Army Of Paid Bloggers Suddenly Promoting Online Payday Loans

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.

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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.

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Comments

[RickCoMatic]

Pay Day Loans.
If ever there was a business that needed licensing and regulations; Pay Day Loan Sharks are it!

The Pay Day Loan operators are exploitative extortionists.

Maybe that what they should have on their ads.
"We specialize in exploitative extortion and misery!"

[OhgTone]

The real tragedy of the economic slump is that banks are more cautious to grant legitimate loans. Desperation leads people to hope the hype about pay day loans is true - sort of a suspending of disbelief. ..........­........

http://thefiresidepost.com/2008/09/29/redneck-bait-shop-and-bank-loans/

[j-tho]

Our entire financial/banking system in in dire need of a consumer-friendly reinvention!

[guerilla]

Yeah, I think HuffPo needs disclaimers for all of it's paid relationships. Particularly it's partisan relationships. Let's find out whose back is getting scratched by HuffPo and what that costs.

This is so ridiculous. People are ignorant and cornered, which is why they want PayDay loans in the first place. There is a debt money system that forces people into wage slavery, and then the government wants to regulate speech, rather than fix the systemic problems with the monetary regime.

While Wall Street Bankers steal trillions, the Pentagon loses trillions in accounting errors, the government wants to put disclaimers on bloggers.

WAKE UP SHEEP. YOU'RE BEING FLEECED.

[retwo]

I'm looking at a Payday loan add on the very page I'm typing this on right here on Huffpo!!!

Say what you want, but an advertisement on a web site is often taken to be an endorsement of the product. Disclaimers don't matter.

Having adds like this on Huffpo are just as bad as sites that have paid bloggers pitching them.

[j-tho]

There's a HUGE difference between a paid AD in a sidebar and a blog post where the paid nature of the "testimonial" is unclear, retwo!

[Solaris123]

Follow the money, not the talk!
This is essentially the problem I have with the limo liberals. The talk is good and so is the desire to enrich at any cost.

[yosoyeldecider]

Yep. There go the libruls again, ruining the country with payday loans.

[SoCalNick]

The SAME PAid Bloggers POSED as the " Mass's" That were supporting McCain and Palin. These people write what they are told. Disrupt ANY target they are hired to destroy and do not care what the damage is.

They were VERY easy to spot too. Still are.

[dulceburro]

Don't use them then.

commisionjunction.com shows how much each ot these guys pay per lead.

There is good money in it.

[wietog]

And here is EXACTLY what is wrong with marketing.

INSINCERITY.

There should be a disclaimer required on ANY falsely generated comments (paid comments).

Once a company resorts to these tactics, they should be added to a list and avoided at all costs.

True testimonials are rare. False testimonials are LIES.

[BeasleysMom]

"Sponsored conversati­ons." What a cute name for ly ing and fraud by a company that takes advantage of desperate, often not too bright, individuals. S c umballs.

[david43a]

The answer to "payday loans" is simple....­.default! after you pay the ridiculous useristic rates to equal the amount of your "loan" plus a bit for their trouble...­default! its fun and free!

[formerprosecutor]

I assume that in their fine print they have the ability to attach your bank account and retrieve their money; the same wasy they deposited it.
so don't count on evading unless you close that account ; then they will take action on a closed account.
sc um always knows the ropes sometimes better than the 'rope builders" ( our legislators) our government, thanks to de regulation, is why they exist and go unprosecuted

[motoGpifupleez]

How many of these "payday/title loan" places were there in your town before January 2001?
How many sprang up between then and January 2009?
Who should we thank for the economic atmosphere that spawned these outfits?

[SoCalNick]

And BUSH for relaxing the LAWS that kept LOANSHARKING illegal.

[Adartist777]

If these people are operating in Costa Rica, how are they gonna get their money back from you if you don't pay them back?

[LauraO322]

They get a person's bank acct number when they apply for the loan, and then take whatever they want from that person's bank account... it happened to a friend of mine, and it was a nightmare.

[Nyla785]

So many scams, so little time.

[RGMc]

The real dirty secret is that these are not "stand alone" operations. Many of the loan sharks and "fee harvester" credit cards are by the big Wall Street banks that were bailed out by the taxpapers. Capitol One, HSBC, and others run loan operations under different names.

They don't want their "wealth management" clients to know that they are loan sharking on the side.

[BeasleysMom]

Your post confrimed that i was right to pay off close my Cap one card after they raised by rate from 9 percent to 27 percent. When I called to close the account I told them they are crooks.

[SoccerNana]

The saddest part about this is that some desperate family or single parent are going to fall for this "legal-loa­nsharking" and get deeper into financial mire.

[VPN]

Not to worry our Congress is reforming the way C-C Companies and small loan companies do business and address Usury by capping, oops, oh wait, never mind.