Today’s Wall Street Journal article on page C1 (Thursday, February 10, 2011) states,”The sovereign-loan model is exploding and will be the future lending model for payday loan companies, said Jer Ayler, president of Trihouse Inc. a payday loan consultant in Las Vegas.”
Actually what I said was,
“Consumer demand for payday loan type products throughout the world, and Regulators who don’t understand the needs of our customers, are forcing payday loan providers to employ creative ways to offer small, no-hassle, non-collateralized loans.”
In my last communication with the Wall Street Journal reporter, Jessica Silver Greenberg, I stated:
“I must say, there is a LOT of hesitancy by the industry to discuss ANY aspect of payday loan and micro-lending; too much bias by the typical reporter/researcher and a complete lack of understanding of our customer’s needs!”
“My feeling is that the more light we shed on our products and services, the better the regulators will understand the needs of our customers and pass enabling legislation not only enforcing “industry best practices,” such as full disclosure of fees and the temporary solution our product offers our customers, but additionally , negating the need for us to employ creative approaches to offering our products.”
“Additionally, this will reduce the negative stigma surrounding the payday loan product and result in a competitive environment that will drive fees lower and enable new approaches such as http://www.kiva.org/, http://www.prosper.com/ and others to achieve the goal of profitably solving consumer financial problems and make a fair return on our investments. (What ever that is :o)”
What the so-called consumer protectionists and uninformed Regulators don’t get is that it’s consumer demographics and a lack of access to capital that’s driving payday loan customers throughout the world into the arms of payday loan type product providers. Consumers by the millions need our products and services for a multitude of reasons. You cannot legislate this demand away!
Instead, create an environment in which FULL disclosure of ALL financial products including payday loans, installment loans, credit card fees, bank fees, credit union charges… are clearly and plainly revealed to our customers AND enable entrepreneurs to develop products and services that can fairly compete for this customer’s business.
Achieve this, and all these convoluted AFS (Alternative Financial Services) approaches like the Tribal Nation – Sovereign Nation, Offshore, Choice-of-Law, payday loan Internet operations, etc. will evolve into a model that consumers will use to solve their financial challenges and the consumer protectionists can embrace as well.
Jessica Silver Greenberg did a good job in reporting on ONE of the creative models employed to serve payday loan consumers. The reality is that AFS products and services will continually evolve to serve their customers in not only the USA, but in countries throughout the world.
Again, millions of consumers continue to demand these types of products! They are NOT going away!!