War On The Poor

"Far from teaching Tinita [a poor single mother] a lesson, the pawnshop incident was her introduction to a parallel world of finance for the working poor and credit-deprived, an industry on the margins of legality, fraught with dubious and endlessly creative offers of instant cash. It is a world of title pawns, payday lenders, rent-to-own stores, buy-here-pay-here car lots, high-interest credit cards and exploitative income tax services that cater to people who see few other ways to make ends meet. University of Houston professor Howard Karger, author of the recent book Shortchanged, calls this rapidly expanding sector the 'fringe economy.' 'In some ways,' he says, 'it represents a war on the poor.'"

"Most consumer advocates don't discount the demand for check-cashing companies but argue that the companies could easily lower their fees: ACE [Cash Express] uses a system for assessing the risk of each check transaction and reports losses of less than a quarter of 1 percent. Its profits rose from $600,000 in 2001 to more than $27 million last year, even as the company opened new stores and franchises at the rate of nearly one per week, according to the company's Web site."