Blaming the Victim

Reporters have very little training in economics, finance or accounting, and that ignorance combined with a general disdain for certain businesses often leads to stories that have rather glaring errors.   

Readers don't expect the Arizona Republic to be the Economist or the Wall Street Journal, but we assume that somewhere along the line there are editors who can at least catch the obvious errors in front page stories. 

Here's the worst lede paragraph that I've seen this year.  The article is a hit piece on the Payday Loan industry and the lede is meaningless, mistaken and misleading.

Diane Robles, a recently divorced mom, was working as a secretary and going back to school when she borrowed $100 from a payday lender to make a mortgage payment, a decision that eventually cost her upward of $15,000 in lending fees.

The Lede is Meaningless

Let's start with the obvious.  Did Robles pay $15,000 in fees on a $100 debt?  If so, that's and incredible story.  If not, it's a meaningless comparison.  I know the Payday Loan industry has its critics, but we eventually figure out from the article that no one is claiming that Robles paid $15,000 as a result of that decision.  She decided to go into debt and eventually paid $15,000 in interest.  How much money did she eventually borrow?  We have no idea. 

I got my first credit card in 1986 and I've been making car payments, student loan payments or house payments ever since.  Can we look back on my first credit card application and claim that it was "a decision that eventually cost me upwards of $100,000 in interest expense?"  Of course not.  I made hundreds of decisions and so did Diane Robles.

The Lede is Mistaken

However, it only takes a little research to show that the $15,000 figure is completely bogus. 

If you read the full article, you will notice that Diane Robles is from Tucson.  Robles first surfaces in a February 4, 2007 opinion piece in the Arizona Daily Star.

Diane Robles is a confident, professional single mother. She has bachelor's and master's degrees and holds a good job as a facilities director with Child & Family Resources Inc., a local nonprofit agency that assists families in need.

That's not all we learned about Robles in the February article.

After two years of revolving loans, Robles said, she owed more than $10,000, and she estimated that she paid about $5,000 in fees. Her house was being foreclosed and there appeared to be no solution.

That's right.  Two months ago, Robles estimated that she had paid about $5,000 in fees.  Now the number is $15,000.  Either reporter Jessica Coomes really botched the lede or Diane Robles is a liar. 

The Lede is Misleading

Actually, we know that Diane Robles is a liar.  She may not have lied to the reporter, but she certainly lied to the Payday lenders that she defrauded. 

That's where an accounting or finance background would have helped the Republic reporter.  She portrays Robles as a victim and misses the entire point of the story.  Coomes has all the pieces, but she's not able to put them together.

Here's a key fact from the article.

Starting in 2000, Robles spent two years taking out and trying to repay the loans. She was only supposed to take out one loan at a time, but she had five from different stores.

She knew that she was only supposed to get one loan at a time, but she got loans from five stores.  She broke the law and the rules.  How do you suppose she did that?  Did she perhaps lie to the clerk or on the application?  She knew the law and the rule and she got five loans anyway.

Why do the stores have a one-loan-at-a-time rule?  It is for the same reason that your bank wants to know about your other loans when you refinance your house.  They want to make sure that you can pay the money back.  The Payday Loan stores know that if you break the rule and borrow money from five different stores that you are likely to be unable to pay them off. 

That's exactly what Diane Robles did.  She broke the rules, borrowed from five different stores and then...didn't pay them back.  She eventually cleared the debt by filing bankruptcy.

The Star article offers more detail. 

After two years of revolving loans, Robles said, she owed more than $10,000, and she estimated that she paid about $5,000 in fees.

Once Robles hit bottom, she made the decision to file for bankruptcy.

Even if she is right that she paid $5,000 in fees during her splurge, Robles admits that she broke the rules in order to borrow more money and then walked away with $10,000.  Who is the victim here?

This article should have been about people like Diane Robles who break the rules, cheat lenders and make interest rates so much higher for the rest of us. 

But that story would have taken some training and objectivity--not something you are likely to find in modern journalism. 

Comments

[Diane D.]

Thanks for the post, Greg. I really appreciate your ongoing coverage of the Republic's foibles. As regards this story, a couple of comments. First, yes, absolutely crappy reporting, no doubt about it. (And don't even get me started about the glaring spelling errors in both the print and web editions -- Jeez, Louise!)

As a business, however, the Republic exists to make money. Period. Exploitation sells-- which brings me back to the story topic. As a culture, our unbridled greed leads to things like payday loans stores and lousy newspapers. Loan sharks are fine gentlemen too, if you pay them back on time... But no one thinks loans sharks are legitimate businessmen.

Payday loan stores are just storefront loan sharks -- they exploit people. We've neglected the fact that corporate responsibility matters just as much as individual responsibility.

The same thing is occurring at the Republic. They neglect ethics to make a buck at any cost.

Americans have begun to react to the underlying sleaze factor in too many businesses. I think it's a good thing and necessary to restore some balance.

[RDH]

Not sure how someone with Robles education falls into such a trap. It either speaks to her inability to control her spending or is a glaring indictment against the education system from which she recieved her degrees.

Interestingly enough, the article is another "pity piece" trying to redirect the blame for Ms. Robles poor decisions away from her and on to the lending agency. It is no different than the plight of those who run up enormous credit card bills and then blame the credit card industry for making it too easy for them to do that. When will this society ever return to individual responsibility for personal choices?

[David]

As you know, the story is actually about the evil capitalist making the "Victim status" of Robles worse. It is pure propaganda and nothing less. The timing is interesting as the immigration issue is spiraling out of the control of Mexican activists bent on "reconquista"!

This story is not about individual responsibility but the strengtening of a 'nanny state' that relieves the unwashed masses from the discomfort of thinking for themselves.

I am suprised the article did not attempt a tie-in between global warming and Payday loans. Reporting such as the article cited is why I cancelled my subscription years ago.

[Fred F.]

Excellent observation about how bad the Republic really is. And excellent observation about the economic ignorance of journalists.

It explains why they hired Jon Talton.

Journalists are unbelievably naïve and stupid.

[netrootsdemocrat]

Haha, you GOPers continue to defend the CC companies and the Payday Loan companies as something that is somehow sacred to the "religion" of the phantom "free-enterpise" system. Good. I'll take two scoops of that along with a Democratic victory in 2008, please.

This is the epitome of why I like to read this site.

[ron]

Fred F.

Did they RE-hire Jon?

[Joe G.]

If the choice is between having to have payday loan companies or having the NetRootsDem types determine what economic choices are good for people, I'll choose the former.

[ron]

Diane D, you wrote: "Loan sharks are fine gentlemen too, if you pay them back on time... But no one thinks loans sharks are legitimate businessmen.

Payday loan stores are just storefront loan sharks -- they exploit people."

Hmmmm, let's see the last I heard Jim Weiers, House Speaker, still owned his store-front payday loan businesses...

Of course, there is no connection between that fact and this Republic story..... any takers on some swamp land in Yuma....

[Geoff]

People who rail on the payday loan industry never seem to offer any alternatives. The banks created the mess when they stopped providing small loans, and started jacking up fees for everything. It's cheaper to take out a $200 payday loan than to bounce a check or pay a credit card late.

[ron]

Geoff,

You are correct although across the country and now in Phoenix, various faith groups have begun to address the issue with their own 'payday loan' programs. These groups, due to low overhead and no need to create profits for shareholders, are slowly working to create alternatives to the payday loan businesses on what seem like every corner in my neighborhood.

[Marcy]

Hopefully, someone at the non-profit this woman works at is watching the books really well. People with money problems who are willing to lie to a lending operation may be tempted to skim a little here and there. Just a thought.

By the way, I'm a very conservative Republican capitalist who has great disdain for these loan shark stores. Net Roots needs to stop thinking Democrats are the saviors of the poor and unfortunate. These stores have no political affiliation. And capitalism does not equal evil sharkdom. It is the ignorance of capitalism and the misinformation spread by those who do not understand the free market that exploits the greatest number of people.

[logical1]

My problems with the payday loan companies are that they give you the ability to just pay interest and keep the debt outstanding for too long. They need to put rules in place that allow for one loan at a time that has to be paid back with a 30 day waiting period before taking on another loan.