Where the Loan Sharks Feed…
The high cost to women of expensive short term loans.
Money Saving expert Martin Lewis writes:
“The payday loan industry was built on the back of marketing, not need. They sold people the concept of a need to create a demand, then pushed products. Payday loans are for most a flawed concept. How many in dire need this payday would see such an improvement within a month that they not only not need to borrow again, but could repay last month’s loan plus the huge interest?”
Despite Lewis’s concerns the high cost short term loan industry (which includes payday loan services) continues to expand in the UK having grown rapidly during the financial crisis years until it was tamed by regulations in 2015, seven years after the credit crunch. Why did it take so long? As with the subprime mortgage debacle expensive short term loans rely upon poverty to be profitable. Most borrowers do not live in affluent areas but in high rise rentals and council homes in areas of deprivation. (See the Responsible Finance map of the greater Manchester area). While governments were keeping banks afloat capital was still up to its old tricks creating and taking advantage of crisis situations to exploit the desperation of people with rising bills to pay.
There is no shortage of websites and TV advertisements promoting payday loans and alternatives such as instalment loans. The trading names of many websites are often bizarre and most do not state clearly that the product they are pushing is a high cost loan. The borrower has to work out from a bunch of figures if the loan is affordable. It is not surprising many misread the APR and interest rate figures and fall foul of the repayment rules. The Loanly website with personal assistant Oscar declares it has only one two minute form. The form has six sections requiring the applicant to provide details of employment status, home ownership status, monthly outgoings and so on. The privacy policy alone takes half an hour to read carefully.
Many website trading names are designed to hook in women and young adults. ‘Drafty’ features a cute dog who shares a modest apartment with their owner a young black woman. While ‘Loanly’ plays with the idea that customers are single and lonely and may require support from a male assistant, ‘Drafty’, a provider of instalment loans, exploits the conditions of poverty more directly by suggesting the borrower and her pet do not need to put up with icy cold draughts! The innocent sounding ‘Peachy’ offers to provide a short term loan of £400 if you can repay £710 within six months, but the prize for aiming to profit from desperate females in dire financial straits has to go to Unclebuck. ‘Ask Uncle’, the site says above a picture of a happy woman with a smart phone considering whether to apply for £250, to be repaid over 4 months at a total cost of £375.32.
In representing the provider of credit as a mature male and the receiver as female ‘Unclebuck’ exploits traditional age and gender power differences to market its brand. When a male relative like an uncle has control over a woman’s finances and exploits her for his gain we call the relationship patriarchal. Women in these relationships are exploited both by male power and the market.
The ‘Cashlady’ site operates a similar marketing ploy to ‘Unclebuck’. Instead of a male relative as the credit provider it is a friendly ‘lady’, one who could be a charity helper. But ‘Cashlady’ is also a reference to the days when wives of loan sharks collected payments from single mothers and widows. The cash lady was a debt collector who preyed upon less fortunate women. Behind her a male relative or husband running the cash lending business.
Another marketing ploy is to work on women’s insecurities and anxieties. ‘Peachy’ seems like a fun name until you realise that it’s not makeup being marketed but a high cost short term loan! Why Peachy? Who is being targeted? The name is clearly not going to hook in older men, but by preying upon women’s anxieties over makeup and fashion issues ‘Peachy’ entices underpaid women to eat its juicy fruit. The Quick Quid restore some order adverts often feature women in need of instant money. Rather than being single and alone they are depicted as busy mothers with families. These ads exploit the idea that it is women’s responsibility to sort out household problems such as a broken boiler or cooker. They create fear and anxiety by implying that if a mother doesn’t fix the problem instantly, ‘restore order’, her family will disintegrate and her marriage will end.
Behind the Quick Quid website is a company called CashEuronetUK which is owned by the Chicago-based Enova International. This company operates around the world. Thus what appears to be a friendly local UK finance service is only a small part of a much larger global capitalist enterprise.
UK women trapped in poverty, earning low wages and discriminated by the gender pay gap are easy targets for these capitalist enterprises. As the provision of public services unravels, the wage share falls and the costs of getting by increases, it is women whether single, partnered or married who are at the forefront of keeping their communities and families together. Without women’s paid and unpaid labour capitalism cannot survive.
The financial practices of the High Cost Short Term loan companies exploit women’s unequal position in the labour market by extracting profits from their labour, the work women do to earn the money to pay off their loans; and their data, the information they supply when they apply for loans. Such companies do not alleviate women’s poverty but trap them in a cycle of poverty. Therefore more should be done to regulate their practices and to boost the wages women earn. It beggars belief that financial regulations were not applied to these companies much earlier, at the time it was slowing dawning, very slowly dawning on politicians that a major cause of the 2008 credit crunch was the creation of mortgage debts the poor could not repay.
