate

it's like

if you are not making a lot of money and

you're living paycheck to paycheck and

an unexpected expense comes up

yeah kind of some hard-nosed cynics may

suggest anyone silly enough to take out

a payday loan without thinking it

through

properly deserves to be saddled in a

never-ending cycle of debt

yes totally if they are silly enough to

do that but the reality is

they're often in an insanely hard place

and i am sounding

so far left that people are definitely

gonna have a go at me generally

i don't sit that far on that side of the

i don't really even sit that side of the

political spectrum i'm very much in the

center but that's probably a lot easier

to say if you're not the one panicking

about keeping a roof over your head this

month while there may be

some borrowers who fail to review the

fine print the majority of them

are more likely are more likely to

understand exactly what a payday loan

means

but they feel painted into a corner with

no other options left on the table

also they do make it like it's really

those if you don't pay it back on time

because they always say pay it back

within two weeks and you'll be fine but

people don't they think oh yeah i'll

totally be able to do that because you

know they're not the most financially

literate people in the world

not everyone in general just a select

group of people who take these you're

like yeah i'll definitely be able to pay

that back look i'm getting paid next

week and then things come up and you

don't and then you get into this crazy

cycle of paying them a

ton of money according to research

conducted by the pew charitable trust

the average payday loan borrower in the

u.s is white

female and between 25 to 44 years old

but the report also highlights other

significant high risks too

including high-risk groups too including

home renters african-americans divorcees

those without a college degree and those

who earn less than 40 grand a year

there are usually at least a small

number of other viable options for these

groups to consider before going down the

dark

path to payday loans for example

borrowing money from family and friends

with a more reasonable and less

crippling interest rate

debt consolidation cutting down on

expenses having a clear out and flogging

stuff you don't urgently need

selling a kidney jesus starting up your

own mukbang channel

that's what you should do but i'll pay

my rent may as well start a mukbang

channel that'll work it's like whenever

my you know career goes to ah thank god

i can sell my old xbox and start a

mukbang channel or taking some of your

more valuable positions down to the pawn

brokers shop

some of those were slightly more serious

than others but

just to illustrate a point i know of one

guy who would regularly visit the pawn

brokers

when he found himself short of cash now

danny's also british i'm british we

don't really call them pawn brokers but

they exist they're like a computer or

something exchange

and like we just don't call them pawn

breakers who must appoint his xbox

console and then claimed it back more

times than he ever got around to

actually playing the damn thing

it seemed like a hell of a lot of

pissing about to me at the time but in

fairness he surely avoided having to pay

excessive fees

for a short-term cash loan asking

friends and family for a loan is often

an ideal solution

whenever possible particularly if they

get a chance to earn a little bit of

money from the deal too

wow and i think i'd loan my family money

anyway

i i guess i'd just give it to them if

they really needed money

also i definitely wouldn't charge them

interest because that feels a bit weird

but it can also be hideously

embarrassing i can remember squirming

when i had to ask simon to get me a

couple of quid so i could buy a tin

opener to get inside a can of kambel's

creamy cauliflower cooking soup

danny what is wrong with you that i

found while rummaging around in the bits

probably outside the back of the office

here um when i lay him out of the cellar

he eventually agreed to rent me his own

tin opener for half an hour

but it was still an experience i would

have rather avoided it

it was extremely expensive it's a very

nice tin opener danny and plenty of

people in financial difficulty tend to

prefer the relatively impersonal

and formal nature of dealing with a

complete stranger when it comes to

asking for money the irony is that

although some borrowers initially

dismiss these alternative options in

favor of a nice and

simple and hideously expensive payday

loan

they later up resorting to one of the

alternatives in order to pay back the

huge

payday loan debt hopefully not many

people resort to flogging their own

kidney though

it's maybe worth bearing in mind that

critics who are calling for a radical

overhaul or even a complete ban on

payday loans are not usually the ones

who are actually using them

yeah i mean i'm not i'm not for banning

these

i i really not i'm just for making them

not sh it's a complicated issue it

clearly is

it's all very because people do need

these clearly there's a demand for them

it's all very well for people in

stronger financial positions to dismiss

the whole thing as a predatory business

model which shouldn't be allowed to

operate but getting rid of them all

together could potentially rob borrowers

of what they perceive to be their last

remaining lifeline

exactly they suck but it's like the only

choice

and you could say and it's easy and and

like i'd be tempted to say well you know

i've said like make it fair make it a

reasonable thing

but then it's like well these are super

high-risk people that are borrowing

money so the odds of getting it back is

going to be reduced so you do need to

high

have a high interest rate but does it

need to be this high guys oh i guess

this is why this is an issue that hasn't

been solved because it's more

complicated than it appears

on the face of things sorry yeah that's

gone please step aside for people who

actually have money the industry agrees

that payday loans are an essential

financial tool for people who have

exhausted all other avenues

and who may otherwise have been forced

into considering alternative illegal

solutions

to survive in other words they're doing

us all a big favor by stopping all the

poor people from turning into nuisance

shoplifters

however i was surprised to discover

while writing this script that in the

last few years

payday loans have been already been made

illegal in 14 u.s states

it's still considered to be a thriving

industry in the uk although tighter rate

restrictions have recently been

introduced to ensure that firms only

lend to borrowers

who can genuinely afford to pay back the

debt good

but while there's no federal ban in the

united states 14 states have either

outlawed them or completely capped the

interest rates to a point

where such a business would be

unprofitable that seems a bit extreme

let's just cap them at a point where

it's like yeah they're making a

reasonable amount of money

and not an insane amount of money and

the digital world is taking a sense too

in 2016 google declared a complete ban

on adverts for payday loans defined by

an advert promoting a loan

with 36 apr and above or in which

repayment is expected within 60 days

i'm with google on that that seems

pretty smart that's like i don't know

but that seems like a good middle ground

but is a complete ban really the right

answer some would argue that this

doesn't remove

the basic need for a payday loan and

that it simply drives the industry

underground

back in the day chicago mobsters used to

run similar sort of schemes with the

main difference being that if you didn't

pay the loan back in time you got your

kneecaps broken

way look what they did to me my legs are

useless now

instead of pushing the problem into the

hands of shady criminals it could be

considered a healthier move to keep the

industry completely legal

and fully regulated of course we'd all

love to see more

conventional or at least more realistic

interest rates charged on a typical

payday loan but there's a big problem

there

the industry argues that such a move

would render business unprofitable

if for example they charged a 20 apr on

a short-term loan of 100

they would only end up making 40 cents

on the whole deal

that is a good point and if this sounds

like a lame excuse from an industry

clutching as straws

actually seems like a good point it has

to be said that some recent evidence

seems to back up their argument

back in 2010 the state of montana voted

to introduce a strict 36

interest rate cap on payday loans and

there was a general feeling of

celebration and trump and justice for

the common man

now that the greedy loan sharks have

been forced to curb their crazy

cash-grab charges

however within the space of just a year

all the payday loan stores in town well

over a hundred of them

boarded up their windows and closed up

shop for good taking hundreds of jobs

with them what would be a good solution

to this like i feel like

maybe the government can offer some sort

of emergency loan system

um and still make because the government

would be happy with

40 cents on a hundred dollars because it

is still a 20 apr

and it could be a governmental thing

they'd make money people wouldn't get

screwed

uh also the government is the government

so if you don't pay them back

well you're gonna pay them back it's the

government they'll just take it out of

your paycheck

like and again i don't wanna seem like

i'm sliding into that

area of having the government there to

support but this does seem

like something that could be either run

by a government

or some sort of non-governmental entity

but not a business

charity some something like that that

that would be an interesting model or a

semi-public body

wow simon you are drifting to the left

son

and a disastrous side effect of this

development is that all those low-income

workers

are still in need of a short-term loan

and they have to look elsewhere

they didn't exactly go underground as

much as they went online to source

unscrupulous lending firms who are

charging even more than the legal

brick and mortar stores ever had

unfortunately there's no easy solution

when it comes to fixing

a business model that was fatally flawed

to begin with the very idea of running a

business aimed at getting money from

people in financial difficulty which is

both reasonable and

profitable is a bit of a non-starter

campaigners often call for

more transparency in payday loan

marketing and this could potentially

help a little but i don't believe it's

the core problem with an industry in

which most borrowers

are very much aware of the terrible

terms and conditions but feel as if they

have no other viable alternative to

pursue

i like that dany is delivering us

something a bit more balanced than

my general rant against these but also

realizing

that they are something that people do

want and need which isn't something i'd

thought a ton about before i just

i guess i'd been like the privileged

person who was like yeah [ __ ] this and

now i'm realizing okay i see why these

exist but

there needs to be a better solution than

this because this they're saying yeah a

longer-term solution might be to

incentivize banks in some better way to

offer better and fairer loan services

for people on low incomes

although that leads to a separate debate

on whether the whole thing becomes a

high risk charitable venture

rather than a sound business model or

here's a crazy idea maybe people on low

incomes need to be paid a bit more so

that they're less likely to be in need

of an emergency micro loan in the first

place which is

a very complicated and controversial

thing because while it's wonderful i

think you know

i think people should get paid more and

i don't know i don't really know how i

this is beyond what i've thought about

and can think about in this short video

but even if you bump that up i still

think you know

there's always that great example of you

know if you earn 40 000 a year

you live off 50 because you have credit

card debt and then you make 50 and

you're like great i won't have credit

card debt anymore but you live off 60

grand a year i don't know if that's

actually true it's just one of those

things you hear

i just think this is something that

escalates with time i think this should

be governmental

is that so bad in the meantime we may

well continue to see much

tighter regulations and widespread bans

on a universally hated industry

built on the principle of draining every

last cent from four families but unless

this is complemented with other

meaningful initiatives and services for

low-income workers to consider

it won't magically heal the problem it

will just slam yet another door

in the face of someone who was already

running out of options

agreed fully agree with danny fully

agree

bonus fact this business place has been

intense

it's not been like yeah let's laugh at

some been like oh

so the poor are screwed and our feelings

are hurt

bonus facts one of the most famous

payday loan providers in the uk and

other european

com countries was a company called wonga

i remember one girl they had shitty ads

or ads that didn't make any sense which

ran from 2006-2018

the award-winning outfit became famous

for its friendly tv commercials often

featuring bizarre comedy puppets for

some reason

which explained how easy and simple it

was to save money by getting yourself a

cheap one good loan

yeah saving money in fact it wasn't very

cheap at all the apr in a wank alone

could be as much

as wait for it

1509

a whole string of these puppet-based

advertisements were swiftly banned

by the advertising standards authority

on the grounds that they presented

information

which was either misleading or

irrelevant yes because save money

and 1509 interest should not be in the

same

advert okay that's real

the company also came under fire in 2014

for sending out hundreds of thousands of

aggressively

this feels much more like an episode of

uh last week tonight

have they done an episode on this that i

haven't seen i would love i bet john

oliver has done

he probably has done something on this

hasn't he let me check he's done

something on predatory lending auto

lending debt buyers

uh predatory lending's got to be it

right are you watching this

just go watch john oliver he probably

got all of these points across and

made it funny at the same time the

company also came

the company also came under fire in 2014

for sending out hundreds of thousands of

aggressively worded debt collection

letters purporting to be from legal

firms which in fact didn't exist at all

because

wonga just completely made them up that

is sketchy af but it's wonga

what a fact following discussions with

the office of fair trading wonga ended

up writing off 22 million pounds of debt

over that little error of judgment good

wonga sadly the wonga dream came to an

end i'm going to edit that

the longer dream came to an end in 2018

after a huge surge in customer

compensation claims which eventually

forced the company

into administration if only they could

have sourced a loan with fair and

competitive rates helped tied them over

during this difficult period

there might be a gap in the market there

this has been business plays

i'm sure i've said something that is

going to make some people want to smash

the dislike button

so i'd invite you to do that right now

you legends it doesn't matter that you

smash the dislike button you watch to

the end

and you gave me all of that sweet watch

time if it's a hate watch

that's okay it's still watch time smash

that dislike button

subscribe i'll see you next time

it's that whenever my you know career

goes to sh oh thank god i can sell my

old xbox and start a mukbang channel