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Predatory loans can't really be solved with education, at least not a simple "personal finance" course. People don't get loans like that because they're dumb, they get loans like that because they're stuck and desperate:


'...they get loans like that because they're stuck and desperate.

In the UK we have what's known as 'doorstep lenders' who offer these kinds of extortionate loans to people who are on benefits (welfare) and who can not get credit by any other means.

It is fashionable to sneer at their victims as irresponsible and feckless but these companies have spent years perfecting a methodology that is difficult to resist.

If you're living hand to mouth and someone offers you a cash loan of £500 there and then it can take a lot of self-control to pass.

A friend of mine has mental health issues and has a real problem with the word 'no'. As a consequence he's found himself a target of these people on numerous occasions.

It is the common and, for some, so very morally upright, to castigate people for not being proof against practiced, refined methods specifically designed to take advantage of them. Payday lending in the US or doorstep lending in the UK is exactly that.

These people are practiced. They have built strategies on exactly how to get the most out of disadvantaged people: the poor with payday lenders, addictive personalities with casinos or mobile games, all of it. They have bigger guns and much, much more data about how to aim--but John Q. Public is supposed to be able to ward all of it off?

Here's an example. Here in Massachusetts we're plagued with scumbags who want you to sign up for an "alternative energy provider" or whatever. Still uses your normal electric company but they "source the power" from a company you select. "It's green," they cry! "It's cheaper," they cry! Of course, what they don't tell you, as they literally knock on your door and fast-talk you, as they imply-but-don't-say that they're from your actual power company, into signing up. Then they jack your rates a few months later, expecting you to not notice, because the bill comes from National Grid anyway. And there's also a big cancellation fee after 48 hours, too, so they get you that way too.

The reason I know about these bastards is because one day, a little confused, a little hungover, and not wanting to look stupid, I got suckered by these assholes. Some dude knocked on my door, was super duper friendly, and explained his upsides and not his downsides; sure, this sounds fine, I'll sign up. Was it stupid? Yeah, it really was. But hey, I messed up. It happens to everyone. For me, the risk is pretty small. It would've been twenty, forty, sixty bucks extra a month. But I'm in tech! I might not have noticed. What about the barely-speaks-English immigrant who lives two doors away from me and works at the 7-Eleven down the street? What about the elderly people in my building? They're not gonna know what happened, they might not even remember doing it by the time it goes down.

I'm in a more privileged place than most people, in that I'm comfortable with legalese and how to operate with regards to contracts and that sort of thing. So, after the high-pressure sales were no longer clogging my brain, I was able to go "wait, what did I just agree to?". I read the papers left to me, went "this is awful" and "wow, fuck those guys" respectively, canceled it within the cancel window, and called my state senator saying "hey, this is totally bad up, you need to do something about it". I did, what's it called--civic engagement, something that actually still works in Massachusetts. And his office is on it, they've co-sponsored a bill to give the state AG authority to deal with these scams, and I called my rep and rep-at-large afterwards to make sure that they're aware of it and are going to vote for the bill. But it's not just civic engagement, it's community engagement: ever since, because I am fortunate and I can do it safely because I'm a pretty tall, pretty broad white dude who has no reason to be intimidated by these people and knows the rules they have to operate under, any time they come in the building and I'm around, I make sure they leave, or I call the cops.

This is not something solved merely by education. This is something solved by the communities in which we all live grabbing the metaphorical torches and keeping the wolves at bay rather than letting them take the weak. Not allowing wolves to eat the least of us is why we invented society in the first place, isn't it?

Yes. I know bright, competent people with PhDs who have fallen victim to professional scammers. Education does not solve the problem. Scammers make use of information and power asymmetries, ruthlessly exploiting weaknesses.

I guess in theory we could educate every single person on every single scam and give them all enough regular practice in spotting and dodging scammers. But it's far, far cheaper to just vigorously enforce the laws we have, and to update the laws as needed.

Understanding personal finance would give people the tools to help avoid becoming stuck and desperate in the first place (obviously not in every case)

Most of the predatory lending industry is built on top of people who are born stuck and desperate.

Well not knowing how to manage your own finances is one sure way to guarantee that everyone "born stuck and desparate" will stay there indefinitely!

But hey, might as well give no one the tools to help their situation if it won't help everyone all at once, right?

I hear this a lot, but everyone I know who had debt trouble did so because they made a dumb purchase (or 20) with debt, not because they had no other options. I have trouble believing the maximally charitable explanation.

None of the people I know are in massive debt, therefore I have trouble believing that anybody is in massive debt.

Does that sound like a reasonable assertion?

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