5299199423_f8de99f3ee_zThe payday loan industry has four times more revenue than the NFL! Sounds true, doesn’t it?

“The wedding industry in the United States generates about $40 billion per year, almost as much as payday loans.” Interesting, is it really that much?

“Statistics show the payday loan industry is growing faster than ever.” Well, the article seems to have it’s math right.

“There has been a decline in recent years in the number of payday loans.” This article also seems to have it’s math right.

What gives?

Across every form of media, there seems to be very little consistency in reporting the facts and figures of the payday loan industry. Most of the numbers are very close, and everyone seems to agree that payday lending is at an all-time high. The words “epidemic proportions” keep getting thrown around for some reason.

So how come none of these experts agree? A lot of reputable publications and websites have conflicting information about payday loans. Who is right? And why can’t anyone agree on a final number?

Who Is Right?

How Stuff Works recently published an article about payday loans. Although dated August of 2014, it is just a repost of an article written in 2008, citing research from 2006.

Anyone who just clicks on this site looking for current information, without using a discerning eye, will logically assume that the information is up to date: it says that the industry had become a $40 billion a year industry.

Other numbers from 2006 are much lower than $40 billion, and the article seems credible enough that the $40 billion seems like it could be right, either for 2006 or 2014.

The Wall Street Journal is one of the most credible financial publications in the world. It cited research saying payday loans decreased from 2007 to 2009, declining to $38 billion.

Meanwhile, an industry estimate in 2010 pegged the total as $29 billion.

Another 2010 estimate (courtesy of Paydayloaninfo.com) puts the total at $40 billion.

The truth is, each of these quotes are correct. Each citation of national figures is based on data from a private research group and/or a survey. The responses are considered the sample group, and national numbers are extrapolated.

None of these figures are verifiably correct, but they are all reasonable interpretation of the facts. That there is no commonly accepted number is because everyone is working with small groups, so everyone’s results come out a little bit different.

4769199272_a15665526b_zLoan Industry Slant and the Spin

One of the reasons there is no consistency in payday loan data is because the issue is very divisive, and has become politicized.

What that means, is that usually when someone writes about payday loans, they are either “for” or “against” them, instead of being objective. Studies are conducted by the Pew Research Group, which has been crusading against payday lenders for years. Other studies are performed by the payday loan industry themselves.

In both cases, a side is trying to use statistics and numbers to prove that they are right, and that payday loans are either good or bad. Data from these studies is often used in other research, so the numbers get repeated as being purely factual.

There are other industry studies done, as well, from independent organizations. But even in these cases, the lack of concrete facts is a problem.

Corporations and Private Businesses

Why are there so few facts?

Because payday lenders are private business owners. They are not required to divulge their financial details. This makes it mandatory for researchers to rely on some educated guesswork to go with their numbers.

In a publically traded company, the books must be open for any of the shareholders to examine. But in a private company, the owners must only comply with the law and pay any taxes they owe. Beyond that, the government (or any private agency) can’t demand they open their books.

And since payday loan regulations are so varied (they are illegal in some states, legal in others, with different laws for each state) the numbers from one state might not be analogous with another state. With more and more lenders closing up their storefronts and doing business entirely online, it makes an already-hard-to-track industry even more enigmatic.

How many payday loans were issued last year? How much revenue did they create this year? It’s actually impossible to say. Just keep that in mind when someone does claim to have a definitive figure about the payday loan industry – the only thing definite about it is that they don’t know for sure.

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