January 12, 2016
DFC Global is “serving unbanked and under-banked consumers and small business owners” with companies like Money Mart, a US payday lender (above, from Money Mart website, accessed 12/8/2014)DFC Global is “serving unbanked and under-banked consumers and small business owners” with companies like Money Mart, a US payday lender (above, from Money Mart website, accessed 12/8/2014)

Yesterday, 31 consumer advocacy and fair lending organizations sent a letter to Lone Star Funds calling on the manager to end predatory payday lending. The letter calls for fair lending practices at Lone Star Funds’ DFC Global, a major payday lender.

The full letter can be found below or at www.LoanSharkFunds.org.

Lone Star Funds purchased payday lender DFC Global through its Lone Star Fund VIII vehicle in June 2014. Through DFC’s Money Mart and Check Cashing Store brands, Lone Star Funds and its limited partners profit from abusive lending practices that trap borrowers in a cycle of debt. DFC Global has advertised loans with APRs of over 300% in some states.

In their letter, advocates call on Lone Star Funds to require DFC Global to abide by the Federal Deposit Insurance Corporation’s Small-Dollar Loan Guidelines, which suggest common-sense standards for these types of consumer loans.

“Today, we’re calling on Lone Star Funds to stop trapping borrowers in a cycle of debt,” said Gynnie Robnett, campaign director at Americans for Financial Reform. “Lone Star and its investors should not be profiting from abusive practices.”

The letter is also being sent to several of Lone Star Funds’ key public employee pension fund investors, many of which own DFC Global through their interest in Lone Star Fund VIII.

 

————————–

Lone Star Funds: Stop Predatory Payday Lending!

 

André Collin
President
Lone Star Funds
2711 North Haskell Avenue
Suite 1700
Dallas, TX 75204

 

Dear Mr. Collin and Lone Star Funds investors:

We are troubled to learn about your purchase of DFC Global, a major payday lender and pawnshop operator.

Through its investment in DFC Global, which operates US payday lending outlets under the Money Mart and Check Cashing Store brands, Lone Star Funds and its limited partners profit from abusive lending practices, including interest rates of 300% and more, and loans that trap borrowers in a cycle of ever more burdensome debt. Outside of the US, DFC companies have advertised APRs as high as 33,000%.

Payday loans often cause a cascade of devastating financial consequences that include lost bank accounts, delinquencies on credit cards and other bills, and bankruptcy. Payday loans take borrowers already in dire circumstances and leave them even worse off.

In fact, payday loans like those Money Mart and Check Cashing Store sell are so harmful to consumers that they are illegal in many states. In 2007, the Federal Deposit Insurance Corporation issued Affordable Small-Dollar Loan Guidelines which suggest common-sense standards for these types of consumer loans, including limiting APRs to no more than 36%. The FDIC also advises limiting any time spent in a payday loan to 90 days within a twelve-month period. DFC’s practices are grossly inconsistent with these advisories.

Lone Star Funds has received billions of dollars in commitments from public employee pension funds, a number of which are in states that sharply limit predatory payday loans. We urge Lone Star Funds and its limited partners to require DFC Global to adopt guidelines for small dollar loans along the lines of the standards put in place by the FDIC, both in the United States and abroad. If DFC is unwilling or unable to abide by these standards, we ask that you exit your investment in the firm.

 

AFL-CIO Office of Investment

Alaska Public Interest Group

Americans for Financial Reform

Arkansans Against Abusive Payday Lending

Birmingham Faith in Action

California Reinvestment Coalition (CRC)

Center for Economic Integrity – Arizona Office

Center for Economic Integrity – New Mexico Office

Citizen Action/Illinois

Consumer Action

Consumer Assistance Council

Consumers Council of Missouri

Consumers for Auto Reliability and Safety

Delaware Alliance for Community Advancement (DACA)

Delawareans for Social and Economic Justice (DSEJ)

Florida Alliance for Consumer Protection

Gowen Consulting

Jesuit Social Research Institute

Massachusetts Consumers Council

National People’s Action

New Jersey Citizen Action

PathWays PA

Reinvestment Partners

Sisters of Mercy

Springcreek Church

Tennessee Citizen Action

Texas Appleseed

UNITE HERE

United Way Silicon Valley

USPIRG

Virginia Citizens Consumer Council

 

cc:

 

Investors in Lone Star Fund VIII:

 

Ms. Katherine J. Durant
Chair, Oregon Investment Council

 

Lt. Samuel Friar
Chairman, Dallas Police and Fire Pension System

 

Mr. Lon Roberts
Chair, State of Wisconsin Investment Board

 

Ms. Mary Lou Cameron
Chairperson, New Mexico Educational Retirement Board

 

Mr. Todd E. Clark
Chairman, Houston Firefighters’ Relief and Retirement Fund

 

Other key Lone Star Funds investors:

 

Mr. R. David Kelly
Chairman, Teacher Retirement System of Texas

 

Mr. Robert Lawyer
Board Chair, Teachers’ Retirement System of Louisiana

 

Michael Kraus

President of the Retirement Board, New York State Teachers’ Retirement System

 

Mr. Tony Smith
President, Teachers’ Retirement System of the State of Illinois

Related Issues
Related Fund Managers