The editorial board met for two hours Thursday morning with Billy Webster, CEO of Advance America, the big dog of payday lenders. He was accompanied by his board member and former Democratic state attorney general nominee Steve Benjamin, and Patsy Allston. (I’m not sure of the spelling of her name, as I didn’t get a business card.)
The purpose of the meeting was to address criticism we have aimed at his industry, particularly recent columns by Associate Editor Warren Bolton.
The essence of the presentation was this: That while there are some in his industry — and particularly among check-cashing businesses, which are often confused with payday lenders — who engage in unscrupulous practices that take advantage of the powerless and unwary, his company is on the contrary trying to elevate the industry by not only being ethical itself, but pushing for legislation that would cause all in the industry to be equally free of taint. (Mr. Benjamin elaborated on that to explain why the company is at odds with some groups pushing for more regulation: "We support regulation. A lot of people, when they say regulation, they mean prohibition.")
A second part of the argument was that there is a natural demand and market need for the services he provides ("I can’t change the demand for the product," said Mr. Webster. "I can’t solve the problem that they need the $300."), caused by a number of factors. Conventional lenders such as banks no longer do the small "signature loans" (such as for $500 or less) that they once did, because the cost of processing it is greater than the return. He compared what his business does to the practice by banks of offering ODP (overdraft protection) service — something that has become an increasingly lucrative part of the bank business. He said banks used to drop customers who repeatedly bounced checks, until they realized how foolish they were — they were missing out on the fees they could be charging each time they save a check-writer from embarrassment (and higher fees) at the local merchant’s.
There was some talk about "credit migration" and "FICO scores" and such that made me feel a little like Yossarian listening to Milo Minderbinder, but I think I understood most of it.
We had some questions, which they answered readily, such as:
— While they say they don’t target minorities and the poor, might their support for the NAACP and the Urban League not be seen as a tacit acknowledgement of the importance of those communities to their business? Mr. Webster, who has long been active in Democratic Party politics, cited his involvement with the NAACP and Urban League going back many years "before Advance America was even considered." Besides, he also supports the League of Women Voters, the Palmetto Institute, and other organizations.
— Did the company pay to fly Sen. Joe Biden in from Washington to speak to an NAACP function? At first, Mr. Webster said he had offered to, but couldn’t remember whether that had happened. When Mr. Benjamin jumped in with "We did," Mr. Webster joined him for two simultaneous repetitions: "We did; we did."
— Did the company fly S.C. House Speaker David Wilkins to Salt Lake City for a meeting of the national association of state legislators? Mr. Webster was unsure, but said he would check. He called me later in the day to say that was correct, and to add that a reporter from The State was on board the plane as well. (The newspaper paid for the reporter’s passage.)
— What about that $20 million he made last year, putting him out far ahead of any other CEO in South Carolina? Mr. Webster said he receives no salary, no options, no bonus, or any other compensation from the company. However, "I am a major shareholder. I sold 15 percent of my original holdings."
I’m working on developing a similar portfolio position with Knight Ridder via my 401k, but I’m not quite there yet.
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Finally, someone who seems to listen to what is being said and not jumping on the “kill the payday lenders” bandwagon. I have worked for Billy Webster and Advance America since they came to California. In all of my 40 plus (plus) years I can say he is the most upstanding, ethical and honest man I have ever worked for. I am on the Monterey Peninsula- an area of affluence and also one with a lot of agriculture and a lot of people in the hospitality industry. The need for Advance America here is as great as it is in any other part of America. Our customers range from school teachers to police officers to hotel workers and yes, the dot-com industry. The number one reason for needing a payday advance? Bank fees. Make an addition error in this payday to payday reality and you are in some serious trouble! Paying the fee for a payday advance is far less expensive than racking up overdraft fees and/or bounced check fees. It’s a mathematical no-brainer. When the “big-guns” come after our industry because of disclosed APR rates, it’s a cheap shot because we do not offer an ANNUAL loan, we are offering a pay day advance- until their next payday. Billy Webster and Advance America with the CFSA has instituted a “break” a cooling off period, if you will, in an effort to break the cycle that people can and will get themselves into. Who else have you heard of that enforces people to “go away” for a while? It’s ridiculous that a handful of men have given our industry a black eye and continue to bash away at us. Speak to our customers- and I don’t mean those who have made us a “cause” in an effort to dodge a bill or to try to sue someone for giving them the initial help they asked for. ( Have you ever seen an Advance America employee out dragging people into their centers and forcing them to write a check?) We are valued by our customers. Time and time again we hear “You are a life saver!” This is from intelligent, informed people in my division who range from San Jose – the home of the dot-com and Silicon Valley, Santa Cruz and Monterey- to Salinas, Gilroy and Hollister. The median housing in Monterey County is over $600,000, but this is our home. We have to find the means to make it and sometimes that means getting a payday advance. And as far as Advance America’s involvement in NAACP and the Urban League of Voters, I always thought it was more of an effort to progress beyond the stereo typical Southern Company and to show us (meaning me and the 35 people who work for Advance America in my division) that a Southern company and a Southern state can be progressive and active in equal rights movements, voter initiatives and the promotion of voters rights. I believe I am correct in my assumption and I say this with confidence. I believe in Advance America (I have worked here almost 7 years) and I believe in Billy Webster and the rest of the people in this company. I know Billy. He is a man anyone would be proud to work for. Keep listening, Brad. It seems that you have heard the common sense of this and have filtered out the political rhetoric.
Thanks for letting me vent.
Sincerely,
Melody A Locke
Monterey, CA.
. . . Patsy Allston. (I’m not sure of the spelling of her name, as I didn’t get a business card.)
I gotta ask – why didn’t you just call her office and check? Isn’t that the kind of thing journalists do?
PAYDAY ADVANCES
Why are people singling out payday loan stores?
If you have bad health, you pay more for health insurance.
If you’re very young you pay more for car insurance.
If you get to many traffic tickets, you pay
more for your car insurance.
If you have abuse your credit rating, you
pay more for your mortgage, loans etc.
If you bounce a check, you pay high fees.
WHO IS GOING TO GIVE YOU MONEY “NOT THE BANK” ONLY THE PAYDAY ADVANCE INDUSTRY.
I use the payday loan industry for emergency expenses. I am trying to refinance my mortgage for a lower rate and don’t want my Fico score going lower , by a finance company. pulling my credit bureau So I use a payday loan store.
It certainly is a thing of the past the small loans that provided the consumer 1-$500. However, with the advent of the computer, you can get practically any type of loan availble to consumers today on the internet.
Great Post,
regards
Brian
I can’t resist appreciating the owners of this blog. Good information. Well Done.
Kevin Daniels
http://www.lenders4every1.com
For anyone who thinks all Payday Loans are bad, check out: http://www.simplelendingsolutions.com/paydayloan.html
Especially the part about “Payday Loans vs. Personal Loans”
makes sense if people are so worried about their credit scores
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