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The Pew Charitable Trusts today released a report detailing fraudulent and abusive practices associated with payday loans offered online. The study found that Internet loans are more expensive than those offered through storefronts; that they are designed to promote renewals and long-term indebtedness; that many online borrowers report being threatened by lenders or debt collectors; and that the vast majority of payday borrower complaints are about online loans. Pew calls on federal regulators to address these problems by establishing strong, clear, and consistent consumer protections for the small-dollar lending market as a whole.
The report, Fraud and Abuse Online: Harmful Practices in Internet Payday Lending, is the fourth in the “Payday Lending in America” series produced by Pew’s small-dollar loans project. Problems in the online payday loan market have been chronicled anecdotally, but Pew’s report is the first formal analysis to use surveys and focus groups, consumer complaints, company filings, and lenders’ spending on advertising and prospective-borrower leads.
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