Some credit unions are still making small value, short term loans that they say are not payday loans, but really they still are, according to a report developed by the National Consumer Law Center.
"Too many providers of so-called payday loan alternatives hit consumers with some of the same onerous provisions that predatory lenders use to saddle unwary and vulnerable borrowers with loans they can't afford to repay," said Lauren Saunders, managing attorney of NCLC's Washington office and principal author of the report.
NCLC researchers reviewed hundreds of small loans. "Many genuine payday alternatives are in the market, but some products are nearly as bad as or even worse than payday loans," said Leah Plunkett, the report's co-author. "Cash advances offered to checking account holders by Wells Fargo Bank, U.S. Bank and Fifth Third Bank are payday loans, plain and simple - triple digit loans repaid on the next payday."
The report named some credit unions and CUSOs for their allegedly bad payday loans, including Kinecta Federal Credit Union in California; the Prospera Credit Union in Wisconsin and 12 federal credit unions that is said are still offering loans through the CU Access (e-access loans) CUSO. None of the criticized credit unions have commented on the report.
The report also named credit unions that it said were offering short term, lower dollar loans that were truly consumer friendly, including CUs participating in the National Credit Union Foundation's REAL Solutions program. Alternatives Federal Credit Union in New York; the Novartis Federal Credit Union in New Jersey and First New England Credit Union in Connecticut were some of the ones named.