Last week the blogosphere showered love on a website that offers no-hassle payday loans online. Over a dozen individual bloggers posted items singing the praises of paydayloansmania.com. Just a spontaneous outpouring of collective love for a fab website.
At PaydayLoansMania.com, "Nobody will ask you for what purposes you need your payday loan, and your credit history will not be taken into account while granting you a credit," one blogger writes. "It can be a life saver that also provides easiest advanced cash online," says another.
"Pay Day loans in the month of May, it sounds almost poetic," waxes a third.
It sounds more like a paycheck for the blogger. The poet and his entourage are participating in a viral marketing scheme whereby they get paid to chat up a product. IZEA, the company behind payperpost.com, a lead innovator of the marketing method, calls the business model "sponsored conversations."
The Federal Trade Commission is considering updating its guidelines to indicate that the commission expects these kinds of testimonials to come with conspicuous disclosure of the paid relationship. Most of the blogs that endorsed paydayloansmania.com in the last few days have a sidebar that discloses that the blogger is getting paid per post. The poet's blog specifically says he's working for www.payperpost.com.
The blog posts represent the meet-up of new frontiers in advertising and lending. Once you follow the a link to paydayloansmania.com, you're in what one lending lobby spokesman calls "the Wild West." Forget about disclosure.
"Online payday lenders are the same or worse than regular payday lenders," said Kathleen Day, a spokeswoman for the Center for Responsible Lending, in an interview with the Huffington Post. "The problem is that they're even harder to track."
The Huffington Post had no luck tracking down anyone from paydayloansmania.com. The website provides no contact information. A registration check revealed a nonworking phone number and a street address in Albuquerque, New Mexico. A note to the listed email address was not returned.
While the Center for Responsible Lending considers online payday lenders essentially the same as their brick-and-mortar counterparts, Steven Schlein, a spokesman for the Community Financial Services Association -- a payday lending trade group -- calls online lending "the Wild West" of the industry.
"Storefront companies make online loans but they adhere to state regulations," Schlein told the Huffington Post. "It's kinda weird that [paydayloansmania.com] doesn't have a rate sheet and just starts asking for your personal information."
The Online Lenders Alliance, which formed in 2005 to "protect the industry against potential damage caused by inept lenders," said paydayloansmania.com is not a member.
Evasiveness is part of the business model for some online lenders. The state government of California has been unable to crack down on online payday lenders because "many of these Internet lenders... say they are Indian-owned businesses, linked to sovereign Indian nations and immune from state regulation," reported the Los Angeles Times.
"A lot of online payday lenders are operating out of Costa Rica," said Schlein. "How is the state of New York or Massachusetts going to go after them?"
But if you need a hassle-free loan, hey, take it from blogopinionz and visit paydayloansmania.com:
"Aside from the hassle free payday loan service that they are offering, their service doesn't have hidden fees."
UPDATE 5/22: CFSA's Steven Schlein wrote the Huffington Post to clarify his "Wild West" comment.
My comments equating internet payday lending to the Wild West were directed at rogue off-shore lenders (such as the Costa Rican operators I referred to in the story) and not the Online Lenders Alliance (OLA) or its members. The OLA has been a constructive force in its efforts to bring industry best practices and standards of conduct to the internet cash advance sector.
I would like to emphasize that Mr. Delaney did not misquote me, only that I was inarticulate in making the point I wanted to make.