Of Advance America
John Patrick O’Shaughnessy (better known as Patrick O’Shaughnessy) is the CEO of Advance America, one of the nation’s largest payday lenders. He is also Chair of the Board of Directors of Community Financial Services Association of America – the payday industry’s special interest trade group, which has a history of trying to block efforts in Washington and across the nation to protect hard working families from the predatory practices of its member companies.
Most recently, the Consumer Financial Protection Bureau (CFPB) handpicked O’Shaughnessy for a three-year term on its Consumer Advisory Board (you read that right… Consumer Advisory Board).
At the time of his appointment, CFPB Director Richard Cordray said Advisory Board members would “provide valuable input to help us better understand the consumer financial marketplace.” The CFPB – the government agency charged with overseeing that marketplace, including payday lenders like O’Shaughnessy’s Advance America – is considering new rules for the payday lending industry that would protect consumers from predatory lenders like O’Shaughnessy. Talk about a fox in the hen house!
In his capacity on the CFPB’s Consumer Advisory Board, O’Shaughnessy is likely to go to bat for the interests of the payday lending industry. What exactly is his view on the subject? Well for starters, he thinks regulators discriminate against payday lenders. Seriously. And when banks tightened their restrictions on credit after the financial crisis, he attempted to swoop in and take advantage. After all, what does it matter if someone cannot meet the terms of their short-term credit agreement if companies like Advance America are banking on customers remaining in a cycle of perpetual debt so they can rake in piles of cash?
When it comes to payday lending reform, O’Shaughnessy has very strong opinions. In fact, he thinks putting caps on interest rates (so lenders can not charge 400% for example) or limiting the number of consecutive payday loans a consumer can take out would be “detrimental” to his business. And why should he support strong reforms that favor hard working families? He hilariously believes that his hard-luck customers choose payday loans because of the “transparency” of such options.
And what about the payday lending company O’Shaughnessy runs? A former manager of Advance America said “an overwhelming percentage” of its customers re-borrow every two weeks and can’t get out of “what appears to be a never-ending cycle of payday loan debt.” The manager is right. Take 2011 for example. That year, Advance America reported serving 1, 347, 000 customers and originating 10, 561, 000 cash advances, which averaged out to nearly 8 cash advances per customer. In other words, these hard working men and women see no other choice but to take out new payday loans in order to pay off old payday loans. Advance America’s Senior Vice President Carol Stewart has gone on the record stating that the company cannot survive if they are forbidden from giving customers more than 5 payday loans – a cap that would make it easier for consumers to escape the debt cycle Advance America relies upon.
Believe it or not, Advance America’s debt collection tactics are far worse than simply signing folks up for additional loans – how it convinces customers to take out additional loans is perhaps even more problematic. As PR Watch reported:
“A primary goal is to get customers to continually renew their loans. ‘We had to call in our numbers every night to Advance America’s corporate headquarters. They were not interested in numbers on who paid off their loans, but on who renewed their loans. They wanted folks to pay the interest rate and keep the loan going and going, ’ says the former [Advance America] employee.
“This employee also worked for a time in the collection department, where he was instructed not to visit people at home, but to go to people’s place of employment first. ‘We would not tell their bosses where we were from, but we would carry a clip board with our name on it in a prominent way. We would request that a person be pulled off the factory floor, not to collect, but to keep them on the hook. The key was embarrassment and intimidation.'”
It is – by design – a vicious cycle that has paid off handsomely for O’Shaughnessy. He has received millions of dollars in compensation, spent hours of personal travel time on Advance America’s corporate jet, and owns a .34 million nearly 10, 000 square foot mansion in South Carolina.
It has paid off for others too. During the past few election cycles, O’Shaughnessy has contributed nearly , 000 to the campaigns of Members of Congress and payday lending special interest PACs, which have also donated large sums of money to the campaigns of elected officials.
O’Shaughnessy Bragged about Payday “Earnings Growth, ” No Doubt Fueled by his “Millions” of Customers
- In the First Nine Months of 2011, Advance America had a Net Income of Million. October 28. Spartanburg-based Advance America, Cash Advance Centers Inc. reported Thursday its earnings increased almost tenfold during the third quarter. The company said its net income for the quarter was more than .5 million, compared with .4 million during the same quarter last year. For the first nine months of the year, Advance America’s net income has more than doubled to more than $41 million, compared with $20 million during the same period a year prior. “We are pleased to report our third consecutive quarter of center gross profit and earnings growth, ” Patrick O’Shaughnessy, president and CEO of Advance America, said in a statement. “Customer service is the core of Advance America’s business, and our strong results this quarter reflect our steadfast efforts to satisfy the varied needs of American consumers.” [Herald Journal, 10/28/11]
- Advance America Website Claims to Have Had Millions of Customers Since the Late 1990s. [AdvanceAmerica.net, 10/8/14]
Then Oversaw the Sale of Advance America to a Mexican Corporation
- Under O’Shaughnessy, Advance America was Purchased by Grupo Elektra in 2011 for $10.50 Per Share. “In what it said would be its final bid, Grupo Elektra on Dec. 15, 2011, offered to acquire all Advance America’s common stock at a cash purchase price of $10.50 per share. After continued negotiations, Advance America approved a merger agreement Feb. 15, and the two sides issued a joint press release announcing the deal after the close of trading.” [SNL Financial Services Daily, 3/28/12]
Payday loans in Australia are part of the small loans market, which was estimated in 2008 to be between $800m and $1bn a year, although it seems likely that the true market was and currently is higher than this.
The growth of this market mirrors the growth in Canada, the United Kingdom, and the United States. Because the market for small loans...
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