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21 Feb. 2017 
Last Christmas Eve, Virginia resident Patricia Mitchell borrowed $800 to help get through the holidays. Within three months, she owed her lender, Allied Cash Advance, $1,800.

On the other side of the country, Marvin Ginn, executive director of Native Community Finance, a small lender in Laguna, New Mexico, reports that some customers come to him seeking help refinancing loans from nearby payday lenders that carry annual percentage rates of more than 1,000 percent.

"You get a person with low income into a loan with that kind of interest and it's like, 'Holy mackerel!' How do they ever get out of it?" he said.

Welcome to the world of payday loans. If the 2008 financial crisis that upended the U.S. banking system led to some reforms for consumers, this remote corner of the financial industry remains rife with problems. Regulation in many states is loose and enforcement weak. That environment has left millions of Americans trapped in a financially crippling cycle of debt that many struggle to escape.

Change may be on the way. The federal Consumer Financial Protection Bureau (CFPB) is expected in May to propose national standards for payday loans, which for now are regulated only at the state level. Striking the right balance will be critical, threading the needle so borrowers are protected from predatory lenders without wiping out the only source of capital available to many low-income Americans.

Legal loan-sharking?


Payday lending is big business. Every year, roughly 12 million people in the U.S. borrow a total of $50 billion, spending some $7 billion on just interest and fees, according to The Pew Charitable Trusts. An estimated 16,000 payday loan stores are spread across the U.S., with hundreds more such lenders operating online.

Payday loans and so-called auto title loans, which are secured by a borrower's vehicle, are marketed as being helpful for financial emergencies. Allied Cash Advance, for example, touts its payday loans as a way to "bridge the gap" after a car accident, illness or other unexpected expense leaves people temporarily low on funds.

In fact, the typical borrower uses payday loans for rent, utilities and other recurring expenses, said Nick Bourke, director of the small-dollar loans project at Pew, which is pushing for tougher payday lending rules nationally. And while these loans are usually due in two weeks, the sky-high interest rates and heavy fees make repaying them on time all but impossible.

"The No. 1 problem with payday loans is they're unaffordable," said James Speer, an attorney and executive director of the Virginia Poverty Law Center. "They're really not even loans at all -- it's just a way of sucking people into what we call a debt trap. It's more like loan-sharking."

Most payday loans are exorbitantly expensive. The average annual percentage rate, or APR, on the loans is 391 percent, which comes to $15 for every $100 borrowed, according to Pew. But lenders in states without a rate cap often charge far more.

In 2014, for instance, the New Mexico Supreme Court heard a case in which two payday lenders peddled small "signature" loans that carried APRs of up to 1,500 percent. These loans required only a borrower's signature, along with verification of identity, employment and home address, as well as personal references.

Lenders' origination fees and other charges further push up payday loan costs. The average fee for storefront payday loans amounts to $55 every two weeks, Pew's data show. That means borrowers typically pay more than $430 the next time their paycheck arrives, often leaving them struggling to cover their living expenses until the following payday.


The Pew Charitable Trusts

As a result of these costs, instead of quickly borrowing and repaying the money, most payday loan users end up in debt for months at a time, repeatedly taking out loans as they run low on cash.

"The longer that payday lenders can keep flipping the loan, the more money they make," Ginn said.

Another major problem, critics say, is that payday firms don't issue loans based on a person's income or ability to repay the money, like an ordinary bank loan. As a result, loans typically end up consuming well over a third of borrowers' total income. What lenders can do in many states, by contrast, is directly collect payment for a loan from a person's bank account.

The results are predictable. Borrowers often end up incurring what the CFPB calls "hidden" costs. Those include bank penalties for overdrafts and insufficient funds when payday lenders repeatedly try to debit a person's account to collect payment.

"It's a very dangerous practice because they debit your account whenever they feel like it," Speer said. "And if you overdraw your account, it causes all sorts of problems. Your rent doesn't get paid or you bounce a check at the grocery store, and then people get a letter [from a collection agency] saying they're going to prison for writing bad checks."

A spokeswoman for the Community Financial Services Association of America (CFSA), a trade group that represents payday lenders, defends the industry's practices, insisting that the group's members do take a borrower's ability to repay into account. Citing survey data, she also said the vast majority of payday borrowers weigh the risks and benefits before taking out a loan, arguing that most are aware of the overall financial costs.

"Where are you going to go?"


Mitchell, 44, a single mother who recently moved to North Carolina from Virginia, said that between January and February she racked up interest charges of nearly $582 and additional fees of $115 on her original $800 loan. Several hundred more dollars have piled up since then, she said, expressing concern that the debt would scuttle a job she recently applied for given that many employers review a candidate's credit record.

Many borrowers are well aware that payday loans are a bad deal. Near Laguna, New Mexico, in a cluster of villages known as Laguna Pueblo, the average household income for the roughly 8,000 members of the Laguna, Mesita, Paraje and other local tribes hovers around the poverty line. Residents have few low-cost options when it comes to a short-term loan.

Such concentrations of poor people are an invitation for payday lenders to do business. Gallup, New Mexico, which lies in the Navajo reservation, has about three payday lenders for every fast-food restaurant, said Ginn, whose federally certified lending firm caters to Native Americans.

"I've seen it where they'll borrow from one payday lender to pay another one, and then borrow from a third to pay the other two," he said of some of his customers at Native Community Finance. "They're aware of the cost, but access to capital on the reservation is so limited that they borrow anyway. If you need the money and the only access to capital is a predatory lender, where are you going to go?"

Not all states are so permissive. While 28 states allow payday loans with APRs of 391 percent or higher, the rest put lower caps on fees, along with other limits, or ban payday storefront lending altogether.


Payday loan usage in the U.S. is highest in parts of the South and Midwest. States with stricter payday lending regulations see lower rates of borrowing.

The Pew Charitable Trusts

A model for change?

One state, Colorado, has gone to further lengths to protect payday loan borrowers without stamping out the practice altogether. A 2010 law replaced two-week payday loans with six-month installment loans capped at $500. The maximum allowed APR, at 45 percent, is nearly two-thirds lower than the average rate before the law, while other fees are limited.

The measure has reduced payday loan defaults, and three-quarters of borrowers are able to pay off loans early, according to Pew. While half of storefront payday lenders have since closed in the state, remaining firms have gotten more business, the group found.

"Colorado proves it's possible to reform payday lending in ways that benefit borrowers," Bourke said.

A spokesman for Ace Cash Express, a national provider of payday, title and installment loans, along with other financial services, said it closed nearly half of its 85 stores in Colorado after the 2010 law as its profits fell and the company cut costs. It now turns away more customers seeking small-dollar loans in the state, approving three out of 10 loan applications.

"Those borrowers who can still get loans like the new system because they don't have to pay the loan back all at one time," the spokesman said in response to emailed questions. "The old system worked very well for those who could pay the loan back quickly, less well for those who couldn't. So for many in Colorado, an installment loan is a great relief, and our customers seem happy about that."

Market solution


One complaint about the payday lending industry is that it lacks competition, making it hard for borrowers to shop around for the best terms. Doug Farry wants to change that.

A former TurboTax executive, he's the co-founder of Employee Loan Solutions, a program that lets employers offer small loans to their workers. Called TrueConnect, the product enables loans of up to $3,000 at an APR of 24.9 percent. That amounts to charges of $120 per year on a $1,000 loan.

To ensure people don't get in over their heads, loan amounts are limited to 8 percent of gross pay, compared with upwards of 39 percent in some states. Loans, which are made through Minnesota-based Sunrise Banks, are repaid through automatic payroll deductions.

"We made it so our borrowers would be able to repay their loans in small increments spread out over a year," he said. "That way they don't get caught in a debt trap."

Unlike payday lenders, TrueConnect also reports to credit bureaus when borrowers make payments. That can be especially valuable for people trying to rebuild their credit.

A number of public and private employers in California, Minnesota, Ohio and Virginia are now offering TrueConnect, which is designed to be rolled out as an employee benefit and which Farry said comes at no cost to the organizations that use it.

Employee Loan Solutions' "business model is one we can definitely use in New Mexico," said Rep. Javier Martinez, a Democratic member of New Mexico's state legislature who is pushing to crack down on payday lenders in the state. "It's a safe alternative, and it's a fair alternative.

What the feds can do


Such financial products can help, but they're likely not enough. Making small loans to subprime borrowers presents serious business challenges, including a high incidence of fraud, significant customer-acquisition costs and the complexity of dealing with varying state rules.

Those obstacles have largely deterred other types of lenders, such as credit unions, from entering the market.

That puts a premium on the forthcoming rules from the CFPB, which reformers hope will set national standards for payday and other small-dollar loans. Perhaps most urgent, Bourke said, is to put pressure on payday lenders to ensure that borrowers can repay loans. Loans also need to be more affordable, and lenders must be discouraged from trying to collect payment from borrowers' bank accounts in ways that rack up fees.

Bourke also urged the agency to set standards for short-term installment loans that many lenders have started pushing in recent years amid mounting scrutiny of payday loans.

"One problem we might see with the CFPB loan rules is that they're not bold enough in drawing really clear lines, and that could lead to bad products coming onto the market at the same time that low-cost lenders are discouraged by ambiguity [in the draft rules] from introducing products."

Ace Cash Express said it works with customers by converting loans to a payment plan with no additional fees or interest. "We don't lend to people whom we believe can't pay us back. No one should," the company's spokesman said.

But he acknowledged that some Ace Cash borrowers repeatedly roll over the same loan. The company wants regulators to let lenders convert shorter duration loans into installment loans, as Colorado does.

"What we don't want are regulations that appear to be reasonable but are really designed to make lending impossible," the spokesman said.

Echoing such concerns, the CFSA said setting federal standards requiring lenders to take a borrower's ability to repay a loan into account would drive most payday firms out of business.

The wrangling over the rules of the road for payday lending will continue for some time to come. Even after the CFPB issues its proposal, it could take a year or more to pass a final rule.

For her part, Mitchell said she's done with payday loans, noting that she tells her 12-year-old daughter to stay clear of the products.

"I would starve before getting another payday loan," she said. "I just think it's robbery."
Admin · 113 vistas · Escribir un comentario
21 Feb. 2017 
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Possibly related articles:
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20 Feb. 2017 
DAVENPORT, Iowa--(BUSINESS WIRE)--Kaplan Higher Education today announced the merger of Concord Law

School, the first wholly online law school in the United States, and

Kaplan University, a leading provider of online higher education. In

addition to expanded course offerings, qualified Concord students will

now have access to Title IV student loans for the first time.

"Concord Law School has been a pioneer in the

world of online legal education. The Law School's

merger with Kaplan University will enhance the level of service and

program offerings for students, and opportunities for collaboration

between the two institutions," said Andrew S.

Rosen, CEO of Kaplan Higher Education and CEO and President of Kaplan

University. "Since we launched Concord in

1998, Concord has been challenging the conventional wisdom about legal

education. This merger is a natural step in its development and we're

excited about the possibilities it brings."

Both Concord Law School and Kaplan University are owned by Kaplan Higher

Education Corporation, the largest business unit of global education

provider Kaplan Inc. Concord Law School is now Concord Law School of

Kaplan University, making it the first online law school to be part of a

regionally accredited institution.

The merger opens up opportunities for the two institutions to develop

joint programs and provides Concord students with expanded course

offerings through the University, including graduate courses in

business, health sciences and education. Concord students will also have

access to the University's library resources.

Concord's administrative operations are

already integrated with those of Kaplan University.

"Having regional accreditation is a logical

and important step for Concord's evolution,"

said Barry Currier, Dean of Concord Law School. "The

programmatic possibilities presented by the merger are compelling, but

also significant is the fact that our students who qualify can now use

federal loan programs to finance their Concord education. Part of Concord's

mission is to provide access to legal education to those who cannot

feasibly attend a traditional law school. One component of access is


Concord's Juris Doctor program satisfies the

legal education requirement for eligibility to sit for the California

Bar Exam. Although Concord now shares Kaplan University's

regional accreditation, at present, Concord graduates may not be

eligible to sit for the Bar Exam in states other than California.

Concord Law School, which will remain based in Los Angeles, was founded

in 1998 and today has 1,500 students across the country. Since Concord's

first graduating class in November 2002, more than 600 students have

completed the School's Juris Doctor (JD) and

Executive Juris Doctor (EJD) programs . More than 40 percent of its

students have graduate degrees upon entering the program. Many pursue a

JD to advance their current careers and others plan to start a new or

second career with their legal education. The school's

EJD program also provides a legal education for individuals who want a

professional law degree but who do not plan to sit for the bar

examination to become practicing lawyers.

In addition to now being part of a regionally accredited University,

Concord is also accredited by the Distance Education Training Council (

Concord is registered as a distance learning law school with the

California Committee of Bar Examiners (

It is also a member of the International Association of Law Schools (

and is an institutional member of the Council on Higher Education

Accreditation ( For more

information on Concord, visit

Kaplan University, based in Davenport, Iowa, is regionally accredited by

The Higher Learning Commission of the North Central Association of

Colleges and Schools (NCA). The University's

online programs have grown from 34 students in 2001 to more than 27,000

students today, placing it among the largest universities in the United

States. The University also has 4,000 on-ground students studying on its

eight campuses in Iowa and Nebraska.

The University offers master's, bachelor's

and associate's degrees in more than 100

programs and has online student support centers in South Florida,

Chicago and Phoenix. Kaplan University's

market-driven curriculum is designed to prepare students to pursue

careers in fields such as business, criminal justice, IT, nursing, legal

and education. Many of its students are working adults who appreciate

the flexibility of the online platform which allows them to juggle work,

family and other responsibilities while attending classes online. For

more information about Kaplan University, click on

About Kaplan Higher Education

Kaplan Higher Education serves more than 75,000 students through 70

campus-based schools across the U.S. and additional schools in Europe,

Asia and Australia. It also has online programs through Kaplan Virtual

Education, Kaplan University and Concord Law School. Kaplan Higher

Education schools offer a spectrum of academic opportunities, from high

school diplomas to graduate and professional degrees, including a Juris

Doctor degree. Kaplan Higher Education is part of Kaplan, Inc., a

subsidiary of The Washington Post Company (NYSE: WPO). For more

information, visit
Admin · 79 vistas · Escribir un comentario
20 Feb. 2017 
"Now that we are doing good on social media, can't we stop putting efforts on email marketing? This question has been asked several times, either on the internet or in some of our meetings. As a digital agency, it was somehow perceived as an insult, not to the team, nor the agency, but to online marketing in general. Each time a "new" effective platform pops-up, we need to cancel the previous one. Well that's definitely not the way things work.

We simply answer this question with: "social media can NOT replace emails". After showing in a previous article why social media does not replace a website, here are the reasons why it doesn't replace email marketing :

Emails are more personal than social networks

Either in B2C or B2B, communicating about an offer, a promotion or an update through Facebook, Twitter or any other social network makes the communication impersonal. When a Facebook page or a Twitter account publishes a post, it would be addressed to the general public. While in an email/newsletter, businesses can approach each individual in the contact list with the first and last name. Doing so drives more attention to the content of the email which can also result in better outcome. According to Aberdeen, "personalized emails improves CTR by 14% and conversions by 10%".

Emails are more effective than Facebook, Twitter...etc.

The ultimate purposes of businesses being online are acquiring new customers and retaining existing ones. Many think that Facebook, being the largest social network out there, is the best place to attract new customers. However, many studies show that emails attract new customers more than any social network. In fact, according to McKinsey, emails are 40 times more effective than Facebook or Twitter for acquiring new customers. Monetate adds to this that email marketing is the channel that drives the most conversions.

Email messages have better chance to be seen than social media

Without a doubt, Facebook is the largest social network ever, and the second most populated website after Google. However, running a Facebook ad for a specific target doesn't necessarily assure that all users, within this target, will see the ad. Yes, it's true, this also applies to emails. But according to Radicati, an email message has 5x higher chance to be seen than a Facebook post.

Emails are DEFINITELY not dead

The statement that email subscribers don't read their emails anymore is a total myth. To prove this, we had to refer to ChoozOn which stated that 57% of email subscribers allocate 10-60 minutes per week browsing marketing emails. A lot of you will say that Facebook, Twitter or Instagram users spend more time checking their feeds. While this statement is true, Facebook users "like" several businesses pages, and with the latest big Facebook update, they are now seeing less and less content coming organically from these business pages. And rarely will Facebook or Twitter users check a business account randomly, without any specific reason. In addition, 72% of people said they prefer to get promotional content through email, versus 17% via social media, according to MarketingSherpa.

With social networks, there's nowhere to run

Whether on Facebook, Twitter, and recently Instagram, businesses have to run ads to promote their offers, promotions, or simply their announcement. To do that, they have to target people according to their interests, jobs, demographics...etc. Not all users who see the ad, will feel concerned or interested by it. Therefore, their newsfeed might get full of similar irrelevant ads. The only way to get rid of them is to...God forbids... quit the social networks! On the other hand, if users receive irrelevant emails, they can simply unsubscribe from the list, in a click of a button. And poof... no more emails from this sender.

twitter follower bot

In conclusion, email marketing is a big player in any online marketing strategy. But now that we have, hopefully, convinced you that social networks cannot replace emails, we hope that you won't look down on social media marketing. Many social media agencies will agree with us when we say that every online channel has its own benefits. Therefore, collaborate with a digital agency to create a successful online marketing strategy and give every channel its right.

Admin · 374 vistas · Escribir un comentario
19 Feb. 2017 
Leveraging the power of content and social media marketing can help elevate your audience and customer base in a dramatic way. But getting started without any previous experience or insight could be challenging.

It's vital that you understand social media marketing fundamentals. From maximizing quality to increasing your online entry points, abiding by these 10 laws will help build a foundation that will serve your customers, your brand and -- perhaps most importantly -- your bottom line.

1. The Law of Listening

Success with social media and content marketing requires more listening and less talking. Read your target audience's online content and join discussions to learn what's important to them. Only then can you create content and spark conversations that add value rather than clutter to their lives.

2. The Law of Focus

It's better to specialize than to be a jack-of-all-trades. A highly-focused social media and content marketing strategy intended to build a strong brand has a better chance for success than a broad strategy that attempts to be all things to all people.

3. The Law of Quality

Quality trumps quantity. It's better to have 1,000 online connections who read, share and talk about your content with their own audiences than 10,000 connections who disappear after connecting with you the first time.

4. The Law of Patience

Social media and content marketing success doesn't happen overnight. While it's possible to catch lightning in a bottle, it's far more likely that you'll need to commit to the long haul to achieve results.

5. The Law of Compounding

If you publish amazing, quality content and work to build your online audience of quality followers, they'll share it with their own audiences on Twitter, Facebook, LinkedIn, their own blogs and more.

This sharing and discussing of your content opens new entry points for search engines like Google to find it in keyword searches. Those entry points could grow to hundreds or thousands of more potential ways for people to find you online.

6. The Law of Influence

Spend time finding the online influencers in your market who have quality audiences and are likely to be interested in your products, services and business. Connect with those people and work to build relationships with them.

If you get on their radar as an authoritative, interesting source of useful information, they might share your content with their own followers, which could put you and your business in front of a huge new audience.

7. The Law of Value

If you spend all your time on the social Web directly promoting your products and services, people will stop listening. You must add value to the conversation. Focus less on conversions and more on creating amazing content and developing relationships with online influencers. In time, those people will become a powerful catalyst for word-of-mouth marketing for your business.

8. The Law of Acknowledgment

You wouldn't ignore someone who reaches out to you in person so don't ignore them online. Building relationships is one of the most important parts of social media marketing success, so always acknowledge every person who reaches out to you.

9. The Law of Accessibility

Don't publish your content and then disappear. Be available to your audience. That means you need to consistently publish content and participate in conversations. Followers online can be fickle and they won't hesitate to replace you if you disappear for weeks or months.

twitter follower bot

10. The Law of Reciprocity

You can't expect others to share your content and talk about you if you don't do the same for them. So, a portion of the time you spend on social media should be focused on sharing and talking about content published by others.  

Susan Gunelius is CEO of KeySplash Creative Inc., an Orlando, Fla.- based marketing communications company. She has authored several books, including Kick-ass Copywriting in 10 Easy Steps, published by Entrepreneur Media. Connect with her o...

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