Former Employees Criticize Payday Loan Lender
By Paul RizzoPayday Loan Writer
Former employees of a Cincinnati area payday advance lender have criticized the company’s business practices, saying they were pushed to solicit minority and low-income residents and get them to go deeper into debt through revolving loans.
The men, who once worked for Check’n Go, based in Mason, spoke at a news conference Wednesday in Washington, D.C., where they supported efforts to get the Council of the District of Columbia to regulate payday lenders.
At least one state lawmaker in Ohio is proposing a cap on interest rates on fast payday loans.
“We train our sales staff to keep customers dependent, to make sure they keep re-borrowing … forever, if possible,” said Mike Donavan, a former district director of operations for Check’n Go stores in Washington, D.C., northern Virginia and Delaware.
The company has about 1,500 offices nationwide.
William Harrod, a former manager of one of the company’s Washington, D.C. stores, said Check’n Go deliberately targets black communities.
“I was instructed to stick to low-income, black apartment buildings,” Harrod said of his instructions for marketing cash loans.
Check’n Go makes it very easy at the front end for people to get a loan, said Cameron Blakely, another former store manager.
“But at the back end, we made it very difficult for customers to get out of the loan,” Blakely said.
Check’n Go’s response Thursday to a request for comment was a written statement that said the three former cash advance loan employees had made “false and reckless statements regarding the business practices of Check’n Go.”
“Check’n Go adheres to all local regulations and industry best practices that provide for a variety of consumer safeguards,” the statement said.
Donavan also said Wednesday that he had been pressured to donate to the campaign of Check’n Go executive John Rabenold, who is running as a Republican for the Ohio House in the 35th District.
“We were told that this was voluntary, but our understanding was that a failure to do so would impact our careers in the company,” Donavan said.
Rabenold said Thursday that no one was pressured to donate to his campaign. Only 21 individuals out of the no faxing payday loan lender work force of over 3,500 made contributions, and all but one were in the Mason office.
The ones who contributed did so because they know who I am, and they want me to be successful,” Rabenold said. “They understand me to be a social and fiscal conservative wanting to represent those same values that we find in southwest Ohio.”
Members of the Ohio Coalition for Responsible Lending said Thursday that they believe the business model described by the former Check’n Go employees is typical of many payday lenders around the country.
“We need to break this cycle of debt where people have to get another loan to pay off the last one,” said Bill Faith, a member of the coalition and executive director of the Coalition on Homelessness and Housing in Ohio.
Tom Allio, chairman of the Ohio Coalition on Responsible Lending, said members of the group met Wednesday with state Rep. William Batchelder, R-Medina, to review details of a bill Batchelder plans to propose on regulating personal loan lenders.
Allio said the group is planning a news conference next week in Columbus to discuss details of the proposal that would cap interest rates on payday lenders’ loans at 36 percent annualized and hopefully help create small loan alternatives. The current limit on the typical Ohio loan is 391 percent annualized, Allio said.
“Several states have taken action to regulate payday lending, and we feel we have a lot of support for this bill,” Allio said.
The quick cash advance lending industry also has a proposal backed by state Rep. Matty Lundy, D-Elyria, and state Rep. Ross McGregor, R-Springfield, that would let borrowers enter an extended payment plan and limit fees for bounced checks to one per loan.