Industry Insider Skewed Academic Payday Loan Study
Inside Subprime: March 13, 2019
By Grace Austin
New reports and emails indicate a payday loan industry insider influenced academic studies on lending research that may have affected government policy.
The Washington Post is reporting that an attorney and payday loan advocate, working on behalf of a nonprofit, contracted with a Georgia statistics professor to find research and data to produce a report on payday loan rollovers.
That 2014 report, “Payday Loan Rollovers and Consumer Welfare,” eventually sided with the industry. It concluded that repeat borrowers ultimately had better financial outcomes after taking out loans than shorter-term borrowers, and borrowers benefited from living in states where loans were not severely limited.
That study has since been touted by the payday loan industry as evidence to support payday loans, and was even delivered to the Consumer Financial Protection Bureau in 2015. It’s unclear, as the Washington Post stated, how it has factored into any decisions at the bureau, though.
The report also drew the attention of the watchdog group the Campaign for Accountability, which found they were “tainted,” as the American Banker wrote, by the nonprofit the author chairs.
The organization gave the statistics professor a $30,000 grant to complete the report.
In 2015, the Campaign for Accountability filed an open-records request with several universities where payday lending studies have been produced, which has led to a long legal battle all the way up to the Georgia Supreme Court.
Another professor produced the 2013 paper, “Assessing the Optimism of Payday Loan Borrowers,” which has also been used as an industry benchmark. That study argues that most borrowers understand the risk involved when taking out a payday loan.
Emails obtained by the New York Post show Mann and Miller also corresponded on payday lending data. In one email, Mann even suggested to Miller how Priestley could wrap up her own academic paper on payday lending.