EXECUTIVE SUMMARY

 

Campaign for Accountability?s new report, Academic Deception, reveals how a
payday lending industry trade association paid for and edited a controversial
academic paper claiming that payday loans do not leave consumers trapped in cycles

ofdebt

Background

Payday lending is a $46 billion industry that is frequently reviled as burdening
consumers with debts from which they cannot escape. The Consumer Financial
Protection Bureau has found most borrowers renew their loans so many times
that they pay far more in fees than the amount of money initially borrowed, effectively

trapping them in an endless cycle of debt.

Aware that the CFPB would eventually seek to regulate payday lending, the industry
has ramped up lobbying and campaign donations. Less transparently, one payday
lender, Dollar Financial Group, funded the Consumer Credit Research Foundation
which, in turn, has financed academic research designed to provide

arguments against regulation.

CfA?s Open Records Requests

In July 2015, filed open records requests with Arkansas Tech University, Kennesaw
State University in Georgia, George Mason University in Virginia, and the University of

California, Davis.

CCRF filed a lawsuit to prevent Kennesaw State from releasing any records and is

in court in Georgia seeking the records.

George Mason refused to provide records relying on an exemption to Virginia?s open

records law to keep them secret; UC Davis claimed to have few relevant records.

Arkansas Tech released emails of College of Business Professor Marc Anthony Fusaro,

one of the authors of a 2011 paper on payday loans that concludes payday loans are

not responsible for the cycle of debt.

Key Revelations from the Arkansas Tech University Documents

CCRF paid Prof. Fusaro, at least $39,912 to prepare a report entitled, Do Payday
Loans Trap Consumers in a Cycle of Debt? Prof. Fusaro?s co?author, Dr. Patricia
Cirillo, the President of Cypress Research, billed CCRF directly for her costs

associated with the study, though the amount she requested is unknown.

CCRF Chairman Hilary Miller received and edited drafts of the study. In one
email to Dr. Cirillo, Prof. Fusaro defended the arrangement, stating, ?[f]or the
most part, Hillary?s comments did not undermine the integrity of the paper

(emphasis added).?

Mr. Miller directed Prof. Fusaro to remove negative information about payday
lenders from the report. When Dr. Cirillo discovered payday loan borrowers
often had massive debit card overdrafts the month before seeking a payday
loan, she emailed Prof. Fusaro that Mr. Miller was not ?too happy? about the
finding and had told her it wasn?t the ?objective of the study.? Prof. Fusaro

agreed not to include it in the report.

Mr. Miller instructed Prof. Fusaro to delete any acknowledgement of role

played by representatives of payday lenders in producing the report.

Mr. Miller dictated and financed the press strategy for the report. In an email
to Prof Fusaro, Mr. Miller instructed him to identify Arkansas Tech as the source

for a PR Newswire release, and Prof. Fusaro agreed.