The Discovery Channel's annual "Shark Week," airing through Saturday, teaches viewers all about great whites and hammerheads—but that's not the kind of shark that activists plan to protest in Springfield on Wednesday.
"[Payday lenders] feel they can shark everybody out of their money," said Rev. Charles B. Jackson of Springfield.
Alleged loan sharks are the target of the planned protest, one of several so-called "Shark Week" rallies across the country that activist group National People's Action has organized. National People's Action considers payday loans a form of predatory lending and hopes the protests will pressure the government to tighten regulation on the industry.
The Springfield crew even plans to carry toy sharks at the rally to drive home their point: Payday lenders are, well, fishy.
“From a regulatory approach, it’s still perfectly legal to charge 300, 400 percent interest to people who largely are down on their luck,” said Don Carlson, executive director of Illinois People’s Action, a faith-based community organization affiliated with National People’s Action. “Part of the way the business model works for payday lending is, it only really works when they trap you in debt. So why would we ever imagine that this would be an industry we would want in the state of Illinois?”
Payday loans are small short-term loans that generally come due on the borrower’s next payday. Since many borrowers cannot pay back the full amount on the first due date, they must renew the loans for a fee on top of what the borrower already owes. The average borrower stays in debt for five months, according to research from Pew Charitable Trusts.
Such loans end up being extremely expensive. The APR on a payday loan can be as high as 400 percent—astronomical compared with credit cards, which generally carry APRs of 10 to 30 percent.
“These are predatory loans,” Carlson said.
Carlson said he has been in contact with the federal Consumer Financial Protection Bureau and hopes the agency will issue new regulations on payday lenders soon—but he didn’t know when.
“It is really kind of like tea-leaf reading,” Carlson said. “We’ve heard it’s going to happen soon. I think one or two of those 'soons' have already gotten kind of pushed back, but that being said, it’s supposed to happen soon.”
RedEye reached out to several local payday lenders requesting interviews for this story; they either could not be reached or declined to comment.