Collection Agencies and Your Debts

Courtesy of sidsnapper / iStockphoto

People who do not pay off their debts risk to become clients of a collection agency. But sometimes such an agency calls you up and asks for repayment of debts that you do not even have. What can you do in this situation?

Debt is always an unpleasant thing. We are always concerned about them and try to pay them off on time; otherwise a bank may refer to a collection agency that will force you to pay your debts. Unfortunately there are cases when collection agencies ask people to pay debts that do not belong to them. The reason might be a mistake of a bank or a collection agency itself. Anyway you have to know how to deal with collection agencies.


How does a collection agency work?

If you do not pay your bank debt during one hundred and eighty days from the moment of its receipt, the bank will hire a collective organization that has to collect your debt. And usually after some more months the bank sells your debt to a collection agency. In this case, when the bank has sold your debt, it does not have any relations to your debt anymore. And because of that a collection organization might take from you more money than you should have paid to the bank to make a profit from buying this debt.

It should be mentioned that not only bank debts can be transferred to a collection agency. Any debts you have including medical loans and utility debts can end up in such an agency.

After the information about your debt comes to a collection agency, a notification about it will appear in your bureau. This notification can significantly influence your score.


How can activity of a collective agency influence your score?

As it has been mentioned, once a collective agency receives your debt data, your bureau acquires a status of a “collection account”. These harmless at first sight words can greatly affect your score, and the degree of this influence depends on the size of your score. The higher your score is, the more points it can lose.

This information about the status of your account remains in your bureau for seven years. It should be mentioned that those seven years start only after one hundred and eighty days of non-payment, or after a collection agency receives the information about your debt.

The only way to get rid of this status is to make a collection agency remove your debt after paying it. You may ask this organization to have a “pay for delete” deal. It means that you agree to pay the sum that a collection organization wants you to pay, and after the repayment is done they remove a notification “collection account” from your bureau.


What can you do to change the situation?

If you are sure that the debt a collection organization wants you to pay is not yours, you can write a letter to it within thirty days from the first collection activity confirming that you do not have any debts. If the organization does not provide any proof that you owe the debt, the information in your bureau will be renewed and all the collection activities will be stopped.

In the situation when the agency provides proof that you actually have the debt, but you do not agree with it, you can search for help in CFPB. Consumer Financial Protection Bureau is an organization that helps people in the situation when their financial rights are violated. This organization controls the work of banks, credit unions and other financial companies and ensures compliance with financial laws that protect you from fraud and abuse.

So, you have to remember that if you have any debts you have to pay them on time unless your debts may be bought by a collection agency. And this purchase can bring you a lot of troubles. You will receive unpleasant calls from the agency workers asking you to pay your debts off, and in addition you will acquire the reputation of a “bad borrower” and that can cause problems with your future loans.

In What Way Are Payday Loans Connected with Native Americans?

Courtesy of AdobeStock

Payday loan is a controversial issue. Some people do not hesitate to take it, while the others cannot even bear the idea of taking any payday loan. And they have every right to do it, because of all the news and talks about organizations that provide such loans. So, if you are going to have a payday loan you should study information about this organization beforehand.

No one wants to be deceived especially when it comes to our money and taking loans. We are trying to act as careful as we can, but unfortunately it is not always possible. We fall into the trap and stay duped. Usually it happens because we do not study all the information about the organization that provides these loans. The first thing we should do before borrowing money is to check all the information about the organization and payday loans in general and find out if you can trust this organization or not.


Check if Native Americans are involved in the organization

It is said that some payday lenders in America use sovereignty of Native Americans to avoid consumer protection laws. It is really useful for lenders who want to breach the law, because the sovereignty of Native Americans prevents them from being sued for violating consumer protection laws. And if an organization wants to earn a little bit more money on their clients, its head just has to find a tribe and ask for help.

You may have a reasonable question: why do tribes need this? The answer is very simple: money. Of course, they enter into such business to get some money from it. The statistics says that one out of four Native Americans is living in severe poverty. That is why they are ready to earn some money even if the way of getting it is not quite fair. But in fact, a tribe usually gets only one per cent from the average revenue of a company. It is not a big sum in comparison with the revenue of a company that can be more than several millions of dollars.


In what way does it violate the law?

According to Public Justice Report, some payday loan organizations provided loans with an interest rate higher than 700 per cent.  The organizations knew it, but they could not be judged by court, because an accused organization formally looked like tribal business and its activities could not be sued according to the local consumer protection laws. And the organizations continued to take profit from their existence.

These details were opened when the police started to investigate the case of Scott Tucker. Scott Tucker used to be a race driver and an owner of some payday loan organizations at the same time. He has been recently sentenced to more than sixteen years in prison for illegal loan practices that affected about four and a half million customers. According to the documents, Tucker’s companies were affiliated with the Miami Indian tribe of Oklahoma.

In fact, sometimes leaders of the tribes which names are used by payday lenders do not even know of that. It happens because a lender needs approval of just one member of a tribe to use its name. And there are cases when the heads of the tribe did not agree to take part in this business, but anyway they participated in it without even knowing about this fact, because of the agreement with one of the tribe members.


Many people can assure you that payday loans are absolute evil and such loans are not worth being trusted, but actually payday loans cannot be called so. As in every business there are companies that are not so light-fingered. You as a customer and user of these loans have to think of your safety and find out as much information about the organization you want to borrow from as possible. Except for the information about the address of the company, its reviews and reputation, you have to find out who the head of this company is and check if it is affiliated with any tribe.

5 Things You Had Better not Take Payday Loans for

Courtesy of Shutterstock.com

Sometimes we face such situations when we really need some money, but actually there is no opportunity to earn it. In this situation we are thinking about payday loans. They are the most convenient; you do not have to spend a lot of time waiting for an approval of your loan application and you do not have to give a lot of different documents to get it. Unfortunately, there are cases when people take payday loans to spend money on something ridiculous.

Payday loan is a good source of money for those who need it immediately. But anyway it is a loan and you have to pay back the money you borrow. So, before taking any loan you should think of where you will get money for repayment and be sure whether you can pay this money back or not. Sometimes people are not able to demonstrate such responsibility and take payday loans without even thinking that the day, when they will have to pay the bills, will certainly come. They take a loan guided by some insane reasons and after it, do not know how to pay it back. So, what are these reasons?


Loan for a wedding day

Some people are so obsessed with an idea of luxurious wedding day that they are ready to spend millions of dollars on it. But what can they do if they have only one hundred dollars in a pocket. There is a way out! Payday loan! They celebrate their wedding day and then understand that they have to pay back quite a big sum including interest and fees. And of course these debts affect their married life a lot.


Loan for shopping

There are people who cannot imagine their life without buying some new clothes, shoes or jewelry. They cannot wait for their salary to come to buy some new clothes. And because of that they go and take a payday loan and then spend all the money shopping around. When the day of repayment comes they do not know where they can take this sum of money and some of them go to another organization that provides payday loans and take another loan to repay the first one.


Loan for gadgets

TV sets, computers, laptops or smartphones are the things that many people get payday loans for. But, again, they are not worth it. The reason is that gadgets are not essential goods; you can easily live without them. It is senseless to buy a gadget with the help of a payday loan and then repay the money including all the fees. It is better to save some money and when you get the sum sufficient to buy the gadget you need, you can easily do it.


Loan for addictions

Gambling, drinking or smoking are not the right things to spend money for, especially the money you get from payday loan. Spending money on it you harm not only your health, physical and mental, but your financial position as well. It is 100 per cent obvious that people who borrow money for such purposes will have problems with repayment, because they will spend this money for their addictions and will hardly think of paying it back.


Loan for socializing

Of course, it is great to enjoy your life and spend your time with your friends clubbing, for example. But if you do not have enough money for your social life it is not the reason to take a payday loan. Everybody likes spending time with pleasure, but people who have little money by the end of the month should be more careful with their spending on social life. Otherwise, they are risking to get themselves into financial difficulty.

Payday loan can help people who really need money to buy necessary things, but, also, it can do a lot of harm for those who borrow money guided by some insane reasons. If you need to buy some unimportant things, such as gadgets or new clothes, it would be better to save some money or earn it somewhere (work some extra hours, for example). And in this situation you will not have to pay any money back.

Four Bad Money Habits We Have

Courtesy of Photobuay / iStockPhoto.com

We are usually very busy to notice that we spend our money improperly. We do not have a chance to stop and analyze our financial behavior. And that is why we do not even think that some financial habits we have sooner or later may lead to some unpleasant consequences.

It is not a secret that sometimes we spend our money unreasonably. We buy some things that we do not even need, we lose our money playing some games of chance or we do not pay enough attention to the terms of our credit card repayment. Usually we do not really notice such things thinking that we can afford being free with money from time to time. But, in fact, such behavior forms our “bad” money habits. So, what are the most common “bad” money habits of people in the USA?


More than 40 per cent of Americans do not pay back their credit card debt in time

In the USA many people do not pay their credit card debt every month. They just pay some minimum sum and wait for the other settlement period to come. It is not quite right attitude, because in this case you will have to pay back more money than you actually spend because of the interest rate. According to the statistics of NerdWallet an average American family who has credit card debts pays about 1300 dollars in interest per year.


About a half of Americans do not have enough money for a rainy day

It is important to have some money saved because one day you may really need it. It is a pity that many people ignore this advice and spend everything they earn in one month. Some extra savings may help you at the time of trouble, such as job loss or any health problems.

The experts recommend that everyone has some savings in the amount of six salaries. They advise to put at least ten per cent of every income aside to save some sufficient sum. It may sound difficult for those who are not used to making savings, but when it becomes a habit your savings account will add up quickly.


The number of parents who take student loans has increased

The statistics say that the number of adults with student loan has quadrupled in recent years. Parents take student loans to provide good education for their children, but, in fact, such debt aggravates the position of the parents themselves. They have fewer options for loan repayment and in addition they are closer to retirement, which means that after their retirement they might not have a chance to pay this debt back successfully.

Parents who want to take such a loan should think not only about their child’s education but also about the sum they have to borrow. It is a good decision to find some cheaper colleges or some other variants of financing. For example, a child may take on some part of the student debt too.

The statistics says that an average student loan is about 23 000 dollars. Total debt on student loans in the USA is 875 billion dollars and it increases every second.


Only 58 per cent of Americans have retirement savings

About a half of the adults in the US does not have any savings for retirement. There are two reasons for that. The first one is that they simply do not bother to do it, and the second one is that they just do not have any money for that, because they have to pay back their debts.

Again the experts recommend put some 5 – 15 per cent of your income on your savings account to prepare for your retirement. It is important to save some money today, because tomorrow it will provide you a good life.

Today money plays an important role in our lives and because of that we should learn how to manage it correctly. The first step that should be done is to get out of debt. It is not the easiest thing to be done, but you just have to do it to provide better future for you and your family.

Credit Card Debt of Different Generations

Courtesy of iStockPhoto.com

The world does not stand still, but moves and changes. And people are changing together with the world. They change their behavior and attitude to different things. People of different generations have different attitude to money, their accumulation and their spending: and also they have different attitude to the debt. So, what generation has the highest debt?

Some people are okay about living in debts, some of them are totally against it. Why are their opinions so different? Such difference in perceiving of the notion of debt can occur because of the different lifestyle and different outlook, but in fact this difference may occur because of the age gap between them.

The research conducted by 2017 showed us the attitude of different generations to their debts and answered the question “which generation has the highest debt”.


What do people born between 1961 -1996 think of their credit card debt?

People who were born from 1961 to 1996 are usually divided into three generations: Generation Z, Generation Y and Generation X. The research found out that these people use their credit cards in comparison with the other generations less often. The study proved that people who belong to the Generation Z spend less money than the others. An average debt of this generation is about 630 dollars. The debt of the generation Y and X does not exceed 660 dollars.

Now many people from these generations leave their parents’ homes to buy their own. And this is the reason why their mortgage debt is the highest in comparison with other generations. It is more than 230 000 dollars.


What is the debt of Baby Boomers? (People who were born after WWII)

An average credit card debt of a Baby Boomer is about 700 dollars that is just a little bit higher than the debt of a person belonging to previous generation. Although, these people are in a very good financial shape, their mortgage debt cannot be called the lowest, it is about 190 000 dollars.

Such mortgage debt may be the cause why many Baby Boomers have no retirement savings. The research of 2016 showed that three people out of ten are not able to save money for the retirement.


The attitude of the Silent Generation to their card debt (from 65 and older)

Silent generation has the highest credit card debt among the other generations. Their average debt is around 730 dollars. And their mortgage debt is also surprisingly high: about 157 000 dollars.

The research of 2015, though, found out that this generation is the most responsible. It is said that 72 per cent of people who belong to this generation usually pay their debts each month.

But not many people pay their credit card debts each month. Many of them do not pay their debts off even in some months and wait until the sum they have to pay is “high enough”.

In the situation when you cannot manage to pay your card debt you have to follow some important tips:

  • Track down your money. If you have a constant credit card debt it is obvious that you spend more than you make and in this situation you have to find out what you actually spend your money for. Install a special app on your phone that would show you the list of things you buy or just write down them in your notebook. And then you will see what the reason of your excessive expenditures is.
  • Cut your expenses. The next step is to get rid of your expenses to free up more money for debt repayment.

People belonging to different generations are accustomed to different ways of spending their money. They have different attitudes to their debts and their repayment. But every generation should remember that it is important not to spend more than you can afford, more than you earn. Because in this situation you would not have to think of your debt and how to pay it off, and, also, you would be able to save some money “on a rainy day”.

Are Payday Loans Unreliable? The Same Question Again and Again.

Courtesy of Exoduslending.org
 

There are various ways to get some money when you are broke: to moonlight, to sell something, to borrow from your friends or to approach some special organizations such as loan organizations.

Loan organizations that provide people with money are mostly payday. This means that a person who borrows money from them should pay this sum back on the first payday; otherwise it would be increasing every following day according to the interest rate. Because of that many people reject taking such payday loans, but on the other hand it is a great opportunity when you need to get money immediately. Anyway before borrowing from any of such organizations we have to find out more information about them and look what is going on in this field of payday loans.
 


The recent news

Today almost everyone is aware of the trial of Scott Tucker and his attorney. Tucker is a race driver, a participant of the popular races such as Level 5 and Le Mans 24. Tucker and his attorney, Timothy Muir have been accused of racketeering, money-washing, and illegal debt collection.

It is said that there have been several lending organizations under Tucker’s control. And their mutual income for nine years (from 2003 to 2012) exceeded 2 billion dollars. It is claimed to be one of the largest criminal cases in the United States connected with the sphere of payday loans.

The investigation of Tucker’s case was conducted by Federal Trade Commission. It found out that the interest rates of the loans were concealed and the debt of a person who took 300 dollars could turn into 1000 dollars within a year. In fact interest rate could reach even 700 per cent.

Manhattan U.S. Attorney Preet Bharara also admitted that Tucker spent about 100 million dollars that he earned from these organizations on buying racing cars and a house and financing his team. In 2018, Scott Tucker was sentenced to more than 16 years in prison.
 


Is the situation so bad?

As in every business in loan business there are also people who act unfair, whose only aim is to earn money and as much as possible. Scott Tucker’s case is a good example. But it does not mean that every organization that provides such loans is bad and not worth to be trusted. There are organizations that would expect you to pay the sum clearly stated in the contract taking into account your prescribed interest rate and would not ask some extra money for nothing.

You may ask how to find such an organization. The answer is simple: just check. Before taking a loan, check the information about the organization that lends you. They should have Better Business Bureau accreditation. It is a non-profit organization that helps consumers to find out if they are dealing with reliable companies or not. If your company has such BBB accreditation it means that you can trust it. Also, the organization should have all the contact details including physical address, phone support or live chat.

In addition, before taking a loan try not to be lazy and search the internet for some reviews of the work of the organization. If many people are satisfied with its work, so it is a good sign.

The next thing you should do is to read your contract carefully and ask a consultant if something is not clear for you. Signing the contract you have to be sure that you fully understand its content, know the terms when you should pay and the sum of money that you have to pay back.

Payday loan is a very controversial issue. Many people have a negative attitude to it and they have their reasons for it. But sometimes people need to get some money immediately and payday loan can solve their problem. Anyway before borrowing from both the organization and people you should at first think if you really need it.

Christmas Loans?!

Courtesy of Getty Images

 

Christmas is coming, but you do not have enough money to buy presents for your friends and members of your family? Do not worry! There is a great way to get money! It is Christmas loans! Or, maybe it is not such a good way?

Almost everyone has been in this situation when you do not have money to buy presents that can make people you love happier. You do not know what to do. Then you see those advertisements of Christmas loans and you think it is a great idea to borrow some money, because only then you can afford buying good presents. But do not hurry to visit these organizations, at first you have to think what are advantages and disadvantages of such a loan.


What are Christmas Loans?

Christmas loans are the loans that are provided by special organizations at Christmas time. It is said that at this time interest rate is lower than usual. It means that borrowing money from one of these organizations you have to pay back less money than in any other season. You can take any sum you need. And then you will be able to buy some small presents or even take your family somewhere abroad. Moreover, you do not have to wait for credit verification to take a Christmas loan, and thus it does not matter what credit history you have. Sounds good, does not it? But do not hurry to take a loan. We have to understand what Christmas loans are.


Lower interest rate?

Usually such organizations that lend Christmas loans claim that their interest rate is extremely low. But is it so? Most of Christmas loans are payday loans. This means that if you do not pay back your loan fully on the first payday, the next day your debt become higher due to the interest rate you have.

All you should have to get such payday loan is your bank account and income. The organizations that lend you the money get access to your bank account and collect the money you have to pay back from there. If a person does not pay back the money, at the end they might have the debt which is much larger when the original sum they have borrowed.


Is your personal data safe?

Sometimes it happens that the organizations that offer you a loan do not do it in fact. They might just collect the information about the people who contact them, and then sell it to other lending organizations.

You might think that only one organization has your personal data, but unfortunately it can be transmitted to the third parties. That’s why sometimes you can receive a call from organizations that you do not know, but that wants to find out if need any money.


Check the organization you want to borrow from

If you want to take a Christmas loan, you have to be sure you can trust the organization that provides such loans. At first, you have to check the contact information of this organization. Its website should have all the contact details. Also, the information on the website should be grammatically correct and have no spelling mistakes; otherwise it is obvious that this site exists only to make this organization look more substantial.

Christmas loan might seem a very good way of getting money for people who are broke. But if you have decided to take such loan, you have to be 100% sure that organization that gives you a loan is reliable and does not offer payday loans.

And to be sure in it, you have to check all the information about this organization beforehand and understand if you are able to pay back the money or not. You have to decide yourself if you need to take a Christmas Loan or not, but before doing it you should also ask yourself “Is it really the best option”?

Another Way to Make It till the Next Paycheck?

Courtesy of Even.com

 

Meet Even“the bank app that plans, so you don’t have to.”

According to its developers and founders this platform is a new hope for the majority of people who live from paycheck to paycheck.

To think about it, their target audience is really huge – according to the data about 70% of Americans actually live like this.


The Goals

The idea behind the application is to provide people with the access to their honestly earned cash at the time when they actually need it, not just at fixed salary dates.

The company’s CEO Jon Schlossberg explained why it is important – the app gives more freedom as well as saves from forced and frequently unfavorable financial decisions.

When you have to count days till your paycheck, and you need money now (for any emergency expense), you are more likely to resort to literary any option, high-interest loans and pawn shop services included. Late fees are a common story and overdrafts are a nightmare. These are the consequences of low income, for sure, also mismanagement, undoubtedly; but it is also the problem of a paycheck-to-paycheck living situation.

Thus, Even is meant to deal with that. The platform can serve both workers – on fixed salary and hourly-paid. It will allow receiving at least half of the paycheck as soon as this amount is earned – once a pay period.


What Is It?

Even is a finance management tool. It has been developed with the assistance of the Stanford University researchers and the Consumer Financial Protection Bureau (CFPB) and is specifically meant to help people to deal with their earnings wiser.

The app teaches to plan and stick to the limits – one can only have one pay advance in a pay period. It doesn’t seem to help when more frequent payments are allowed – not from the point of view of financial situation improvement and wiser decision-making. Too frequent payments are able to make the situation worse.

Only half of the earned amount is accessible at a pay period. Which is usually quite enough since diapers and school supplies (that often cost no more than $50) are most common things that cause a problem (according to the research data.) Such small cash injections form the future earnings represent much safer and less riskier option than applying for cash advances from third parties (where you are bound to repay with interest included.)

Right now Even does not provide opportunities for large money injections as it goes against this product’s main purpose – to solve financial issues (allowing large withdrawals at any time is unlikely to improve anyone’s situation.)

It may seem strange to introduce such a clever tool and set it up with very strong limitations; however, there is a lot of sense in making people learn more about their money, how they actually spend, and how they can plan better, if they want to.


The Idea

The idea is to teach – and also to demonstrate not just Instapay‘s potential but how all such services in general and the ones of Even’s in particular can make a difference to a person’s financial situation.

Pretty often people who live from paycheck to paycheck don’t really have time to realize how their money come and go: by the time they get their salary, the list of expenses is too huge, too may items to cover – very little is left, again. Getting information about the cash flow is a key to change some habits, a key to better financial management.

Even is a complicated tool – it took developers three years to create it. Now it allows a user to connect their bank account to the app and have all the income and expense information processed. They get individual recommendation on personal finance management – which sounds really promising.


Will It Work?

The idea is great, especially if you take the number of people they strive to help. However, as in any startup, there are still many issues to resolve.

One of the next goals is the provision of larger pay advances (>50% of a paycheck.) And by the description of it, these larger advance option might be a good alternative to payday loans. At least, the company’s CEO hopes, it will be a better option.

The company also plans to provide its users with an easier access to both automated budgeting tools and Instapay in combination and they hope to achieve even better results.

At the present moment Even is being tested by a great number of Walmart workers, and it is expected that many more will sign up and use it in the nearest future, so, we are likely to see some feedback and results pretty soon.

Last Year Results: Every 6th Utah Payday Loan Store Got out of Business

Courtesy of Utahtitleloansinc.com / Google Image © 2017 Google.com

 

In accordance with the new state report 1 out of every 6 Utah payday loan stores closed for the period of the last year. It seems that recent changes in legislation were not introduced in vain – borrowers started using other options.

However, payday lenders had to counteract as well, and they did – they raised loan APR to nearly 485 %, which is almost twice as much as the Mafia lenders of the 60s used to charge for their loans. And that’s saying something.

One more interesting thing the report shows is that all the more Utah borrowers are unable to repay their debts even at the end of the 10th week (a maximum-allowed roll-over period in Utah.)


Closing Facts

Thus, now Utah has got 462 stores instead of 553. Though, some stores disappear, many others stay and refuse to lose their ground – not even fast food chain stores combined can overcome them in numbers.

There are 50 payday lending companies in Utah and about 32 online ones. Add 61 car title firms, and you get the picture – high interest loans industry feels pretty comfortable here.


Interest Rates

What about the rates? The report states that those have grown as well. APR for the previous year equaled 459.14%, now it is 484.74%. That’s impressive. Some of the companies even managed to charge 1,407.86% APR for a one-hundred dollar loan per week. Quite impressive.


Endless Debt Circle?

Payday loans are notorious and represent the subject of heated debates all over the country; and Utah is no exception. Here the situation is peculiar because payday lenders can actually charge such high interest loans. And they do.

The thing is that (as it has already been mentioned) borrowers fail to repay the loans and get into debt traps as a consequence – only 45,114 loans taken were not repaid even after a 10-week rollover period. The previous year was no better – 43,564 but, still, the number has grown.The report shows that more people get into a difficult financial situation by using small-cash high-interest loans (even if this option is sometimes more affordable and far more convenient than a credit card loan.)


Measures Taken

Well, what has already been done? There have been several legislative attempts to help borrowers as well as to bring more order to this industry regulation. Two years ago an extended payment plan (in writing) was introduced as a compulsory requirement for each loan default case.

One more law allows quick loan cancellation at no cost in cases when a borrower changes their mind fast. The report states that is resulted in 3,819 cancelled loans this year and 2,332 in the previous year.


Measures to be taken (more?)

This spring new law took effect – it prohibits taking new loans before the old ones are repaid. So, the present report only shows the data for a small period of time; however, it seems to be working – people do as they are told. But not everyone, of course.

Surely, it’s a good trend that new regulations appear and they are aimed to protect Utah citizens in the first place. However, some more laws would be nice, some policymakers think, and, perhaps, they are right. After all, interest caps proved to be a good thing for many neighboring states.

The new Consumer Financial Protection Bureau rule that is to take effect in 2019 will require payday lenders to check the solvency of their customers as well as their ability to cover basic expenses before issuing a loan. Plus, it will limit the number of successive loans to 3. As we have already written, it is hard to predict whether the new rule will actually see the light as it has already gained a number of opponents in the present Cabinet and in the Congress.

Google Payday Loan Algorithm and Its Updates

Courtesy of Carlos Muza / unsplash.com

 

Why is it that Google named its 2013 algorithm update so peculiarly – Payday Loan Update – and how it affected various websites, payday loan ones including? Here are some facts.


The Payday Loan Update was one of the major and also pretty much significant updates that Google initiated. Its target was various spammy queries associated with such notorious industry sectors as porn and expensive payday loans (hence the name). As a result, about 0.3% of super spammed queries were affected.


Some History

  • Payday Loan Update (2013) – The first one, it was aimed at payday loan and porn industry and other sectors with heavy amounts of spammed queries. The update got huge reaction.
  • Payday Loan 2.0 (2014) – Google updated the payday loan algorithm to target spammy sites.
  • Payday Loan 3.0 (2014) – Came out less than 30 days after the previous one, this Google anti-spam algorithm update actually had all the spammy queries targeted.

Thus, in the result both spammy queries and spammy sites were affected by the Payday Loan updates.


Three Examples of Websites Affected by the Payday Loan Update (that are interesting from the SEO point of view)

There are many case studies of the sort, here are just three to start with. Their examples are quite informative; and they also provide us with better understanding of how Google updates generally work (how to fall into disfavor, how to recover, or not to lose your search engine position in the first place) and what useful lessons can be drawn from such experience (especially for the industry players.)

Link Research Tools case study by Bartosz Góralewicz concerns the British website Cashlady, and it is a very interesting text that deals with spammy links and Google manual penalty as well as possible ways to lift it.

TrenchWorthy case study by Josh Sturgeon offers all types of examples: paid backlinks, guest (sponsored) posting, even hacking as a way of getting a new link. It also focuses on blog comments which are spammy but still capable of making it through the Google’s filter. It is an interesting case study, worth reading.

Moz case study by Steven Macdonald concerns the British website Peachy.co.uk and describes how it ended up with an 81% organic traffic loss after Google Payday Loan Update. It might be interesting to see how one website managed to use almost all the unhealthy linking techniques in order to get good rankings and search engine position. They had to made a huge effort to recover – deal with their links as well as content and usability. The decision to shift their content focus to education is also a fascinating one (and is pretty much popular and successful technique nowadays.)


Google Payday Loan Adwords Ban

However, Google didn’t stop there and introduced another restrictive measure – this time it targeted the AdWords sector. All payday loans or similar ads were to be banned. This was in 2016, and a year later Google doesn’t seem to change its mind no matter how liberally-oriented AdWords placement initially was meant, no discrimination intended.


Lessons to Learn

So, what were all those steps supposed to teach industry-related businesses?

Well, in order to be good, comply with the Google’s Webmaster Guidelines and do your best improving your search rankings by using white hat methods, not scammy ones. That’s what serious reliable businesses do, they don’t resort to manipulation, and they are also aware that it’s quite easy to get caught now – Google is much more fastidious and it reacts very fast.

That’s what some payday loan websites and their affiliates should start doing, too – using only clear well-thought SEO strategies; the industry is notorious enough to be called predatory and not to be trusted in the first place.

What to expect in the future? Will there be any more restrictive actions from Google that would deliberately concern payday loan industry and websites? It’s hard to tell. Policymakers are presently trying to figure out which side will win and whether the recently drawn CFPB payday loan rule will actually come into effect in 2018. If it does, perhaps, we will see Payday Loan 4.0 Update in the nearest future.