Payday loans and globalization in the age of the Internet – policy recommendations

Purpose - – This study aims to analyze Payday loans and many similar products which are a relatively new phenomena in the USA, but have been rapidly expanding particularly after the 2008 financial crisis, and have taken a heavy toll on the most vulnerable members of our society. Design/methodology/approach - – An extensive literature review of the key US features of payday loans, the regulatory framework and its limitations, the issues and the most recent actions taken to date. The review also includes work done by the European Union, the Organization for Economic Cooperation and Development and the United Nations while discussing how the Internet and extraterritoriality influence the current landscape. Findings - – With the advent of globalization and the Internet, the issues associated with payday loans have become harder to tackle, particularly in the USA, given the arcane state regulations used to address the numerous frauds and abuses plaguing the industry. The lack of any international approach combined with increasing cases where questionable actors leverage extraterritoriality, making addressing the issues even more challenging. Originality/value - – This is an all-encompassing review aimed at expanding on existing approaches to properly provide and regulate payday loans and similar alternative sources of credit in this rapidly changing environment; pragmatic domestic and international policy recommendations are listed accordingly.