Predatory Lending Preys Mostly on the Poor, Including Native Communities

NOTE: This is a guest post from Andrea Wieland, Communications Specialist at the First Nations Development Institute.

Recently, I posted some information to our Facebook page about efforts to protect Native American communities from predatory lending practices, which is something my organization has been battling for more than a decade.

In response, one of our readers posted this comment: “Yes, by all means, let’s deny the working poor access to emergency cash when they need it!”

Say what? I believe this reader failed to understand that poor people are not just getting emergency cash when they need it. They are also being sucked into a deep, swirling pool that they may not be able to get out of. This vortex will just keep pulling them further and further down into the pits of financial despair.

Predatory lending isn’t about helping poor people in emergency situations; it’s about taking as much money as one can from a desperately poor person. Charging someone up to 300% interest isn’t a fair profit; it’s taking gross and unfair advantage of the downtrodden.

First Nations’ efforts against predatory lending are not about taking options away from the poor but about the development of sound alternatives for borrowing. In particular, our program demonstrates how Native people – many of whom are under-banked or unbanked – can have access to fair lending practices as well as a host of other services. These can include small-business loans that provide much-needed capital to Native communities as they create and build stronger tribal economies. Our efforts also aim at educating Native peoples about how to properly save money, invest, borrow money, and evaluate their situations for their own betterment rather than lining the pockets of predatory lenders and, in some cases, unscrupulous tax preparers who divert much needed cash from Native communities – cash that normally would benefit all of the community.

Beyond this issue, Native communities have suffered for a long time from other inequalities, including a forced dependency upon the government. Thus, the government sector has long been the only or dominant “leg of the stool” in many Native economies, and that has stunted economic development for decades. Today we all recognize that truly strong and functioning economies need a fully developed three-legged stool that also includes for-profit businesses and nonprofit organizations. First Nations’ efforts aim to strengthen those economies by helping develop those other sectors in a culturally appropriate way. That’s why our guiding belief is stated this way: “We believe that when armed with the appropriate resources, Native peoples hold the capacity and ingenuity to ensure the sustainable, economic, spiritual and cultural well-being of their communities.”

Healthy Native economies are good for everyone in America, Native and non-Native alike. So let’s all work together to give our First Americans the opportunity to thrive yet again.

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Photo courtesy of the First Nations Development Institute.

12 comments

Ro H.
Ro H.3 years ago

go figure

Danuta Watola
Danuta Watola3 years ago

Interesting. Thank you for posting it.

Pamela Tracy
Pamela Tracy4 years ago

EXACTLY.......AND USURY IS A CRIME....I LEARNED NOT TO TRUST IN ANYONE..THIS ECONOMY WILL DO ANYTHING TO GET PEOPLE TO BE INDEBTED AND WHEN WE DONT WANT TO OR PRETEND TO BE GET LIBELED BY BOTH SIDES.

Bill Eagle
Bill Eagle4 years ago

The nasty secret regarding predatory lenders is that many payday loan outfits are owned by banks. The banks no longer give short term loans so poor people are forced to go to do business with these "legal" loan sharks.
Thanks to our "Christian" Republican lawmakers, usury is no longer against the law.

John B.
John B.4 years ago

Thanks Colleen for providing Ms. Wieland's guest post. No matter what the logo on the sign says the predatory lending offices must be eliminated as they serve absolutely no one but the owner. Now if we can get the Government to actually listen to the belief of the First Nations IE: “We believe that when armed with the appropriate resources, Native peoples hold the capacity and ingenuity to ensure the sustainable, economic, spiritual and cultural well-being of their communities.” something may be accomplished.

Gary Jeffers
Gary Jeffers4 years ago

I looked at a couple of these site out of curiosity after seeing a commercial for one. In it an attractive native American woman on behalf of Western Sky says their loans are expensive and she wasn't lying! Interest rates of 200% at their site are not uncommon. I couldn't believe what I was seeing! At another called Lakota Cash, the first thing they want is your SS number and your email! I don't think so! Apparently they can get away with this because they are not subject to our lending laws, as they are considered a sovereign nation onto their own. I half to say though, it does seem they are HONEST? about putting the hook in you while many lenders of mainstream America get you with assorted hidden fees. So while Wall Street does indeed play wild wild west with our economy, if you want to see some really wild interest rates get a loan from a native American lending institution.

Eugenie B.
Genie Borrelli4 years ago

Predatory lending has this name for good reason. These companies are doing what they've been taught since 1980, which is look out for number one, have no concern for another person, anyone who is "stupid" enough to use their services deserves what they get. The problem is that the only people who use this service are usually people who are desperate and vulnerable. This is what predators do -- seek out the vulnerable and use them for any purpose that benefits the predator. This is nothing but "legal" loan sharking. Of course, it wouldn't be legal if the lawmakers and courts were not also corrupt, unethical, and predatory (if in a subtler way).

John Mansky
John Mansky4 years ago

Thank you for the article...

Charles D.
Charles D.4 years ago

It seems you hit a rough spot in life and they have their finger on you for ever. The interest should have a cap somewhere.

Sarah Mumford
S M.4 years ago

Of course it does you innocent, that's how they make their money ... and the poor get poorer.

A nice government would encourage mutual banking but they don't. They keep money grabbing personalities off their backs by saving money grabbing banks ... who charge you £30+ for telling you each month you are overdrawn having paid your bills to live ... because the governments allow employers to pay too little for the cost of living that the governments oversees.
And the money is in the bank and not cash in your pocket because some years ago it became a policy to try to eradicate cash to employees, that the tax department couldn't track, all pay through banks.

In Africa the governments are out for themselves and we criticise, in the West they are out for themselves for influence via their friends(cronies) in business NOT for the people. Belgium managed without a government for over a year, maybe we should all give it a go to have time for a rethink of the system!

In UK our politicians are not paid that much and the idea is they are in it for comittment to the people but they mix in the richer eschelons and begin to want better clothes, better houses ... so begin ways to get more income .. that then can mean they open to befriending or a chairmanship and so the loss of 'independence' begins. The sense and global warming becomes secondary to a new car, advice to a Developing country for a few thousand pounds ....!