Predatory Lending and the Military: The Law and Geograpy of 'Payday' Loans in Military Towns

Abstract

A heated national debate has developed over whether one type of high-cost predatory lender, commonly known as "payday lenders," are targeting financially vulnerable military families and whether the law protects them from such predation. Writing within the relatively new interdisciplinary "law and geography" movement, this article provides geographic evidence that payday lenders do aggressively target American military personnel, irrespective of most forms of legal regulation. This paper first provides a comprehensive introduction to payday lending business practices and to the financial vulnerability of military personnel. In conducting our empirical research, we examined 20 states, 1,516 counties, 13,253 ZIP codes, nearly 15,000 payday lenders, and 109 military bases. We consistently found high concentrations of payday lending businesses in counties, zip codes, and neighborhoods in close proximity to military bases. Our observations were controlled by comparing payday lender densities in military areas to statewide averages and also by comparing payday lender locations to bank locations. Of the twenty states involved, the only legal strategy which prevented payday lender targeting of military personnel was New York's aggressive enforcement of civil and criminal usury law. Going beyond the debate over predatory lending to military personnel, our research provides a realist check on pure legal reasoning and unfounded faith in current consumer protection rules.