{"id":2581,"date":"2020-08-30T09:43:50","date_gmt":"2020-08-30T16:43:50","guid":{"rendered":"https:\/\/economicintegrity.org\/?p=2581"},"modified":"2020-08-30T09:46:05","modified_gmt":"2020-08-30T16:46:05","slug":"the-fintech-debt-trap-online-lenders-are-preying-on-desperate-borrowers-and-could-trigger-a-new-consumer-financial-crisis","status":"publish","type":"post","link":"https:\/\/economicintegrity.org\/?p=2581","title":{"rendered":"The Fintech Debt Trap: Online lenders are preying on desperate borrowers and could trigger a new consumer financial crisis"},"content":{"rendered":"\n<a href=\"https:\/\/theintercept.com\/2020\/08\/30\/fintech-debt-personal-loans-economic-crisis\/\" target=\"_blank\" rel=\"noopener noreferrer\"><i class=\"fas fa-newspaper\" aria-hidden=\"true\"><\/i> The Intercept | By Alyssa Katz | <span class=\"submitted-date\">August 30, 2020<\/span><\/a> in partnership with <a href=\"https:\/\/www.typeinvestigations.org\" target=\"_blank\" rel=\"noopener noreferrer\">TypeInvestigations<\/a>\n\n\n\n<p> <\/p>\n\n\n\n<p>The economic cataclysm brought on by the coronavirus caught American consumers in an extremely precarious position \u2014 one that was evident well before more than 50 million people filed for unemployment. By the end of last year, Americans had racked up nearly <a href=\"https:\/\/www.newyorkfed.org\/microeconomics\/hhdc\" target=\"_blank\" rel=\"noreferrer noopener\">$4.2 trillion in consumer debt<\/a>,\u00a0not including mortgage debt \u2014 a record high. The greatest contributor to this surge was not credit card spending or student debt or auto loans, but something newer and, for many borrowers, even riskier: high-interest personal loans, increasingly offered by online financial technology companies known as \u201cfintechs.\u201d<\/p>\n\n\n\n<p>These fintech firms have eclipsed banks and other traditional credit suppliers to become the nation\u2019s No. 1 source of personal loans \u2014 the kind of loans people take out when they need extra cash to stay afloat, or when they have already amassed large amounts of debt and are looking to refinance. At the end of 2019, an unprecedented 20.8 million Americans owed money on at least one personal loan \u2014 more than one-third of which came from a fintech company.<\/p>\n\n\n\n<p>This surge in fintech lending may have dire consequences for American consumers. Just as financial engineering by Wall Street banks fueled unsustainable consumer borrowing in the 2000s, online fintech companies\u2019 quest to squeeze more debt out of borrowers through loans signed via a few clicks on screens has helped set the stage for a new consumer financial crisis today, an investigation by The Intercept and Type Investigations reveals.<\/p>\n\n\n\n<p>Such borrowing might provide short-term relief to some Americans. And, in light of the current crisis, some fintech firms are working with borrowers <a href=\"https:\/\/www.nerdwallet.com\/blog\/loans\/personal-loans\/covid-19-loan-options-and-payment-relief\/\" target=\"_blank\" rel=\"noreferrer noopener\">to defer payments temporarily<\/a>. But ultimately, the surge of fintech lending in recent years will likely result in a massive wave of loan defaults over the coming months, as borrowers burn through enhanced unemployment benefits, which have been reduced since the end of July, and the stimulus payments that the federal government began sending out in April. The resulting spike in defaults will be catastrophic for consumer credit.<\/p>\n\n\n\n<div class=\"wp-block-buttons is-layout-flex wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button is-style-outline is-style-outline--1\"><a class=\"wp-block-button__link\" href=\"https:\/\/theintercept.com\/2020\/08\/30\/fintech-debt-personal-loans-economic-crisis\/\" target=\"_blank\" rel=\"noreferrer noopener\">Read more<\/a><\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>The Intercept | By Alyssa Katz | August 30, 2020 in partnership with TypeInvestigations The economic cataclysm brought on by the coronavirus caught American consumers [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"site-sidebar-layout":"default","site-content-layout":"default","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"default","adv-header-id-meta":"","stick-header-meta":"default","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[11,4],"tags":[10,16],"class_list":["post-2581","post","type-post","status-publish","format-standard","hentry","category-fintech","category-predatory-lending","tag-consumer-protection","tag-covid-19"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>The Fintech Debt Trap: Online lenders are preying on desperate borrowers and could trigger a new consumer financial crisis - Southwest Center for Economic Integrity<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/economicintegrity.org\/?p=2581\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The Fintech Debt Trap: Online lenders are preying on desperate borrowers and could trigger a new consumer financial crisis - Southwest Center for Economic Integrity\" \/>\n<meta property=\"og:description\" content=\"The Intercept | By Alyssa Katz | August 30, 2020 in partnership with TypeInvestigations The economic cataclysm brought on by the coronavirus caught American consumers [&hellip;]\" \/>\n<meta property=\"og:url\" content=\"https:\/\/economicintegrity.org\/?p=2581\" \/>\n<meta property=\"og:site_name\" content=\"Southwest Center for Economic Integrity\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/CenterForEconomicIntegrity\/\" \/>\n<meta property=\"article:published_time\" content=\"2020-08-30T16:43:50+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2020-08-30T16:46:05+00:00\" \/>\n<meta name=\"author\" content=\"honor\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@Econ_Center\" \/>\n<meta name=\"twitter:site\" content=\"@Econ_Center\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"honor\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"2 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/economicintegrity.org\\\/?p=2581#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/economicintegrity.org\\\/?p=2581\"},\"author\":{\"name\":\"honor\",\"@id\":\"https:\\\/\\\/economicintegrity.org\\\/#\\\/schema\\\/person\\\/e43d6b65443d8761868de8705cda4664\"},\"headline\":\"The Fintech Debt Trap: Online lenders are preying on desperate borrowers and could trigger a new consumer financial crisis\",\"datePublished\":\"2020-08-30T16:43:50+00:00\",\"dateModified\":\"2020-08-30T16:46:05+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/economicintegrity.org\\\/?p=2581\"},\"wordCount\":357,\"publisher\":{\"@id\":\"https:\\\/\\\/economicintegrity.org\\\/#organization\"},\"keywords\":[\"Consumer Protection\",\"COVID-19\"],\"articleSection\":[\"Fintech\",\"Predatory Lending\"],\"inLanguage\":\"en-US\"},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/economicintegrity.org\\\/?p=2581\",\"url\":\"https:\\\/\\\/economicintegrity.org\\\/?p=2581\",\"name\":\"The Fintech Debt Trap: Online lenders are preying on desperate borrowers and could trigger a new consumer financial crisis - Southwest Center for Economic Integrity\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/economicintegrity.org\\\/#website\"},\"datePublished\":\"2020-08-30T16:43:50+00:00\",\"dateModified\":\"2020-08-30T16:46:05+00:00\",\"breadcrumb\":{\"@id\":\"https:\\\/\\\/economicintegrity.org\\\/?p=2581#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\\\/\\\/economicintegrity.org\\\/?p=2581\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\\\/\\\/economicintegrity.org\\\/?p=2581#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\\\/\\\/economicintegrity.org\\\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"The Fintech Debt Trap: Online lenders are preying on desperate borrowers and could trigger a new consumer financial crisis\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\\\/\\\/economicintegrity.org\\\/#website\",\"url\":\"https:\\\/\\\/economicintegrity.org\\\/\",\"name\":\"Center for Economic Integrity\",\"description\":\"Promoting Ethical Profits and Responsible Commerce\",\"publisher\":{\"@id\":\"https:\\\/\\\/economicintegrity.org\\\/#organization\"},\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\\\/\\\/economicintegrity.org\\\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"},{\"@type\":\"Organization\",\"@id\":\"https:\\\/\\\/economicintegrity.org\\\/#organization\",\"name\":\"Center for Economic Integrity\",\"url\":\"https:\\\/\\\/economicintegrity.org\\\/\",\"logo\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\\\/\\\/economicintegrity.org\\\/#\\\/schema\\\/logo\\\/image\\\/\",\"url\":\"https:\\\/\\\/economicintegrity.org\\\/wp-content\\\/uploads\\\/2018\\\/09\\\/banner-600x150.png\",\"contentUrl\":\"https:\\\/\\\/economicintegrity.org\\\/wp-content\\\/uploads\\\/2018\\\/09\\\/banner-600x150.png\",\"width\":600,\"height\":150,\"caption\":\"Center for Economic Integrity\"},\"image\":{\"@id\":\"https:\\\/\\\/economicintegrity.org\\\/#\\\/schema\\\/logo\\\/image\\\/\"},\"sameAs\":[\"https:\\\/\\\/www.facebook.com\\\/CenterForEconomicIntegrity\\\/\",\"https:\\\/\\\/x.com\\\/Econ_Center\",\"https:\\\/\\\/www.instagram.com\\\/economic_integrity\\\/\"]},{\"@type\":\"Person\",\"@id\":\"https:\\\/\\\/economicintegrity.org\\\/#\\\/schema\\\/person\\\/e43d6b65443d8761868de8705cda4664\",\"name\":\"honor\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\\\/\\\/secure.gravatar.com\\\/avatar\\\/8a495c607c8e45d273af91cca975dbd52743536d0451faa35503b3733f115977?s=96&d=mm&r=g\",\"url\":\"https:\\\/\\\/secure.gravatar.com\\\/avatar\\\/8a495c607c8e45d273af91cca975dbd52743536d0451faa35503b3733f115977?s=96&d=mm&r=g\",\"contentUrl\":\"https:\\\/\\\/secure.gravatar.com\\\/avatar\\\/8a495c607c8e45d273af91cca975dbd52743536d0451faa35503b3733f115977?s=96&d=mm&r=g\",\"caption\":\"honor\"},\"url\":\"https:\\\/\\\/economicintegrity.org\\\/?author=1\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"The Fintech Debt Trap: Online lenders are preying on desperate borrowers and could trigger a new consumer financial crisis - Southwest Center for Economic Integrity","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/economicintegrity.org\/?p=2581","og_locale":"en_US","og_type":"article","og_title":"The Fintech Debt Trap: Online lenders are preying on desperate borrowers and could trigger a new consumer financial crisis - Southwest Center for Economic Integrity","og_description":"The Intercept | By Alyssa Katz | August 30, 2020 in partnership with TypeInvestigations The economic cataclysm brought on by the coronavirus caught American consumers [&hellip;]","og_url":"https:\/\/economicintegrity.org\/?p=2581","og_site_name":"Southwest Center for Economic Integrity","article_publisher":"https:\/\/www.facebook.com\/CenterForEconomicIntegrity\/","article_published_time":"2020-08-30T16:43:50+00:00","article_modified_time":"2020-08-30T16:46:05+00:00","author":"honor","twitter_card":"summary_large_image","twitter_creator":"@Econ_Center","twitter_site":"@Econ_Center","twitter_misc":{"Written by":"honor","Est. reading time":"2 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/economicintegrity.org\/?p=2581#article","isPartOf":{"@id":"https:\/\/economicintegrity.org\/?p=2581"},"author":{"name":"honor","@id":"https:\/\/economicintegrity.org\/#\/schema\/person\/e43d6b65443d8761868de8705cda4664"},"headline":"The Fintech Debt Trap: Online lenders are preying on desperate borrowers and could trigger a new consumer financial crisis","datePublished":"2020-08-30T16:43:50+00:00","dateModified":"2020-08-30T16:46:05+00:00","mainEntityOfPage":{"@id":"https:\/\/economicintegrity.org\/?p=2581"},"wordCount":357,"publisher":{"@id":"https:\/\/economicintegrity.org\/#organization"},"keywords":["Consumer Protection","COVID-19"],"articleSection":["Fintech","Predatory Lending"],"inLanguage":"en-US"},{"@type":"WebPage","@id":"https:\/\/economicintegrity.org\/?p=2581","url":"https:\/\/economicintegrity.org\/?p=2581","name":"The Fintech Debt Trap: Online lenders are preying on desperate borrowers and could trigger a new consumer financial crisis - Southwest Center for Economic Integrity","isPartOf":{"@id":"https:\/\/economicintegrity.org\/#website"},"datePublished":"2020-08-30T16:43:50+00:00","dateModified":"2020-08-30T16:46:05+00:00","breadcrumb":{"@id":"https:\/\/economicintegrity.org\/?p=2581#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/economicintegrity.org\/?p=2581"]}]},{"@type":"BreadcrumbList","@id":"https:\/\/economicintegrity.org\/?p=2581#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/economicintegrity.org\/"},{"@type":"ListItem","position":2,"name":"The Fintech Debt Trap: Online lenders are preying on desperate borrowers and could trigger a new consumer financial crisis"}]},{"@type":"WebSite","@id":"https:\/\/economicintegrity.org\/#website","url":"https:\/\/economicintegrity.org\/","name":"Center for Economic Integrity","description":"Promoting Ethical Profits and Responsible Commerce","publisher":{"@id":"https:\/\/economicintegrity.org\/#organization"},"potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/economicintegrity.org\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Organization","@id":"https:\/\/economicintegrity.org\/#organization","name":"Center for Economic Integrity","url":"https:\/\/economicintegrity.org\/","logo":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/economicintegrity.org\/#\/schema\/logo\/image\/","url":"https:\/\/economicintegrity.org\/wp-content\/uploads\/2018\/09\/banner-600x150.png","contentUrl":"https:\/\/economicintegrity.org\/wp-content\/uploads\/2018\/09\/banner-600x150.png","width":600,"height":150,"caption":"Center for Economic Integrity"},"image":{"@id":"https:\/\/economicintegrity.org\/#\/schema\/logo\/image\/"},"sameAs":["https:\/\/www.facebook.com\/CenterForEconomicIntegrity\/","https:\/\/x.com\/Econ_Center","https:\/\/www.instagram.com\/economic_integrity\/"]},{"@type":"Person","@id":"https:\/\/economicintegrity.org\/#\/schema\/person\/e43d6b65443d8761868de8705cda4664","name":"honor","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/secure.gravatar.com\/avatar\/8a495c607c8e45d273af91cca975dbd52743536d0451faa35503b3733f115977?s=96&d=mm&r=g","url":"https:\/\/secure.gravatar.com\/avatar\/8a495c607c8e45d273af91cca975dbd52743536d0451faa35503b3733f115977?s=96&d=mm&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/8a495c607c8e45d273af91cca975dbd52743536d0451faa35503b3733f115977?s=96&d=mm&r=g","caption":"honor"},"url":"https:\/\/economicintegrity.org\/?author=1"}]}},"_links":{"self":[{"href":"https:\/\/economicintegrity.org\/index.php?rest_route=\/wp\/v2\/posts\/2581","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/economicintegrity.org\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/economicintegrity.org\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/economicintegrity.org\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/economicintegrity.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=2581"}],"version-history":[{"count":0,"href":"https:\/\/economicintegrity.org\/index.php?rest_route=\/wp\/v2\/posts\/2581\/revisions"}],"wp:attachment":[{"href":"https:\/\/economicintegrity.org\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=2581"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/economicintegrity.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=2581"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/economicintegrity.org\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=2581"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}