A Real Tale of Crime and Corruption from the Payday Loan Industry

By: Javi Calderon
A Real Tale of Crime and Corruption from the Payday Loan Industry

Many critics of the payday loan industry harshly bash the practice of payday lending as “predatory” or “usury” and paint a picture of unscrupulous loan-sharking and savage selfishness.

Ironically, many of these people are elected officials, preaching and raining down legislation from their comfy offices, never having to worry about choosing between an unexpected expense and a utility bill, or being denied for a personal loan.

These champions of short-term credit loans, as well meaning as they may be, are making decisions that affect the lives and the choices of other, far less fortunate people.

Just like in any other profession, there are some payday lenders who are corrupt and out for personal gain. And just like with any other financial product, the majority of people who use payday loans manage to use them correctly and benefit from them, while there is a minority who abuse the ability to take out cash advance loans and end up under a pile of debt – just like credit cards and personal loans.

As for a real story of corruption and crime from the payday loan industry, a Utah man, John Scott Clark, has been accused of using his two online payday loan companies to rope 120 investors into a ponzi scheme that has cost them over $47 million dollars.

The Securities and Exchange Commission claims the man told investors their money was going towards funding payday loans. Instead, the funds were pooled and used to pay off previous investors, make other investments, and finance his expensive lifestyle.

The SEC has determined that he altered accounts to show more than 200% return on investment for investors whose returns were actually in the 30s.

The SEC has frozen the assets of the two companies involved, Impact Payment Systems LLC, and Impact Cash LLC.

In the world of payday loans, this is a real criminal. Not the stores that make modest profit by offering low-income families short-term credit options that they would not otherwise be able to obtain.