One powerful way to help people save money and build wealth is to help them protect the money and investments they already have. Recent changes in the financial services industry has given rise to practices that are often questionable at best, and too frequently predatory in nature. These practices often directly target communities and individuals who are least able to avoid them and afford it.
Defining predatory practices is difficult because of the complexity of determining the appropriate level of fees for taking on certain financial risk levels. There must be a balance between ensuring people have adequate access to credit and protecting people from being preyed upon unfairly.
However, detecting predatory practices can be difficult. Predatory lenders are trained to win people’s trust and to convince them that their product is in the consumer’s best interest. Three features, alone or in combination, typically describe predatory lending practices: