Consumer Group Study Exposes Racial Targeting Among Payday Predators

Statistical Data Highlights Tactics of Debt Trap Lenders

Andy Spears


The Chicago Sun-Times is out with a story citing data from a study conducted by the Woodstock Institute that demonstrates that payday lenders in Chicago use racial targeting as standard operating procedure.

From the story:

Using 2019 borrower loan data obtained from state regulators, the nonprofit Woodstock Institute found the top ZIP codes for payday loans, excluding the Loop, were majority-Black, including:

60619 and 60620 on the South Side, which include parts of Chatham, Burnside, Avalon Park and Greater Grand Crossing, Auburn Gresham and Washington Heights. Those ZIP codes had more than 16 payday loans per 100 people and are both 95.7% Black.

60624 on the West Side, which includes parts of West Garfield Park, East Garfield Park and Humboldt Park and which had 15.8 payday loans per 100 people. That ZIP code covers an area that’s 90.7% Black.


The report is significant because Illinois recently enacted the Predatory Loan Prevention Act.

The Predatory Loan Prevention Act (SB 1792), would directly address long-standing inequities by prohibiting lenders from charging more than 36 percent APR (annual percentage rate) on consumer loans. High-cost, small-dollar loans heighten the racial wealth gap, and stopping high interest payday lending is a significant step toward immediate relief for consumers.

In Illinois, the average APR on a payday loan is 297 percent, and the average APR on a title loan is 179 percent. While the existing federal law already protects active-duty military with a 36 percent APR cap, this legislation would extend the same protection to Illinois veterans and all other consumers.

Additionally, there is currently federal legislation — introduced in both the House and Senate — that would create a national rate cap of 36%.

Consumer protection legislation that would cap rates on payday and car title loans at 36% has been introduced in the House of Representatives. The bipartisan bill is a companion to similar legislation filed in the Senate…



Andy Spears

Writer and policy advocate living in Nashville, TN —Public Policy Ph.D. — writes on education policy, consumer affairs, and more . . .