Abstract
Payday lending has been the subject of strong ethical criticism often by consumer advocates and some academics. What is the nature of these ethical criticisms and how strong are they? This chapter uses consequentialist and corporate social responsibility perspectives. Through these analyses the authors argue that the ethical critique that the payday loan industry receives is, in part, justified. It exploits vulnerable groups, harms many who get caught in debt traps, and overcharges every responsible borrower.
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Notes
- 1.
This argument was presented orally at the hearings in front of the Manitoba Public Utilities Board in 2016, but we do not have a formal written source to cite. The CPLA paid a person to speak in the public hearings and make this argument with a claim that research exists to support this viewpoint, but not to present under oath. This person was billed as if she were a member of the public speaking out of personal interest, and by getting her into the hearing under this guise, the CPLA was able to evade a submission of a written research paper and exempt its paid speaker from cross-examination. The industry associations also claim that payday lending is necessary to prevent organized crime from entering the business. We have never seen a scrap of evidence that organized crime currently lends any significant amount of what could be called payday loans.
- 2.
For those interested in philosophical discussions of exploitation an excellent starting place is Zwolinski and Wertheimer’s article in the Stanford Encyclopedia of Philosophy: https://plato.stanford.edu/entries/exploitation/
- 3.
For example, see Aboriginal Affairs Canada (2013) with respect to income disparity.
- 4.
African-American neighborhoods are allegedly being specifically targeted, with such neighborhoods having three times as many stores per capita as white neighborhoods (King et al. 2005), and with payday loans “…now specifically threatening students of historically Black colleges and universities” (Center for Responsible Lending 2005, p. 1).
- 5.
http://canadiancfa.com/consumer-protection/, accessed June 1, 2017.
- 6.
Lenders vary as to which of these payments they will allow as security and there is no industry standard.
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Robinson, C., Robinson, D. (2018). Ethical Issues Related to Payday Lending. In: Buckland, J., Robinson, C., Spotton Visano, B. (eds) Payday Lending in Canada in a Global Context. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-71213-0_5
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