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Zodijackylite
Oct 18, 2005

hello bonjour, en francais we call the bread man l'homme de pain, because pain means bread and we're going to see a lot of pain this year and every nyrfan is looking forward to it and hey tony, can you wait until after my postgame interview to get on your phone? i thought you quit twitter...

Alternately, it's actually an obscure prank call artist giving you a hard time for no reason at all.

https://www.youtube.com/watch?v=SUkXn_4ZFJY#t=1510s

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Zodijackylite
Oct 18, 2005

hello bonjour, en francais we call the bread man l'homme de pain, because pain means bread and we're going to see a lot of pain this year and every nyrfan is looking forward to it and hey tony, can you wait until after my postgame interview to get on your phone? i thought you quit twitter...

Subprime auto loans are their own type of scam, or predatory business, if you're generous.

Basically, they're ~30% interest car loans given to just about anyone, banking on repossession/fees/interest, and often given on exaggerated terms by car/loan sellers who get favorable terms for signing someone into debt slavery.

Zodijackylite
Oct 18, 2005

hello bonjour, en francais we call the bread man l'homme de pain, because pain means bread and we're going to see a lot of pain this year and every nyrfan is looking forward to it and hey tony, can you wait until after my postgame interview to get on your phone? i thought you quit twitter...

Car dealers are sketchy on their own, but the lenders behind the credit-4-everyone thing are conmen of the highest level. Mother Jones had a good long read (~20m) on subprime auto loans. Not only are they tremendously unfavorable on the terms of the loan, but they are often literally a scam in addition to that.

Some choice quotes:

quote:

it wasn’t uncommon to find customers saddled with interest rates as high as 30 percent. Borrowers typically paid twice what the car had cost the dealer, and often those vehicles didn’t outlast the loans that financed them. Eventually, Credit Acceptance and other subprime lenders would even start requiring borrowers to install starter kill switches that allowed the companies to incapacitate their vehicles from afar, “pretty much guaranteeing that the car loan is the first one people pay every month”

A few weeks after they bought the Taurus, the Peels realized that the dealer had never sent them a copy of the title they needed to get the car registered. They drove back to the dealership and found the lot deserted... for two years the family faithfully scraped together $345 a month to make payments on a car they couldn’t legally drive... When she threatened to stop paying, she said, the person on the phone would remind her of the starter kill switch by which the company could disable her car if she missed a payment—she never did.

A court would later determine that Credit Acceptance knew Car Time’s floorplan bank probably held the title but neglected to share that information with Peel, who was twice pulled over by the police for driving without valid registration. The first officer let her off with a warning. The second one slapped her with a $140 ticket. Feeling wronged, she refused to pay. A judge put out a bench warrant for her arrest...Without a title, she couldn’t drive the car legally and she couldn’t sell it.

http://www.motherjones.com/politics/2016/04/car-subprime-bubble-auto-loans-credit-acceptance-don-foss/

Zodijackylite
Oct 18, 2005

hello bonjour, en francais we call the bread man l'homme de pain, because pain means bread and we're going to see a lot of pain this year and every nyrfan is looking forward to it and hey tony, can you wait until after my postgame interview to get on your phone? i thought you quit twitter...

Back to the real con/scam behind all of this: subprime auto loans

What are they?

quote:

“Essentially, the dealers are not selling cars. They are selling bad loans,” said Adam Taub, a lawyer in Detroit who has defended consumers in hundreds of these cases.

Why do they do it?

quote:

Subprime lenders are willing to take a chance on these risky borrowers because when they default, the lenders can repossess their cars and persuade judges in 46 states to give them the power to seize borrowers’ paychecks to cover the balance of the car loan.

How?!?!

quote:

Most borrowers can’t afford lawyers and don’t show up to court to challenge the lawsuits. That means the collectors win many cases, transforming the debts into judgments they can use to garnish wages.

How often does that happen?

quote:

Almost 9.7 percent of subprime car loans made by non-bank lenders -- including private-equity-backed firms catering to car dealers -- became 90 or more days past due in the third quarter, the highest annualized rate in more than seven years, according to the New York Fed’s quarterly report on household debt and credit. That’s more than double the 4.4 percent rate for subprime loans made by traditional banks, a number that’s been falling pretty steadily since the end of the financial crisis.

So twice as many people don't pay them as banks, but they make HOW MUCH MORE?!?!

quote:

The strategy at Credit Acceptance, which has a market value of $4.4 billion, is yielding big profits. The Michigan company said its return on equity, a measure of profitability, was 31 percent last year — more than four times Bank of America’s return.

So their business strategy is to blood people dry? Yes.

quote:

And collecting on the debt is a critical part of the business. The first item on the quarterly earnings of Credit Acceptance, the large subprime auto lender, is not the amount of loans it makes, but what it expects to collect on the debt.

Repo is a big part of that.

quote:

Repossessions can shatter credit. Like a bankruptcy, repossessions stay on a consumer’s credit report for seven years.

But repossessions are also a cornerstone of the buy here, pay here business model. According to Shilson of the National Alliance of Buy Here, Pay Here Dealers, one-third of buy here, pay here contracts nationally end up in default, which most often results in repossession.

The amount of time between a missed loan payment and when the car can be seized is generally set by state law. Many car dealers also offer an additional 60- or 90-day grace period before repossessing a car.

Still, the Times’ examination found that some buy here, pay here dealers have repossessed a car in as little as two days, as one consumer told the Times in complaining about Car Credit in Tampa. Car Credit did not return requests for comment.



So, on to the horror stories:

quote:

The company, for example, expects a 72 percent collection rate on loans made in 2014 — the year that a used 2009 Volkswagen Tiguan was repossessed from Nina Lysloff of Ypsilanti, Mich.

With all the interest and fees on her Credit Acceptance loan factored in, the car ended up costing her $28,383. Ms. Lysloff could have bought a brand-new Volkswagen Tiguan for $22,149, according to Kelley Blue Book.

When Ms. Lysloff fell behind, the trade-in value on the car was a fraction of what she still owed. Last year, Credit Acceptance sued her for $15,755.

quote:

U.S. Bank is pursuing Tara Pearson for the $9,339 left after her 2011 Hyundai Accent was stolen and she could not pay the fee to get it from the impound lot. When she purchased the car in 2015 at a dealership in Winchester, Ky., Ms. Pearson said, she explained that her only income was about $722 from Social Security.

Her loan application listed things differently. Her employer was identified as “S.S.I.,” and her income was put at $2,750, court records show.

quote:

The numbers kept getting worse for Jeremy McPeek. It started with paying $2,600 down and getting saddled with a high-interest loan on a car worth $5,200. Then came the repairs. Just two weeks in, the engine started knocking and the dealer told him it was shot — so McPeek told the dealer to just collect the car.

The twist: the finance company reported it as a repossession, plunging McPeek’s credit score from 620 to 500.

quote:

At the time, her credit score was about 560 because her identity was stolen when she was 19, Garcia said. She figured that even with a 23 percent interest rate, the biweekly payments would help her build credit.

Garcia said she was never asked her income. She, and others, describe a rushed and confusing process once a car was picked out. Under her sales contract, she would have paid about $18,000 over four years on a car valued by Kelley Blue Book for roughly $5,000. But numerous mechanical issues, including a dead battery that resulted in her physically pushing her car back to the dealer, eventually forced her to trade in the car at another lot. She had already paid about $10,000 to get a trade-in credit of about $7,500.



A bit about the systematic problems behind subprime auto loans, and how the business model is directed to stretch out the loans with more interest and fees, rather than aiming to simply collect the principal and interest.

quote:

Santander Consumer USA, which provides about one in five auto loans nationwide, is fiercely pursuing delinquent borrowers who have gotten mired in debt for financial products they cannot afford and should probably have never been sold in the first place. Aggressive debt collectors could be one factor in the tens of thousands of car repossessions that borrowers have endured, which might in turn lead to an even deeper financial crisis by depriving borrowers of perhaps their household’s only valuable asset. [Santander] has come under fire for unethical sales tactics amid the new subprime feeding frenzy.

Interviews with current and former Santander workers indicate that the company incentivizes employees to “service” debts by steering borrowers to the costliest, riskiest repayment plans. Under an incentive system that rewards performance based on how rapidly and ruthlessly they can squeeze payments from clients, a pressure-cooker office climate pushes workers to skirt ethical corners. The report found that workers press clients toward obtaining “extensions, temporary reductions in payment plans, and loan remodifications that ultimately generate more interest and fee income for Santander.”

Collection workers recalled being coached on how to deflect customer complaints with placating statements and misleading reassurances about the prospects of resolving their debts. The script is rigidly worded to restrict workers from discussing individuals’ economic situations, with “little time or incentive to provide customers with substantive guidance for their individual situations”—suggesting that the company prioritizes wringing out repayment over protecting the customer’s finances.

According to Molly McGrath, author of the report, “Santander’s metrics and incentive system…directly tie collections practices to keeping consumers in bad loans, whether it is through giving out loan extensions, giving a customer a [stopgap temporary deferment]…or in continually reinstating defaulted loans or giving a customer back a car that had been repossessed.” McGrath observed “an environment where employees may inadvertently steer customers into accepting these loan products without a clear understanding of their risk or impact.”

The risky loan terms that Santander pushes seems to draw especially high-risk borrowers, according to the report: “In 2016, the average term for Santander’s loans was 70 months and the average customer payment to income ratio was more than 10 percent. With loans like this, borrowers get ‘upside down’ on their loans very quickly.”


Sources:
https://www.nytimes.com/2017/06/18/business/dealbook/car-loan-subprime.html
https://www.bloomberg.com/news/articles/2017-11-14/subprime-auto-delinquency-near-crisis-levels-at-non-bank-lenders
http://www.tampabay.com/projects/2017/special-report/subprime-auto-loan-tampa-bay-used-car-dealers/
https://www.thenation.com/article/the-latest-predatory-banking-practice-you-havent-heard-about-auto-loans/

Zodijackylite
Oct 18, 2005

hello bonjour, en francais we call the bread man l'homme de pain, because pain means bread and we're going to see a lot of pain this year and every nyrfan is looking forward to it and hey tony, can you wait until after my postgame interview to get on your phone? i thought you quit twitter...

Mary Kay at least makes some sense. Makeup is a luxury product, and most stores also have a sales person whose job is to show off the product and make you feel good about it. A $19 thing of lipstick from Sephora, Mac, or Mary Kay doesn't seem all that different to me (a guy who doesn't wear makeup.) Amway is puzzling because you can mailorder cases of off-brand energy drinks that cost more than just buying the name-brand ones in a store.

The back end/MLM part of the business is the scam part, but Amway's weirder because I just can't imagine anyone actually wanting those products.

Zodijackylite
Oct 18, 2005

hello bonjour, en francais we call the bread man l'homme de pain, because pain means bread and we're going to see a lot of pain this year and every nyrfan is looking forward to it and hey tony, can you wait until after my postgame interview to get on your phone? i thought you quit twitter...

I'm able to understand the appeal of most of these scams - they appeal to some urge to win now, get the better of a situation, or misrepresent what they're selling. I honestly can't figure out what urge could possibly make people buy meat from a van. I thought the instincts which prevent us from eating spoiled food would be stronger than the ice-cream-truck urge, but I guess not?

If van meat is stolen, it's not refrigerated and has probably been down someone's pants. It's a couple bucks cheaper, I guess?

If van meat is from a "legitimate" seller, then what makes it more appealing than going to a supermarket? Perhaps the only understandable answer is that not everyone has a car or easy access to a supermarket, but the logistics of that still don't make sense when you think about handing over $100 to someone with a fridge in their van.

If van meat is cheaper, which I don't think it is, could it really be that much cheaper than a store with it on sale? Is it that much cheaper than the cost of refrigeration? This isn't stolen speakers of Chinese catalog stuff, it's meat.

Could van meat have a similar appeal to moonshine, because gently caress "the man" and you want it direct? I don't think so, because this product isn't romanticized. Buying venison from the back of a hunter's truck, maybe, but boxes of industrial-packed steak from a van is more like a long-shot knockoff from a bargain store than a jar of moonshine.

Even if someone does buy meat from a van on impulse, what would motivate someone to be a repeat buyer? I can wrap my head around Amway and Mary Kay tactics, payday loans, and stolen electronics, but what kind of broken mind or depraved lunacy motivates buying meat from a van?!?!

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Zodijackylite
Oct 18, 2005

hello bonjour, en francais we call the bread man l'homme de pain, because pain means bread and we're going to see a lot of pain this year and every nyrfan is looking forward to it and hey tony, can you wait until after my postgame interview to get on your phone? i thought you quit twitter...

Absurd Alhazred posted:

Money laundering has had an even crazier past than iTunes gift cards:

https://twitter.com/RobertWuhl/status/1023409462223093761

The best part of this article is when they say an FBI agent blamed McDonalds Monopoly for 9/11.

"Baker recalled that one of the FBI’s top agents, known as the “human lie-detector,” interrogated him, and added that if the FBI had focused on surveilling terrorists and not McDonald’s winners, 9/11 might never have happened."

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