Payday loans no credit check richmond va - Humboldt

Online commerce, once a luxury, is now central to people’s lives. The Internet is more than just a convenient place to shop for electronics or to book a vacation. Increasingly, it’s also where people go to find a loan, evaluate college degree programs, and seek financial advice. In order to ensure that vulnerable consumers are appropriately protected, consumer and civil rights advocates, regulators, journalists, and others need to understand the realities of new online marketplaces.,Lead generation is the business of selling leads — pieces of evidence that a consumer is interested in a product or service.

Businesses have long relied upon leads to find new customers. However, the Internet ushered in sophisticated new lead generation practices, including highly-targeted online advertisements and automated, real-time auction houses for consumer data. These powerful techniques deserve special scrutiny when they are employed to promote potentially exploitative goods and services, such as payday loans and costly for-profit degree programs.,These lead generators are central to the market for online payday loans.

Payday loans — small-dollar, short-term credit products with very high interest rates — are harmful to most borrowers’ financial health, and they are illegal or restricted in many states. Some states even restrict solicitations for payday loans. Nevertheless, today, payday lead generators pursue borrowers across the United States. They gather sensitive financial information from vulnerable and often desperate consumers.
They can sell this information widely: not only to payday lenders, but also to peddlers of other fringe financial products and sometimes (wittingly or not) to outright thieves.,Some states have sued payday lead generators, alleging violation of their laws. Federal regulators have uncovered large-scale fraud operations fueled by payday leads.

Nevertheless, payday lead generators continue to target consumers across the web, even consumers who reside in states where payday lending is illegal.,Lead generators do not operate in a vacuum. They rely extensively on online advertising platforms and commercial data providers. These partnerships allow them to target their desired audience, including, for example, by restricting the geographic scope of their ads. Nonetheless, payday lead generators advertise payday loans nationwide.,In the pages that follow, we explain how online lead generation works, describe the risks and legal complexities specific to lead generation for online payday loans, document the widespread use of search ads by payday lead generators, and recommend interventions.,In preparing this report, we spoke with payday lead generation firms, major online advertising platforms, consumer and civil rights advocates, and federal and state regulators.
We reviewed company policies, industry white papers, research reports, and a variety of publicly-available forums and Internet relay chat (IRC) channels. We also ran tests to learn how online payday lead generators are using search engine ads to target consumers online.,Leads are often sold to businesses offering suspect products and services.5 For example, lead generators played a central role in the mortgage crisis, connecting consumers with predatory lenders.6 Today, major lead markets include online payday loans, for-profit education, and various debt-relief products: Online payday lenders rely on lead generators to supply as many as 75 percent of their borrowers,7 the already-sizable market for educational leads is poised for further growth,8 and the Consumer Financial Protection Bureau (CFPB) recently reported a spike in student debt relief marketers targeting distressed borrowers online.9,Lead generators can be gateways to fraud and abuse.

For example, more than one-third of online payday borrowers interviewed by Pew claimed that their personal financial information was sold without their knowledge, and many had to close their bank accounts in order to stop unauthorized withdrawals.10 Consumers can unknowingly trigger a barrage of high-pressure phone calls just by sharing their contact information through a web form. In an undercover investigation, the Government Accountability Office (GAO) reported that one “student” received 182 phone calls within a month of giving personal information to for-profit education lead generation websites.11,Lead generators come in many different shapes and sizes, and they are highly dependant upon a broader online marketing ecosystem.
There are many specialized, brand-name lead generators that focus on particular markets (such as payday loans and mortgages). However, there are also many small, amateur lead generators, known as “affiliates,” that gather leads and sell them to larger, more established lead generation firms. Many lead generators rely extensively on online advertising platforms, which allow them to reach consumers as they search the web, share on social media, or read the news.

These marketing companies work in concert, creating complex layers of sales and commissions.,The following is an illustration of what a consumer might encounter when she seeks a loan online:,Becky opens her laptop and types “need money to pay bills” into a search engine. An advertisement next to the search results catches her eye: “Fast Cash! $100-$1000!
Approved in 2 minutes, direct to your bank. Bad credit OK!” Becky clicks on the ad and lands on the website of SpeedyLoans. The site features a picture of a smiling couple and the assurance that “sometimes everyone needs help making it to their next payday.” Becky enters her name, email address, and zip code, and clicks the “Get Cash!” button. She is greeted by a second form, which asks more information, including for her bank account numbers.

After entering this data, Becky is redirected to another website, LenderCo, where she agrees to loan terms. The next day, LenderCo deposits $500 into Becky’s bank account.,In the weeks following, Becky is unable to repay the full amount of the loan.
She repeatedly pays fee after fee to push the due date forward. Three months later, by the time she pays off the loan, Becky’s has repaid $1,200 — $700 in interest and fees on top of the $500 amount she initially borrowed.,In the meantime, Becky begins receiving unsolicited phone calls and text messages. She is offered new loans, “debt relief” services, and expensive online classes.

Becky asks to be taken off these callers’ lists, but is unable to stop the calls completely.,This story, though fictional, mirrors the experience of thousands of American consumers who deal with online payday lead generators. Becky suffered through several problems: the $700 she paid in interest and fees to cover a smaller loan, unsolicited calls from other businesses who targeted her financial vulnerability, and she may be at risk of fraudulent withdrawals from her bank account. All this occurred despite that fact that that Becky’s home state, Pennsylvania, has some of the strongest usury laws in the nation and has worked hard to keep payday lenders and lead generators from targeting its residents.,Becky’s initial click on the search engine ad triggered a complex set of transactions: First, SpeedyLoans owed the search engine $10.
SpeedyLoans, an affiliate website run by self-employed marketer, collected Becky’s loan application data and sold it to a company Becky never saw, called “Lightning Leads,” for $75. Lightning Leads resold Becky’s data through an instant auction to its network of lenders.

The winning bidder in that auction was a lender called LenderCo, LenderCo paid $150 to have Becky redirected to its website. But LenderCo wasn’t the only buyer of Becky’s information: both SpeedyLoans and Lightning Leads continued to sell her data to other businesses (at much lower prices), leading to the unsolicited phone calls.,For many leads, the story does not end after the race for initial contact.
Some lead generators will retain aged leads for sale at continually-dwindling prices.

Old leads are often compiled into marketing lists and resold for year to come. For example, one publicly-available list purports to contain Hispanic mortgage holders who are good targets for payday loans.62 “[D]ebt is also on the rise for Hispanic families,” claims the listing. “You can target known mortgage holders needing cash to pay their bills.” These marketing lists can be used to target a new set of online ads, starting the lead generation cycle all over again.,The lead generation process described above is central to the market for online payday loans. Online payday lenders rely extensively on lead generators to attract customers.63 Payday leads are expensive, a fact that ripples across the online marketing ecosystem.64 At the outset, affiliates can pay more than $10 per click to display ads alongside Google search terms like “payday loans.”65 These clicks might result in payday leads, which can sold for as much as $200 at auction to other lead generators and online payday lenders, and then resold to other buyers.,This section first explains that online payday loans are often worse for consumers than their storefront counterparts: They are associated with higher fees, longer-term indebtedness, higher rates of borrower abuse, and startling rates of fraud.66 Next, we explore the diverse backdrop of state lending laws.
Finally, we show that generators help lenders skirt state laws by advertising payday loans nationwide, including to consumers in states where payday lending is illegal.,Payday loans are small-dollar, short-term credit products with high interest rates. A longstanding body of research shows that payday loans are harmful to most borrowers’ financial health.67 67 Payday loans are seldom short-term solutions: more than 80 percent of payday loans are rolled over or renewed within two weeks, and the average payday loan borrower is indebted to a payday lender for five months per year.68 Most borrowers end up renewing their loans so many times that they pay more in fees than the amount of money they originally borrowed.69 A 2006 Department of Defense study found that payday loans and other “[p]redatory lending undermines military readiness, harms the morale of troops and their families, and adds to the cost of fielding an all volunteer fighting force,” prompting Congress to legislate to protect members of the armed forces fro high-interest loans.70,Payday borrowers disproportionately come from poor and minority communities.

The groups with the highest odds of having used a payday loan include “those without a four-year college degree, home renters, African Americans, those earning below $40,000 annually, and those who are separated or divorced,” reports Pew.71 Of these characteristics, being African American is the single strongest predictor: African Americans are 105 percent more likely to use a payday loan than other ethnic groups.72,Online payday loans appear to account for a meaningful portion of the payday market, and they are often riskier than their offline counterparts.73 90 percent of Better Business Bureau complaints about payday lenders relate to online, not storefront, lenders.74 They are associated with higher fees and longer term indebtedness.75 They often come with complex terms and repayment structures and can be especially confusing for consumers.76 And online borrowers report high rates of abusive phone calls.77,Online payday loans can also be a gateway to fraud.
Because online lenders typically rely on electronic access to borrowers’ bank accounts (as opposed to a postdated check), payday lead generators almost invariably collect consumers’ bank account information. This data is sometimes shared recklessly.

Almost a third of online payday borrowers surveyed by Pew reported that their personal or financial data was sold without their consent.78 Nearly as many reported unauthorized bank withdrawals in connection with an online payday loan.79,Federal regulators have repeatedly discovered payday lead generators at the center of sweeping financial fraud operations. In 2014, the Federal Trade Commission (FTC) sued LeapLab, a company that “collected hundreds of thousands of consumer payday loan applications” from lead generators, and then “used [the leads] to make millions of dollars in unauthorized debits and charges.”80 The same year, it also sued CWB Services LLC, which made unauthorized withdrawals from consumers’ bank accounts using data purchased from lead generators.”81 In 2015, it sued Sequoia One, LLC and Gen X Marketing, two companies who purchased (or collected) payday loan leads from lead generators and sold those leads to non-lenders who fraudulently withdrew funds from consumers’ bank accounts.82 Similarly, the CFPB sued Hydra Group, which made repeated unauthorized withdrawals from consumers’ bank accounts using data purchased from lead generators.83,Our own survey of payday lead generation websites revealed alarmingly weak privacy policies.84 For example, Money Mutual reserves a virtually unlimited right to “share, rent, sell or otherwise disclose” leads to other businesses and also reserves the right to contact users in any way, “even if [their] number is found on a do-not-call registry or similar registry.85 Another company contemplates selling consumers’ data to a wide array of non-lenders, including “financial service providers, such as mortgage and life insurance agencies, title service companies, debt credit services companies, and auto-finance companies.”86 For entities entrusted with consumers’ sensitive financial details, these are incredibly permissive policies.,We also observed some Internet forums and chat rooms that were rife with evidence of misbehavior by lead generators, especially by smaller affiliates.87 We saw affiliates sharing tips for monetizing “unqualified leads” — leads that the major lead generators don’t want to buy.
One forum poster advised that new affiliates should “[find] lead buyers willing to take a chance on a ‘warm body’ with a high accept rate for somewhere in the $0.50 - $2.50 range.”88 Another reported that they were passing unqualified leads on to debt consolidation and credit monitoring companies. It was common to see affiliates selling “legacy” payday leads (leads that had already been sold to lenders) at a steep discounts, and in large quantities.,Many states restrict payday lending.
According to a Pew study of state laws, payday lending is limited in twenty-four states — it is somewhat restricted in nine and severely restricted in fifteen.89 Approximately 70 percent of online payday lenders fail to obtain a required license in one or more of the states in which they make loans, resorting to offshore incorporation, sovereign nation partnerships, or arguments that the less restrictive laws of the lender’s home state should apply.90 A growing number of legal judgments weigh against online lenders who disregard state usury laws.91 91 These jurisdictional strategies put online lenders on “increasingly tenuous legal ground,” says Nick Bourke of Pew.92 Similarly, New York’s Department of Financial Services (DFS) claims that “Internet payday lending is just as unlawful as payday lending made in person in New York.”93,In addition to regulating lenders themselves, a growing number of states appear to require that payday lead generators also be licensed and comply with usury laws.94 94 For example, Pennsylvania requires that anyone who “hold[s] himself out as willing or able to arrange for” certain loans be licensed.95 Citing this provision, a Pennsylvania regulator prevailed in obtaining a commitment from MoneyMutual, a prominent payday lead generator, to stop accepting applications from and targeting advertisements toward Pennsylvania residents.96,Some states have also pursued payday lead generators under more general purpose laws.

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For example, New York’s Department of Financial Services (DFS) sued MoneyMutual under a state law that prohibits fraud and misrepresentation associated with financial products.97 DFS alleged that Money Mutual lied to consumers by claiming that loans provided by its network were suitable for “emergency, one-time, affordable and efficient use,” when in fact those loans “contained terms that often led consumers to roll over their debt and obtain additional high-interest loans to pay off their prior loans.”98,Other states have gone tried stop online payday lenders and lead generators that target their residents with ads.
Most prominently, Vermont, as part of a larger operation against illegal online payday lending, requested that several major online advertising platforms — including Google and Microsoft — disable advertising for unlicensed lenders that they had identified in violation of state law.99 Google and Microsoft agreed, and prohibited a number lenders from advertising.100 Vermont launched list of “Unlicensed Lenders,” in cooperation with several other states.101 However, some entities in the “Unlicensed Lenders” list continue to advertise on major platforms, despite a state claim of non-compliance.102 And, as we explain below, many payday lead generators continue to target ads to Vermont residents, and residents of other states where payday lending is illegal.,In a series of tests, we saw payday lead generators targeting ads to, and solicit sensitive financial information from, consumers nationwide. In many cases, these lead generators were violating company policies and state laws.,Payday ads that appeared on Google and Bing searches originating from a Pennsylvania IP address. (Pennsylvania strictly regulates both payday lending and payday lead generation.),To test how payday lead generators were using major ad platforms to advertise, we ran a series search queries on Google and Bing (including, for example, “payday loan,” “need a loan fast,” and “need money to pay rent”) from internet protocol (IP) addresses originating in states with strong payday lending laws (including Pennsylvania, New York, and Vermont).

In each jurisdiction, we saw many payday loan ads commissioned by lead generators.,We clicked on many of these ads, and entered test data into these lead generators’ landing pages — including address information consistent with the apparent jurisdiction of the initial search and test bank account data.
The lead generators almost always collected this test data, failing to filter their form submission processes. Some even claimed that they had matched our test data with lenders.
And one falsely reported that Pennsylvania “permits payday lenders to operate and charge any interest rate or fees which the borrower agrees to pay.”103,Nearly every ad that we saw during this testing came from a lead generator, not a lender. This was not surprising. Even payday affiliates themselves might not have direct contact with online lenders. “[Y]ou can’t find 90% of these lenders.

Most want to be secretive, most use [‘doing business as’ names] that are different then the real name and do not provide contact info anywhere on the internet,” observed one payday affiliate on a message board.104 And as described above, leads can travel through multiple entities — from one lead generator to the next — before they are purchased by lenders.,Our testing had limits. We did not submit valid bank account information to the lead generators, and thus we did not formally complete a loan application process.
Nonetheless, the testing that we were able to complete strongly suggests that lead generators (and the lenders that they serve) continue to operate in states where payday lending is illegal.,We began by conducting searches for “payday lead generation tips,” and studied a variety of resources referenced in publicly-accessible forums.,Courts have not looked favorably upon online lenders who attempt to avoid state usury laws or regulations by employing choice-of-law provisions in payday loan contracts.

See, e.g., Jackson v. Payday Financial, LLC, where the Northern District Court of Illinois (East Division), upon remand from the Court of Appeals for the Seventh Circuit, found an online lender’s tribal choice-of-law provision unenforceable because the lender’s underlying business activity was contrary to Illinois’ public policy against usury. Accordingly, the online lender could not avoid potential liability under Illinois’ usury laws., Otoe-Missouria Tribe of Indians, et al., v. New York Department of Financial Services, where the United States District Court for the Southern District of New York held that the New York Department of Financial Services could regulate the activities of sovereign tribal nations offering online payday loan services, even if the lenders claimed sovereign immunity, because the tribe’s online payday lending constituted regulable off-reservation activity., Quik Payday, Inc. v. Stork, where the court found “[t]he discrete nature of the regulated transactions make the internet payday loan industry similar to the insurance industry or any other industry in which a company must tailor its business to conform to the laws of its customer’s state of residence.” (emphasis added)., Bankwest, Inc. et al., v. Oxendine, where the Court of Appeals of Georgia found that “parties to a private contract who admittedly make loans to George residents cannot, by virtue of a choice of law provision, exempt themselves from investigation for potential violations of Georgia’s usury laws.” Federal regulators have also found certain acts by unlicensed online payday lenders in violation of a state’s usury laws to be unfair, deceptive, and/or abusive.
See, e.g., Consumer Financial Protection Bureau v. CashCall, Inc., where the CFPB alleged that because payday loans made by unlicensed lenders in contravention of state usury laws limited or voided consumers’ obligation to repay, online lenders’ “servicing, extracting payments for, and collecting” on those loans constituted an unfair practice not reasonably avoidable by the consumer. Though the CFPB did not argue that unlicensed payday lending in contravention of state usury law is de jure an unfair, deceptive, or abusive act or practice, the CFPB’s pleadings in CashCall establish a de facto regulatory regime where unlicensed payday lending in contravention of state law could be subject to UDAAP liability, as “servicing, extracting payments for, and collecting,” are core functions of an online payday lender.,Options for ad platforms, payday lead generators, and regulators,Payday lead generators expose consumers to two types of risk: First, they connect consumers with an especially hazardous breed of payday loan. Second, they can share consumers’ sensitive financial data widely, increasing the chance that it will fall into the hands of bad actors. These risks fall disproportionately on poor and minority communities.

Today, payday lead generators are using ad platforms like Google and Bing to show payday loan ads nationwide, even in states that outlaw both payday lending and payday lead generation.,Stronger federal and state restrictions on payday lending are likely to help solve these problems.
The CFPB is considering a nationwide rule that would require payday lenders to take steps to ensure that borrowers can repay loans.105 And state lawmakers will continue to consider whether their laws appropriately protect their residents (to date, approximately twenty-four states have some limits on payday lending, as reported by the Pew Charitable Trusts).106 New rules on the federal and state level will not only help to limit irresponsible lending, but also narrow the demand for payday leads.,However, in the short term, it will fall to ad platforms, lead generators, trade groups, and state and federal regulators to protect consumers from harmful payday lead generation practices. Today, there is no overarching federal law that governs the collection and sale of personal data by commercial actors.107,Below, we describe three areas of intervention. First, Google, Bing, and similar online ad platforms have an opportunity to adopt a more practical and effective approach to regulating payday loan ads.
Second, lead generators and their trade groups could develop stronger best practices to limit dissemination of sensitive consumer data, and clarify where payday lead generators should operate. Third, federal regulators, including the CFPB and the FTC, could exercise additional oversight over lead generators and their affiliates.,Google, Bing, and similar online ad platforms have an opportunity to adopt a more practical and effective approach to regulating payday loan ads.

These companies already have relevant policies with good aspirations: For example, both Google and Bing require that advertisers comply with applicable laws. But, in practice, these policies are hard to enforce effectively. Payday lead generators are currently taking advantage of this enforcement gap.,Below, we present several different approaches that major online ad platforms could take to payday loans ads.
We urge ad platforms to engage with other stakeholders — including civil rights and financial advocates — in considering these choices. We begin by describing the wide range of circumstances in which online ad platforms have adopted voluntary policies that protect their users.
We then explain that major advertising platforms have technical tools to identify and label different types of ads in an effective and automated fashion.

We also explain that platforms can automatically restrict how ads are shown, for example, based on location. We conclude that new approaches to policy and oversight by ad platforms could have a positive impact on consumers and help states more effectively enforce their laws.,Today, online ad platforms have a range of policies regarding ads for payday loans. Facebook, for example, recently decided to flatly prohibit ads for “[p]ayday loans, paycheck advances or any other short-term loan intended to cover someone’s expenses until their next payday,” a policy it adopted in August of 2015.108 (Previously, Facebook required that any such ads be authorized by the company.109) Microsoft and Twitter prohibit the advertisement of illegal products or services,110 but neither appear to have restrictions specific to payday loan ads.111,Google currently has two sets of payday loan-specific ad policies. The first requires that payday loan advertisers provide certain disclosures on their websites, such as a physical address and information about interest rates.112 It also requires advertisers to comply with state and local regulations.113 However, we observed many payday lead generators advertising on Google in violation of this policy, either by neglecting to include the necessary disclosures, or by serving their advertisements into geographic markets where it is illegal for lead generators to operate.

Google’s second policy states that, for ads tied to a search, Google will “will only serve payday loan ads if the phrase ‘payday loan’ (or similar terms) are included in the user’s query,” and that for ads the company places on other web sites, payday loan ads “will be shown only on sites related to payday loans.”114 Here again, however, there is an enforcement gap. We saw payday loan ads appear in response to searches that do not use a term similar to “payday loan” including, for example, a search for “i need money to pay my rent.”,Major online ad platforms have a suite of powerful technologies at their disposal. They can control when, where, and in what context each ad is displayed.
On the one hand, these abilities are precisely what makes online advertising attractive to many marketers, including payday loan advertisers. On the other hand, ad platforms can use these capabilities to better enforce their policies.,These many policies and technical capabilities point to a range of options for restricting online ads for payday loans. These approaches vary significantly in their costs, efficiencies, and effects.

Ad platforms like Google and Bing could:,Under this approach, enforcement falls primarily to advertisers themselves, and to state enforcement agencies.
Unfortunately, payday advertisers have shown a willingness to disregard platform policies. State enforcers are not equipped to efficiently deal with an ever-shifting array of payday ads: they have no efficient, automated way of flagging ads for review by an ad platform. Moreover, they must divide their time between dealing with online ads, and payday lenders and lead generators themselves.,The result is widespread violation of both the letter and spirit of ad platform policies by payday lead generators.
Consumers see ads for payday loans nationwide, even consumers residing in states with protective lending laws.

These ads are doorways to debt traps and fraud.,Ad platforms could take a similar approach to payday ads by, for example, requiring that advertisers to demonstrate compliance with state licensure requirements, including requirements for loan arrangers, before targeting any ads in states that require such licensure. Such an approach could be highly effective at preventing payday lending activities that violate state law. However, this approach would likely come at a significant cost, requiring the ad platform to create a human review team, or outsource review to another entity.,Ad platforms could automatically prevent the delivery of payday loan ads into the 24 “restrictive” and “hybrid” states, or merely prevent delivery of such ads into the 15 “restrictive” states.
In either case, the ad platform would protect many consumers from seeing ads for potentially harmful loans that their states have chosen to prohibit.

These policies would, to varying extents, curtail some activity that is clearly or arguably lawful. (Ad platforms have repeatedly made such judgments before, in a variety of other contexts.) The ad platform applying such a policy would also lose revenue that it might otherwise earn from showing newly-restricted payday loan ads.,The challenge of dealing with ads for fringe financial products is still evolving, as evidenced by the fact that Facebook only recently revisited its own payday ad policies. Google, Bing, and other platforms have an opportunity to consider new approaches themselves. We urge ad platforms to engage with other stakeholders — including civil rights and financial advocates — in considering their options. In our view, meaningful new limits on payday loan ads are feasible, and are consistent with the values already reflected in the policies of major online advertising platforms.,Large payday lead generators could make and enforce stronger commitments to limit the sharing and use of consumers’ data.

Today, the Online Lenders Alliance (OLA) maintains the most visible set of best practices for the entire online payday ecosystem, including payday lead generators.134 These guidelines have some strengths, such as barring false or misleading statements and requiring certain disclosures.,Further, although the OLA requires companies to comply with federal and state laws to qualify for membership,136 it has not issued best practices clarifying when payday lead generators should, if ever, market payday loans in states where such loans are severely restricted or prohibited.,The FTC and the CFPB could exercise direct oversight over large lead generation companies. Both regulators have already sued fraudsters empowered by payday leads.
However, these enforcement actions might demonstrate a need for closer attention to the payday lead generation industry’s handling of sensitive financial data more broadly.,The FTC has a broad and flexible grant of authority to police “unfair or deceptive acts or practices in or affecting commerce.”137 The Commission has already pursued lead generators and their affiliates for misrepresentations.

In the future, it could consider using its authority to prevent widespread sale of sensitive data without reasonable safeguards.138 In its complaint against LeapLab, the Commission alleged that the unfettered sale of payday loan applications to non-lender third parties was an unfair practice when those purchasers actually resulted in fraud.139 However, in other contexts, the Commission has alleged that “failure to employ reasonable and appropriate security measures to protect consumers’ personal information” is itself an unfair practice (even when that personal information does not include sensitive financial data).140 Looking ahead, the Commission could consider when the widespread sale of sensitive leads triggers a similar standard, even if the lead generator did not have advance knowledge of a buyer’s intent to commit fraud.,Payday lead generators promote risky online payday loans, help lenders skirt state laws, and can expose consumers to fraud.
Today, payday lead generators are targeting consumers across the web, even consumers who reside in states where payday lending is illegal.,More can be done. We recommend that major online advertising platforms consider new approaches to payday loan ads, that the payday lead generation industry consider stronger best practices, and that the Federal Trade Commission and Consumer Financial Protection Bureau consider enhanced oversight of the payday lead generation industry.,In preparing this report, we spoke with payday lead generation firms, major advertising platforms, consumer advocates, and federal and state regulators. We also reviewed federal laws, state laws, state regulations and rulemakings, state and federal court documents, company policies, industry white papers, presentations, videos, research reports, and a variety of publicly-available forums and Internet relay chat (IRC) channels.,To explore how online payday lead generators were showing search ads, we ran a series search queries on Google and Bing (including, for example, “payday loan,” “need a loan fast,” and “need money to pay rent”) from internet protocol (IP) addresses originating in Pennsylvania, New York, and Vermont using a commercial virtual private network (VPN) service between July and October of 2015. We clicked on many of the payday loan-related advertisements that we saw during this process.
On each attendant website, we reviewed policies and submitted test data, including address information consistent with the jurisdiction of the initial search.,Payday lead generators target consumers across the web, even consumers who reside in states where payday lending is illegal.,Understanding Online Lead Generation looks behind the scenes at how each step in the lead generation process works.

We begin with a short, illustrative story of what a borrower might experience when seeking a loan online — a process where lead generators play an important but largely invisible role.
We then describe how lead generators fit within the broader ecosystem of online marketing. The Online Payday Lending Ecosystem explores the risks introduced by online payday loans, and the lead generators that promote them.

Online payday lenders are often more harmful than their storefront counterparts, and they often operate on dubious legal ground. These online lenders rely heavily, in turn, on lead generators to find new borrowers.
Payday lead generators can aggressively resell consumers’ sensitive data, creating significant risks of fraud and identity theft. We then explain that payday lead generators are using online search ads to advertise payday loans nationwide, including to consumers in states where payday lending is illegal. Online ad platforms have an opportunity to adopt a more practical and effective approach to payday loan ads.,1 Understanding Online Lead Generation An Illustration: Becky’s Search For a LoanStep by StepTargeted Online AdvertisingSearch AdsSocial Media AdsWeb and Mobile AdsLanding Pages and AffiliatesAggregation, Scoring, and Sale 2 The Online Payday Lending Ecosystem The Risks of Online Payday LendingA Complex and Controversial Legal LandscapeUsing Online Ads, Payday Lead Generators Target Consumers Nationwide 3 Interventions: What Can Be Done Online Advertising PlatformsA Spectrum of Company PoliciesAd Platforms Can Automatically Classify and Geotarget AdsLooking Ahead: Three Approaches to Payday Loan AdsPayday Lead Generators and Trade GroupsFederal Regulators 4 Conclusion A Research Methods B Acknowledgments Section 1 Understanding Online Lead Generation From ads, to landing pages, to auctions Lead generation, the production and sale of evidence of consumer interest, is marketing in its most concrete and individualized form.

It is the practice of “getting people to ‘raise their hands’ and say they are interested in buying, or learning more about, [a] product or service.”1 A lead is evidence of interest by a consumer that can be tracked and monetized.2 A lead generator is an entity that sells leads. Lead generators help a wide variety of businesses find new customers. Lead generation marketing is measured in concrete results.,Becky, a resident of Philadelphia, lives in a rented apartment that she shares with her daughter. She is 27 years old, has an associate’s degree, and works as a receptionist at a local clinic, earning $25,000 a year. Becky recently separated from her partner, and quickly found herself struggling with the loss of a second income.
This month, she doesn’t have enough money to pay all of her bills — including cable, groceries, utilities, childcare, and rent — before her next paycheck.

Becky opens her laptop and types “need money to pay bills” into a search engine. An advertisement next to the search results catches her eye: “Fast Cash! $100-$1000!
Approved in 2 minutes, direct to your bank.

Bad credit OK!” Becky clicks on the ad and lands on the website of SpeedyLoans. The site features a picture of a smiling couple and the assurance that “sometimes everyone needs help making it to their next payday.” Becky enters her name, email address, and zip code, and clicks the “Get Cash!” button. She is greeted by a second form, which asks more information, including for her bank account numbers.

After entering this data, Becky is redirected to another website, LenderCo, where she agrees to loan terms. The next day, LenderCo deposits $500 into Becky’s bank account.,A longstanding body of research shows that payday loans are harmful to most borrowers’ financial health.,Online payday loans can be a gateway to fraud.,Payday lead generation websites have alarmingly weak privacy policies.,Many online payday lenders operate on tenuous legal ground.,Payday ads that appeared on Google and Bing searches originating from a Pennsylvania IP address. (Pennsylvania strictly regulates both payday lending and payday lead generation.),Payday lead generators may also be subject to CFPB jurisdiction as “service providers” to lenders.

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