When the media gets the facts wrong about short term loans
Oct 13, 2013 Sean Albert
That old adage that you shouldn't believe everything you read still rings true today, even in an age when we are constantly connected and have access to the latest breaking news. Despite the fact that at any given moment, individuals across the world can use the Internet to see what's going on at that second via their preferred news websites or a site like Twitter, the fact of the matter is that the media is not always correct.
Take April's attacks at the Boston Marathon - for hours after the initial explosions occurred, various media outlets were reporting differing numbers in regard to the wounded and deceased.
Sometimes, news sources simply get it wrong, but other times, individuals could even suggest that the outlets seem to have a bias against a given industry. This certainly seems to be the case with the short term lending sector, despite all of the help companies in this realm gave individuals during the Great Recession when traditional consumers credit sources turned their backs.
The latest media infraction? Shoddy information about the alternative finance situation in New York. In August, the state's Superintendent of Financial Services sent cease and desist letters to 36 short term lenders operating online but helping individuals in the area. He claimed that this was illegal because there is a statute in place barring lenders from operating brick-and-mortar stores in New York.
This controversy rages on two main points - the lenders were operating online, and a number of them were run by Native American tribes, meaning they don't have to abide by state laws, only federal regulations. However, as the media continues to cover the situation, some of the information is getting lost in the fold.
How many Native American lenders are affected?
Perhaps the biggest problem at hand is the fact that many of the leading stories surrounding the situation don't always specify just how many Native American lenders are at the center of this controversy. Many the articles seems to include a variance of the phrase "a number of Native American lenders were involved."
Then there's a recent article from American Banker, which noted that of the 36 online companies sent cease and desist letters, about 50 percent were Native American businesses. However, that's not technically true. Indianz.com pointed out that 15 tribal lenders were sent letters by Lawsky. This might not seem like a massive difference, but it equates much closer to 40 percent.
Some individuals in the short term lending industry might also take umbrage with the fact that American Banker, like many other sources, also said these companies were "operating in New York," which is not technically true either. While the services did provide credit opportunities to individuals in the Empire State, it may have been more pertinent to say that they either operated online or did so from reservations.
The bigger issue
Nit-picking each and every fact that appears in print concerning the New York situation may be tempting, but it's important not to lose sight of the bigger issue - the way the industry is referenced in the media. Claims like the one that half of the lending companies targeted by Lawsky were Native American can be misleading and suggest that an entire demographic of lenders is trying to skirt the system.
Short term lenders know that they have to stay on the straight and narrow, lest they risk tainting the reputation of the entire industry. However, when shoddy information appears in the media, it's up to the leaders in the sector to speak out and inform the public about the truth. They should have some experience doing so - despite the negative picture that's often painted, so many consumers know that these services are invaluable.