Eaten Alive

Rent-to-own stores, pawnshops, payday lenders -- it's hope for sale, with interest

Tinita was lucky to have marketable skills: a high typing score and a smooth phone voice. She went to work for an answering service, routing calls to out-of-office executives for $6 an hour. She avoided paying the pawnshop, which had stopped trying to repossess her television, probably because it had gone out of business, she says. But she was still living beyond her means. After two checks written on her Texas Commerce Bank account bounced, she closed it rather than paying the penalty fees and became one of the roughly 27 million people in America who don't have a bank account.

Taking home money suddenly meant doling out hefty fees to check-cashing companies. The largest among them, ACE Cash Express, charges between 2 and 6 percent per check in Texas -- more for personal checks -- plus a $3 fee for new customers. Still, many ACE patrons say it's their only option. Paul Jones is a former Yellow Cab driver who couldn't make money after 9/11 and overdrafted his bank account by $140. His new salary at an automobile auction company, $180 per week, doesn't leave much extra to repay the debt. Last month he walked out of the ACE Cash Express store on Fannin and Gray, which he has visited every Friday for two years. ACE is tiding him over until he can save money. "It's a stopgap measure," he says, "to get me from point A to point B."

Texas doesn't cap check-cashing fees, a decision supported by Financial Service Centers of America, the industry's trade group. General counsel Bob Rochford says fee caps would put some check cashers out of business, hurting the many consumers who have a "vital need for check-cashing operations."

Tinita Samuels Dorsey pawned her ruby-studded high 
school ring for $20.
Daniel Kramer
Tinita Samuels Dorsey pawned her ruby-studded high school ring for $20.
With 1,371 stores in 37 states, Irving-based ACE 
Cash Express dominates the check-cashing industry.
Daniel Kramer
With 1,371 stores in 37 states, Irving-based ACE Cash Express dominates the check-cashing industry.

Check-cashing businesses are popular with undocumented immigrants, who tend to avoid opening bank accounts for fear of being deported. Even legal immigrants often shun banks out of habit; in many Latin American countries they're frequented by only the wealthy. A young pregnant Latina, who declined to give her name, said she had a bank account but got cash from ACE every Friday anyway. "I get it faster," she said.

Most consumer advocates don't discount the demand for check-cashing companies but argue that the companies could easily lower their fees: ACE 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.

"We need companies to step in with a social conscience, companies that are not driven by quite as much avarice as some of these fringe companies, and not paying their CEOs $2 million, who can bring down rates," Karger says.

During the height of Tinita's check-cashing days, a dollar lost here or there was sometimes an afterthought, sometimes fodder for a shouting match. A dispute over a late videocassette, of all things, sparked a rancorous fallout with her roommate, and Tinita moved back in with her mom. She was 22. Going back felt like "the worst thing in the world," she says. Most humiliating of all was when her mother one day asked her what had happened to the high school ring and Tinita had to confess she'd pawned it.

Tinita describes her relationship with her mom as love-hate, with an emphasis on the hate. When Tinita was a middle schooler, Gwen was working long shifts as a nurse and raising her children alone. She learned one day that Tinita wasn't studying and punished her by removing the spiked collar from the family's rottweiler and slapping it across Tinita's neck. Before the daughter could react, her brother knocked her to the ground and yelled, "You ain't gonna kill my mama!"

At least her mom's role was clear. The other side of the equation was murkier. Tinita had always considered her mom's boyfriend Edward Jenkins, a.k.a. Pigeon, to be, in effect, her father, but he moved out shortly after decking her mom and waking her up with a bucket of ice water. A man named Sydney later pulled 14-year-old Tinita aside at a party and said he was her biological father. Her mom tearfully agreed. A letter arrived a few months later informing them that he was dead. Her mom soon began dating an old boyfriend named LeRoy Ford, who said he was actually her real father, but Tinita was dubious.

Now that she was an adult, Tinita dated men who were even more vicious than the boyfriends of her mom's past. DaSalle, a DJ and occasional burglar, slit her neck with a knife, leaving a scar, and might have killed her, she says, if she hadn't twisted away.

Tinita spent a year with her mom and eventually found a way to turn her personal history of violence, insult and indebtedness into a tool. She went to work as a debt collector. She already knew all the cop-outs people used to plead poor ("You can't squeeze blood from a turnip"); the company taught her all of the comebacks ("Turnips don't bleed"). She most often simply chatted with retirees, single moms and the unemployed and politely asked them for money. But sometimes her boss would slam his fist in his palm and say, "Dun 'em." This was the industry term for the nuclear option. She'd call her debtors and use everything she knew about them -- and herself -- to cut them down. "What kind of mom are you?" she'd ask the single mother. "Are you just gonna teach your kids to be deadbeats?"

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Payday loans or title loans are very helpful if you manage them properly. Otherwise they can create more problems than they were meant to solve. These loans already have a high interest rate but with the passage of time the interest increase even more. So if you delay the repayment of your loan, you will pile up a huge amount of debt for yourself.

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