Payday-loan trade group starts monitoring project
Published 12:00 am Saturday, July 16, 2016
A trade group for online payday lenders has started to comb the internet for sites making misleading claims, part of an effort to clean up the reputation of an industry beset by complaints from consumer groups and regulators.
The Online Lenders Alliance, which represents short-term lenders and the companies that steer customers to them, started the new monitoring project after The Los Angeles Times reported in May that many websites advertising online loans say customers are not subject to a credit check — a claim that’s usually not true.
Last month, OLA hired an outside firm to build a program that will search the web for sites using the term “no credit check.” The group is now picking out sites that are controlled by lenders or loan advertisers and asking them to take down any “no credit check” claims and fix other problems.
OLA chief executive Lisa McGreevy said the group has done similar monitoring work before, but only manually — typing various terms into web searches, browsing sites and looking for misleading language or other bad practices.
This is the first time that the group has tried a more systematic approach.
“We’re trying to be the cop on the beat,” McGreevy said. “We’re not interested in having bad actors or people who do fraudulent business giving our good lenders a bad name.”
In December, the federal Consumer Financial Protection Bureau sued T3Leads, a California broker that sells consumer loan inquiries to online lenders.
The bureau alleged in the suit that T3Leads does not properly monitor claims made by lead generators — sites that collect information from consumers looking for loans.
The suit focused on advertisers’ claims about loan rates and terms, which the bureau said can lure customers into bad deals. But McGreevy said “no credit check” claims are almost never true and that sites that make them are helping perpetuate the notion that the industry is dishonest.
Though online payday lenders generally don’t pull full credit reports from major credit bureaus, they will typically use other methods that qualify as a credit check, McGreevy said, making any “no credit check” claims misleading.
What’s more, sites making that claim are likely to have other problems.
“When sites have one thing wrong, they probably have other things that are noncompliant,” McGreevy said.