Federal Agency Study Contradicts Group's Findings on Payday Advance and Minorities

WASHINGTON – A payday lending study released today(1) by the FDIC Center for Financial Research said that, “Despite allegations to the contrary, we didn’t find evidence that payday advance stores tend to locate in minority neighborhoods.”

The FDIC-commissioned study contradicts the conclusions of a study released last week by the Center for Responsible Lending (CRL)(2) that claimed the industry was targeting minorities. The FDIC study says that the number of payday advance stores in zip codes where populations are predominantly African-American is roughly equal to overall population percentages.


The Community Financial Services Association of America (CFSA), the payday advance industry trade group, has challenged CRL to reveal the back-up data from its report “Race Matters: The Concentration of Payday Lenders in the African-American Communities in North Carolina,” a study widely reported in the media.

“Numerous questions cloud the findings of this report, so we’re calling on the Center for Responsible Lending to show its back-up data to an expert,” said Lynn DeVault, president of CFSA. “The media as well as the public need to know that the Center for Responsible Lending doesn’t employ methodologies to reach predetermined results.”

CFSA is offering to send Dr. Patricia J. Cirillo, Ph.D., a statistician with the independent Cypress Research Group, to review CRL’s back-up data and methodology. Dr. Cirillo’s preliminary review has already found problems with the regression analysis methodology of the CRL report.

In a letter to CRL sent on April 7th, DeVault said her organization was stunned by the lack of credible data backing up the well-publicized report.

“Frankly, given the inflammatory tone of the report, we are surprised that it was not backed by a more detailed, scientific and transparent presentation of the data,” DeVault wrote. “For the credibility of your organization, the contradiction between your study and the FDIC-commissioned study must be addressed.”

(1) The study was released at the Federal Reserve System’s Community Affairs Research Conference.

(2) The Center for Responsible Lending is a “consumer” group tied to the SELF-HELP Credit Union. Credit Unions are competitors of the payday advance industry.