Photo Courtesy of Sen. Schumer’s Office
“History has shown that sharks like these will stop at nothing to entrap people, and so the federal government must meet this new challenge to protect consumers and small businesses with the same vigor, and they better to do it fast,” Sen. Schumer said.
By Forum Staff
Amid the coronavirus crisis, “loan sharks” are closing in and targeting desperate, out-of-cash consumers and small businesses with predatory lender online solicitations deceptively veiled as “COVID-19: Financial Relief” and “Emergency Relief Funding,” Senate Minority Leader Chuck Schumer announced Sunday.
Schumer demanded federal agencies stop these lenders and defend people who need emergency funds. He said that a variety of state rules across the country which aim to control this problem might not be enough to combat unscrupulous lenders skirting the laws and exploiting the desperate cash need being felt by so many people and businesses right now. The senator detailed the unprecedented challenges this new crisis has created within the lending industry, while demanding the nation’s top financial regulators heed his word and put an end to the practices of this predatory industry and its lenders before they strike next. Schumer wants a crackdown and strict policing on the lending practices, consumer warnings against the new solicitations, and tough penalties for any and all violators.
“The coronavirus crisis is creating a desperate situation for countless Americans and New Yorkers, but it is also creating nefarious opportunity for greedy loan sharks who smell proverbial blood in the consumer waters,” New York’s senior senator said. “And what is really egregious here is that these sharks will stop at nothing to drown everyday consumers, and even small businesses, in a cascade of debt that could far outlast the coronavirus crisis itself. That is why we need the nation’s top financial regulators to immediately act, stop rolling back critical regulations and cage these sharks before they strike next.”
Schumer noted that the kinds of loans being offered during these desperate times can come with a hefty price: interest rates that could be as high as 800 percent.
“Interest-rate loans that can hover around 800 percent aren’t just eye-popping—they’re downright shameful,” the senator added.
Schumer detailed a representative example of a U.S. company now working to link out-of-cash consumers and businesses with predatory lenders. For example, say a consumer borrows $200 for groceries for the week with a two-week repayment plan. The loan, which would include a lender fee, would carry an annual percentage rate between 391 percent and 782 percent. The calculation on that is as follows: (lender fee / loan amount) x (amount of days in a year / duration of the loan) x 100 Low End of Range: ($30 / $200) * (365 days / 14 days) x 100 = 391.07 percent; High End of Range: ($60 / $200) * (365 days / 14 days) x 100 = 782.14 percent.
Schumer also showcased new email offers from lenders like “LendAPal,” “TargetCashNow,” and “EvergreenLend,” that prove the problem is escalating.
“History has shown that sharks like these will stop at nothing to entrap people, and so the federal government must meet this new challenge to protect consumers and small businesses with the same vigor, and they better to do it fast,” Schumer demanded.
