Testimony to D.C. City Council
Statement of William Harrod
My name is Bill Harrod and until August 13, 2007 I was a store manager for Check ‘n Go here in the District. I worked for the company for 9 months and I quit as a matter of conscience.
I’m here to tell you that Check ‘n Go deliberately targets black communities. The company sent me to apartment complexes with exclusively black occupants to market our payday loans. I could have gone to other apartment buildings nearby that were more diverse, but I was instructed to stick to low-income, black apartment buildings. I was trained to approach apartment managers and offer them referral fees of $20 for each tenant who came into our store and took out a loan. The sales pitch was that not only would the manager directly earn money off the loan, but that it would help tenants make their rent payments on time. The managers bonuses depend on minimizing late rent payments.
Under what was called our Business Value Program, we were encouraged to establish relationships with local businesses, such as car dealerships, vehicle repair shops, fast food and convenience stores, where ever people shop. The aim was to get referrals and to convince store managers that they could clear overdue payments in their accounts receivable if they sent their customers to us for the cash they needed to pay their bills. If a manager didn’t send us customers for a while, I’d pay a call on him to remind him of how lucrative our relationship could be.
We didn’t restrict our marketing to businesses in the District. We went into Maryland, to College Park, Landover, Laurel, Bowie – always to areas with a high percentage of black customers. We never went to stores in Bethesda or Gaithersburg. And remember: in Maryland, payday lending is illegal. But we marketed our payday loans to Maryland businesses anyway, trying to lure their customers across the border for a loan.
We also included churches in this program, giving pastors $20 referral fees as well if they sent us a member of the congregation. We did this because the church was connected to the community. It gave us credibility. It got us more deeply into the customer base. Sometimes we went even further than that.
I was instructed to start attending services at Unity Baptist Church – neither my bosses nor the lobbyists could do this because they were not black – to gain favor with the minister there and convince him to support us publicly. I was instructed by my boss to offer the church $800 to send several children to summer camp in return for the pastor testifying against the Cheh bill at the Council hearing on reducing payday loan interest rates. I did this. But in the end, the minister walked out of the Council chamber without testifying because he was embarrassed at what he had been asked to do. I was told to pressure him to go back into the room, but he wouldn’t do it.
The racism at Check ‘n Go is systemic, not just directed toward the outside. During my training in Virginia, I intercepted notes between my regional manager and other staff referring to me as a home-boy, negro, and nigger. On my last day of training, I overheard my regional manager say to another staff member, “Isn’t it sad that all we can find in the hiring pool in D.C. is blacks and druggies.” Although I brought these incidents up with Human Resources, the only response of the company was to remove me from Virginia and put me in a store in D.C.
I want to tell you about one last thing: we were trained to access customer’s bank accounts to see if there was money in them to pay us by using their account numbers and Social Security numbers, dialing into the automated line and essentially usurping their identities. We could track their purchases, see where they shopped. We would use this information to collect on our debts, making customers think that we knew where they were all the time and that they couldn’t escape us.
I believe that payday lending is a corrupt and corrupting business. I am glad that I got out of it. The Council needs to do the right thing on Sept. 18th and stop the abuses of this industry.
Open Letter to Virginia Legislature by William Harrod
Hello, My name is William Harrod and until last month I was a payday lending store manager with Check ‘n Go, the nations second largest payday lender. I have worked in stores in Gloucester, VA, Northern VA, and Washington DC. I know that the Virginia legislature will likely consider laws relating to payday lending in your upcoming session and I wanted to provide you some information based upon my experiences as a payday lender for nearly a year. Please understand that the information I convey in this email is drawn from my experiences working in the Commonwealth of Virginia, throughout my training experience.
Much of the information I need to convey is already widely publicized. I also understand that the industry comes to your hallowed halls with lies, fabrications, unethical tactics and a great deal of money to throw around. While I understand all lobbyists attempt to convey information to lawmakers in the most favorable way for their client, the payday lenders actually lie. Their’s is an attempt to perpetrate a fraud on your lawmaking body, and continue to operate outside of usury laws.
I didn’t always feel this way. When I joined the industry I thought I was going to work for a company that would help people. Quickly, however, I realized that our customers were not receiving help. The industry will tell you that their product is short term, but this is absolutely not true. In my time working for the industry, I NEVER saw a customer use the payday loan product and immediately pay it off. Most customers stay in the same loan for more than a year. Think about it – on a $500 loan the customer pays $575. The average consumer is paid biweekly, meaning they will pay that fee 26 times over a calendar year. The total fees over a year for the $500 loan is $1950, and the customer STILL owes the principal. While consumers do make the choice to enter into this contract, we have state usury laws for a reason. To grant an exception to these laws for the payday lenders is to turn your backs on the people who are suffering so much from these horrific interest rates. Also understand, as a manager I was taught (by a regional level executive in Gloucester, VA) to qualify every customer for the max. This way they can never pay the loan off, and they have to reborrow immediately. More reborrows, more numbers of fees. The business model is based upon growing your fees, and we are taught to do this by getting repeat borrows to continue taking additional loans. That’s why the APR does matter, and when the industry tells you different they are simply lying.
I also wanted to touch on collections. When training with a regional level executive in Gloucester, I was taught to use words like “uttering” and “warrant” to threaten customers who did not pay with criminal prosecution. We were also taught to look for info on the application that might be suspect – a transposed phone number, a reference that was illegible. We would then threaten the customer with criminal prosecution – for “obtaining money by false pretenses” by lying on their application. In addition to these unethical practices, we were also taught to dial into customer bank records by using their personal info (social security number, bank account numbers) to pretend that we were the customer. We were to track purchases for collection purposes and to track account balances. When I expressed concern over this practice (as I believe it to be in violation of VA criminal code relating to Identity Theft) I was told “this is how the company operates” and that if I wanted to stay employed, I would quickly conform.
In conclusion, please don’t allow yourselves to be lied to and manipulated by the payday lenders. I was part of their organization, and I understand their tactics. They will stop at nothing to protect their profits. I am reminded of a conversation I participated in earlier this year. The conversation was with the director of government affairs for my company. We were discussing the closure of our stores in PA after the law change relating to an interest rate cap. This person (who is in charge of lobbying for the industry) told me that we could have stayed open in PA. He said we could have changed our business model to a line of credit, and made profit at the 36%. He said the reason we did not do this is because we were concerned that, if other states saw payday lenders could continue to operate with a cap, that other states would quickly pass caps. In other words, we sacrificed our operations in PA in order to prevent a precedent being set that would prove the industry lies when it says it can’t do business within the usury laws.
I hope to testify before your assembly in the upcoming legislative session. I am also available should any of you want to meet with me or have any further questions. Please don’t believe the industry fabrications, and please stand up for the many Virginians who are trapped, stuck in a cycle of debt from which there are no legal protections and very slight chance of escape. Thank you for your time.
William A. Harrod