Not All Companies Are Viewed as Equal – The Payday Loan Industry
For this assignment, I have chosen the payday loan industry. I will be advocating for the consumers. The following are the main reasons why I support the consumer. First, payday loans target consumers of low income and fail to evaluate the ability of the borrowers to repay the loan. Besides, the lenders do not inquire beyond borrowers’ ID, employment proof, and payment method. The above allows borrowers with low credit or extensive monetary challenges to be approved and loan amounts they cannot realistically pay back.
Secondly, payday loans employ unethical methods to charge unbelievable fees. Some lenders give 100% or more APR loans in countries with 36% or fewer limits by laundering the loans via out-of-state institutions, which is not under the country’s interest rate limits (1). The above is known as a rent-a-bank scheme. In addition, although they know the check is wrong, the lenders allow people to write post-dated reviews for a loan to be repaid in a considerably short period. This causes a borrower to repay the total amount, which usually they cannot, or to re-write the check and repay the loan interests only, resulting in a cycle of dependency.
Finally, there are abusive debt collection techniques. Debt collection is a part of every type of loan. However, in most cases, payday lenders use collection strategies that are unethically unfavourable to the borrowers. The techniques mentioned above contradict the very objective of payday lending, which is to assist borrowers in solving temporary monetary issues (2). The primary unethical collection techniques include taking first-pass at a borrower’s paycheck before the other bills and authorizing huge-sum repayment.
The company cannot cater to both its interests and its consumers concurrently. The organization’s interest will always come first, and it cannot profit if it puts the customers first. Secondly, the company requires the customers to repeatedly roll over their loans to sustain its profits (1). Lastly, the company sets up consumers for failure that is counterproductive to the argument that they offer relief from temporary problems.
Sources
Gathergood, J., Guttman-Kenney, B., & Hunt, S. (2019). How do payday loans affect borrowers? Evidence from the UK market. The Review of Financial Studies, 32(2), 496-523.
Skiba, P. M., & Tobacman, J. (2019). Do payday loans cause bankruptcy? The Journal of Law and Economics, 62(3), 485-519.
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Question 
The Payday Loan Industry
Overview
In the land of free trade, the public does not view all industries as equal. Do you believe that is ethical? Do you believe that some industries are unfairly targeted? Should it be consumers’ choice to partake in products that are not healthy for them, or do those companies have an ethical obligation to protect people?
Preparation
Download and review the Week 6 Assignment Template [DOCX]. Use it to assist you with the assignment.
Choose one of the following industries to frame your paper:
The pharmaceutical industry.
The payday loan industry.
Cloning for medical purposes.
Instructions
Write a paper in which you:
Describe the background of the industry and its customer base for which you are framing your argument.
Prepare a sound argument that explains the major reasons you support the industry or the customer with strong supporting evidence.
Justify your beliefs on whether it is possible for a company to simultaneously cater to both its best interest and that of the consumer, or if one always must prevail.
Use at least two quality references. Note: Wikipedia and similar Websites do not qualify as academic resources.
This course requires the use of Strayer Writing Standards. For assistance and information, please refer to the Strayer Writing Standards link in the left-hand menu of your course. Check with your professor for any additional instructions.
The specific course learning outcome associated with this assignment is:
Determine the ethical considerations for balancing corporate and social responsibilities.