Is It Ethical To Lend To Working People At A 200% Interest Rate? Lendup's Iyer and Orloff Say Yes - 574
Never miss another interview! Join Devin here: http://bit.ly/joindevin. Read the full Forbes article and watch the interview here: http://bit.ly/2gR4JCV. We’re all familiar with payday lenders who are providing loans to people who can least afford it at interest rates that shock the greediest of corporate bankers. Can a fintech company that lends at rates up to 200% annual percentage rates ever be considered ethical? In this piece, I’m going to share my conclusion. To help me make this evaluation, I turned to Morgan Simon, a vocal advocate for using a social justice lens for impact investing. She is the author of Real Impact: The New Economics of Social Change and Managing Director of Candide Group. She framed the question for me: In general, when we think about fintech, from microfinance in the global south to financial services for working class populations in the US, we think a lot about the question of fairness. It’s common for a social enterprise to focus on providing better rates to a customer compared to what they had access to. But better does not always mean fair. So, we always look at a company and try to assess--is the financing non-extractive, meaning the customer receives more value than the company? Is the operating margin reasonable compared to the consumer value created? Does the product help build assets as opposed to focusing predominately on consumption? Each company and case is different, and hence it’s impossible to say that a certain range of APRs enables fairness. It’s important to take each company case-by-case and try to assess its particular impact. Read the full Forbes article and watch the interview here: http://bit.ly/2gR4JCV. Check out my free webinar where I share the secrets of successful nonprofit crowdfunding at http://crowdfundingforsocialgood.info.