I briefly caught this special on PBS tonight, a documentary on a cover story done by BusinessWeek magazine entitled "The Poverty Business".  I wish I had been able to watch more of this as I find the subject both heartrending and fascinating.  I was a sociology major in college and I've worked with a lot of people living in poverty through college internships, in my post-college job, and through people God has brought to me.

The story was basically about businesses that make tons of money by taking advantage of the poor, such as certain car dealerships, checks-for-cash, car titles-for-cash, rent-a-centers, etc.  It gave the example of a woman who had bought her first car with no money down.  It was a 1999 model, had 102,000 miles on it, and cost over $7000 with over 24% interest.  She wasn't made aware of the what the actual price would end up being with that interest rate.  Her payments were $150 every two weeks, but after three months she turned the car back in b/c she couldn't afford the payments.  The magazine did an investigation into this car dealer and other businesses and found that most buyers end up defaulting on their loans.  The dealer makes money and gets to resell the car.

Someone might say, "Well, that woman should have done the math and calculated what the true cost of her car would be."  The point is, this was her first car and she was so excited, not because of having a material possession but for merely having transportation to get to the store and to work.  With no money for a down payment at a reputable dealership and no credit with which to secure a loan, this was the only option she felt like she had.

When my brother was a teenager he had a part-time job at a rental center.  He eventually quit because he couldn't stand to work in that environment anymore.  He said that they would deliver furniture and electronics to the poorest sections of town to people who didn't seem to understand that they were paying $2/week for 52 weeks for a lamp that they could have bought outright for much less.  (That's just an example)

One of the most fascinating books I've ever read is Nickel and Dimed by Barbara Ehrenreich, about her experiment at working and living on poverty level wages.  She touches some on the big bullies who bully those who seem to have no other choices.

Anyone else have any thoughts?

Try these websites:  www.pbs.org and www.businessweek.com

The Moyer report on PBS and the written script of the show on Business Week..  I haven't figured out how to pull up the online video forms of the program.  Good Grief!  Being able to watch old TV casts when you want... I'll never be able to get off the computer at this rate.

 My Daddy used to say, "A poor man has poor man's ways." By that he meant that if you live like you're poor, you will be. Rent to own, high interest loans and so on, are the things that make one poor. You don't have to be poor to start with, you just have to have the mentality. I've seen people making a lot more money than I do, make some awful money mistakes out of ignorance and live like they're one paycheck from homelessness, which they sometimes are. They're poor. 

The key is education. We can blame the businesses all we want, but if people know enough to take care of themselves, predatory businesses will go away.  

dolly77:

When my brother was a teenager he had a part-time job at a rental center.  He eventually quit because he couldn't stand to work in that environment anymore.  He said that they would deliver furniture and electronics to the poorest sections of town to people who didn't seem to understand that they were paying $2/week for 52 weeks for a lamp that they could have bought outright for much less.  (That's just an example)

Unfortunatley those places love to take advantage of people who can't afford thing they need.

When I was at the end of my pregnancy for dd#1 (now 20) dh decided to rent to own a dryer (we already owned a washer) so I could dry the baby's clothes. The payments were something like $20 or $25 per week and we'd own it in two years. We made our payments fell behind a couple times. They were seldom if ever interested in working with us if dh told them we'd be a week late in making a payment they'd send someone over to reposess it the day before he was due to stop in and make a double payment to catch things up. I'd end up hiding in the house from them when they stopped by (curtians closed and shades down not moving, answering the phone or door till they left). When we had almost paid off the dryer one of our payments came up missing they swore we'd never made it I had the MO stub that showed we had. We made a lump sum payment to pay it off (something like $150 @ the time) that they were surprised we could do and were ticked off that we'd pay for the dryer. I put a tracer on the missing payment and found their company stamp on it. We went back to the store for our missing money and the same people who swore we'd never made the payment now swore that if their stamp was on the MO they applied it to the account. I demanded to see where it was on payment history and demanded to talk with the Distric Manager (who they had to phone) about the situation. They took out our payment history and went over it constantly insisting that if their stamp was on it the payment was applied to our account but I wasn't backing down. The payment wasn't there. In order to get the money we had to travel to the worst side of town to get it from their district manager who appoligized where no one in the store ever did. Two months later one of the furniture stores advertisied the same dryer for 1/3 the price.

Because of his spend thrift ways that is just one example of how we get taken advantage of we've had to pay interest as high as 20% on a veichle loan and 25% on personal loans. They would always tell him the same blasted line over and over "Once this loan is paid off your credit raiting will improve" (can I say bull without getting in trouble?). Once we paid off the loan(s) and tried to get credit from a legitimate source we were informed that going through those places and paying the high interest we had hurt us red flagging us as high risk. It took years to get out of the suckers pool.  

We get credit card applications by the handful everyday in our mailbox.  I sometimes look at the offers and almost all of them say pre-approved or personally selected.  I laugh, because I know for sure that does not mean you are getting that card.  If you look closely enough you will see that some of them have 25-35 % interest.  We got a phone call a few weeks ago promising a credit card, when I asked for the interest rate on this card they tried to avoid the question until I said I would hang up if they did not tell me the rate on that card that I had been pre-approved for.  It was 35%  plus late charges if you were late in the 1st 6 months.  It was not even a name brand card.   I think the name had something to do with fruit or something.  It was a bank card not really like VISA  or MC.  I just laughed and hung up.  I think the mafia has better rates.

dolly77:

With no money for a down payment at a reputable dealership and no credit with which to secure a loan, this was the only option she felt like she had

The truck we paid off last month was a 1999 with high mileage and cost about $8,000 with financing. Yep, it had 24% interest,

This was not his first vehicle and he knew exactly what he was going to pay on this. He even had money for the down payment but we did not have the money to pay cash for the whole amount. What he really lacked was credit. My husband didn't have bad credit, he had no credit history at all.

This was the price we paid for lack of credit history.

mary w.:

We get credit card applications by the handful everyday in our mailbox.  I sometimes look at the offers and almost all of them say pre-approved or personally selected.  I laugh, because I know for sure that does not mean you are getting that card.  If you look closely enough you will see that some of them have 25-35 % interest.  We got a phone call a few weeks ago promising a credit card, when I asked for the interest rate on this card they tried to avoid the question until I said I would hang up if they did not tell me the rate on that card that I had been pre-approved for.  It was 35%  plus late charges if you were late in the 1st 6 months.  It was not even a name brand card.   I think the name had something to do with fruit or something.  It was a bank card not really like VISA  or MC.  I just laughed and hung up.  I think the mafia has better rates.

I signed up for the "no junk mail list" several years ago (it's been long enough that I can't remember where - but I'm sure you can find it if you look) - it's just like the "do not call" registry, except it's for junk mail.  I no longer get mail from any direct mailer except for the "recipient" type stuff, like ads, unless I have a business relationship with the company.  I think it's wonderful for several reasons - my mail is usually meaningful, I don't have to worry about getting credit card applications in the mail (or having them stolen from my mailbox), and I have less trash to get rid of.  I strongly suggest it!

dolly77:

 

When my brother was a teenager he had a part-time job at a rental center.  He eventually quit because he couldn't stand to work in that environment anymore.  He said that they would deliver furniture and electronics to the poorest sections of town to people who didn't seem to understand that they were paying $2/week for 52 weeks for a lamp that they could have bought outright for much less.  (That's just an example)

 

When I was in college I lived in an apartment by myself and supported myself on $47 a week.  This included a car payment of $76, rent of $55, and a 90 mile round trip commute to school each day.  After all of that and gas, I usually had $6 left over.  (I got to eat at work and one of the cooks would always sneak me a sandwich to take home).  I did my homework at night and my apt only had 1 very bad lighting fixture.  So I rented a lamp.  $1 per week on a 4 month contract.  . The cheapest lamp I could buy at the time was around $14 even then.  And school work couldn't wait.  One day I received a phone call from the rental center to bring in the lamp.  When I went in the guy behind the counter handed me a lamp and a box of light bulbs.  They had figured out that since that was allI was renting, I was using it for studying so they (a couple of the people who worked there) fixed up a broken lamp that had been returned and gave it to me.  I cried all of the way home. 

re-tired

Re-tired,

Sometimes we forget that even what seems like a simple or cheap thing can be out of reach for someone else.

I definitely agree that one's mentality is a huge part of being a wise consumer and certainly education is a component of creating that wisdom.  But I also believe it is important to not just blame the so called "stupid consumer".  The businesses discussed in the program based their BUSINESS MODEL on the exploitation of low income people.  When devising their business strategy, they expected and planned for customers to not be able to make their payments and therefore have their cars repossessed.  If people lost their cars, the business still made money.  Additionally, their method of selling to the customer was to determine if they had the ability to pay for the car and then maximize the price of the car knowing the customer couldn't pay and therefore would maximize their profit. 

I'm sorry, but I feel so strongly that what we have been witnessing across our nation isn't just about stupid, gluttonous consumers.  This type of business is beyond unethical.  However as the program pointed out, most of these kinds of business stay within the law mostly because there is no law to stop them.  In fact it was noted that in Ohio they just passed a law limit interest rates that can be charged on payday loans to 28%, down from 391% !!!!! 

I believe it is far too simplistic to think that if consumers weren't so stupid everything would right itself because evil business would go away.  In my opinion this sort of vicious abuse requires advocacy.  Until we look beyond blaming individuals for being taken advantage of and really start holding businesses, banks, corporations, credit card companies. etc. accountable for what they have done to our country (and actually the world), I don't believe things will change.