Study Shows Hispanics Pay Exorbitant Payday Loan Fees

Hispanic man

When you do not have access to a bank account or a traditional financial institution, you have to turn to the likes of check cashing facilities, prepaid cards and payday loans. All of these cost a great deal of money, and can reduce the amount of funds you earn every single month because of costly fees.

A new study has found unbanked Hispanics are the most affected by this trend.

Using data from the Federal Deposit Insurance Corporation (FDIC), NerdWallet discovered that Hispanic households without bank accounts can pay hundreds or perhaps even thousands of dollars in fees every single year, which impacts the most vulnerable that are already having a hard time getting by today.

It is estimated that 16 percent of Hispanic households don’t have bank accounts. When they decide to use prepaid cards, they can fork over $489 a year. This skyrockets when the fees from payday loans and money orders are added into the mix. The former can range between $10 and $30 for each $100 borrowed in addition to the exuberant interest rates. The latter can eat up 10 percent of the check.

This a lot higher than the $15 a month you’d pay the financial institution for a checking account, and the $34 you’d pay for an overdraft. Simply put: unbanked Hispanics are needlessly wasting money.

“They are discouraged very soon when they start to pay fees or struggle to maintain a minimum balance,” Antonio Alba Meraz, an educator with the Latino Financial Literacy Program at the University of Minnesota told the Palm Beach Post.

Ultimately, the report concluded, Hispanic consumers can enter into high-interest debt traps. Moreover, they can miss out on opportunities to establish credit, which can help them get banking products.

Reportedly, Spanish-speaking households are five times more likely to not have a bank account. Some of the reasons include high fees, identification problems, credit history issues and distrust of banks. Other common issues consist of low income, education, language barriers and legal status – we all know legal status has suddenly become quite the big deal in the United States today.

But if Hispanics want to avoid wasting their hard earned money on fees then it’s time to turn to banks.

Alternative financial products have been given a poor reputation as of late. This is especially true for payday loans, which is a $40 billion industry. Critics often accuse payday loan businesses like Landmark Cash of taking advantage of the impecunious, particularly minorities. They allege that payday loan lenders charge exorbitant fees, which send a lot of the customers into endless debt cycles.

Proponents counter this argument by referring to the fact that a lot of those who utilize payday loan companies do not have access to conventional forms of credit and bank accounts. Oftentimes, a payday loan, no matter the cost, can help a Hispanic households keep the lights on, pay the rent or repair a broken down vehicle.
Whatever the case, now is the time for unbanked Hispanics to become banked.


Salesforce Rethinking Twitter Acquisition

salesforce which appeared to be in pole position to acquire Twitter following withdrawals of other leading suitors might now be forced to back out as a result of pressure from its investors.

Search giant Google, Apple and Disney were among the leading companies thought to be interested in buying Twitter, but all of them have now indicated that they would not make any offer for the social media site.

The withdrawals of these other lead suitors had put Salesforce in the lead as the potential buyer. Its chief executive Marc Benioff is believed to be particularly interested in acquiring Twitter, but his optimism appears not to be shared by investors in the cloud computing company.

Shareholders are lost on what value a troubled company that is being ditched by some of its investors could add to Salesforce. The New York Times reports that these investors have made it clear to Benioff that they are not in support of a Twitter acquisition.

Those calling for the plug to be pulled on the deal are led by Fidelity Investment, the company’s largest shareholder with around 14 percent stake. People familiar with the matter told the NY Times that some of the investors have threatened to sell their stock.

It now appears that Benioff has started to have second thoughts about the Twitter deal, based on his remarks at an investor meeting in San Francisco on Wednesday. He stated that he had read all notes and emails from the shareholders of Salesforce.

“And as I digest all of that information, this is actually the No. 1 thing that has been on my mind,” Benioff said. “In some cases, we have been unusually surprised and we have had to do a reset.”

Salesforce knows it has to be careful with how it deals with its investors, especially in the light of its profitability challenges. It relies significantly on stock to pay its employees and process acquisitions. The customer management software company reportedly paid its employees $593.6 million in stock-based compensation during its fiscal year that ended January 31.

The company has some big names among its shareholders, including T. Rowe Price, BlackRock and Sands Capital Management, so it knows it has to be careful with a Twitter deal. A source said the investors have effectively put an end to any potential acquisition. It is unclear if the company’s CEO would continue in his pursuit, but that now looks unlikely.

News broke on September 23 that Salesforce was in talks with Twitter over an acquisition deal. This led to some investors selling off their shares, driving down price by about 8 percent over the following 10 days.

The cloud computing company previously tried to acquire the professional social network LinkedIn, but it lost that to Microsoft in June. The loss to the tech giant came despite Salesforce offering a better deal. But it relied on stock in that deal while Microsoft offered $26.2 billion in cash.

Analysts say Benioff knows that any action that makes shareholders to sell off their stock would certainly drive down value. This would harm the company’s ability to pull off successful deals.

Founded in 1999, Salesforce has grown to become a public company with a value of about $49 billion. Share price has shot up from an IPO value of $11 to over $70.


Mylan Agrees $465 Million Settlement in EpiPen Case


Global pharmaceuticals company Mylan has agreed to pay $465 million to settle EpiPen Medicaid claims against it over allegations that it overpriced its emergency allergy products.

The settlement with the Department of Justice was announced by the drug maker on Friday. It comes after American lawmakers and federal health officials complained that Mylan had classified its EpiPen as a generic product when in fact it is not.

The drug company had reportedly classified its emergency allergy injection as a generic product since 1997 under the Medicaid program for the poor. This enabled it pay lower amount in rebates on sales of the products. But the U.S. government says EpiPen was wrongly classified, stating that it is a brand product which should have paid higher rebates.

EpiPen is a pen-like device used to inject epinephrine in order to deal with emergency, severe allergic reactions.

The law requires pharmaceuticals companies to pay rebates on sales of their products to Medicaid-insured patients. Under the government’s pricing rules, generics attract payment of 13 percent in Medicaid rebates, while brand-name medications have rebates set at a minimum of 23 percent.

Recently, officials of the Centers for Medicare & Medicaid were questioned by the Congress on what was being done about the lower rebate being paid by Mylan. Some senators last week requested the Department of Justice to investigate the EpiPen classification. It is believed the interest shown in the matter by the law makers contributed to the settlement finally announced by the drug company late Friday.

“I am glad the Department of Justice pursued this so quickly, since the misclassification was an outrage,” Sen. Amy Klobuchar (D-Minn) said in a statement.

Public outcry about the EpiPen misclassification was fueled by anger over outrageous inflation in the price of the anti-allergy injection. Mylan, which acquired rights to the product in 2007, has raised price per pair from $94 in that year to $608 in 2016. The price hike has come without there being significant improvement to the product since the acquisition.

Perhaps, more infuriating to some people is the claim it does not cost up to $10 to produce a unit of EpiPen.

Members of the Congress have also shown interest in knowing why such a high price is being charged for EpiPen. Mylan Chief Executive Heather Bresch was invited to a hearing of the House Oversight and Government Reform Committee on September 21 to explain the outrageous hike.

It was later found out that the company earned considerably higher profit on each pair of EpiPen than the $100 claimed by Bresch.

Government health programs, such as Medicaid, are principal EpiPen buyers. The amount spent on the product by Medicare and Medicaid surged some 463 percent from $86.5 million in 2011 to $486.8 million last year, according to Fox News.

Settlements such as this one usually result after several years of negotiations. The fast pace with which this one was reached indicated Mylan wanted to quickly move on from the controversy, even though it claimed the deal did not involve admission of wrongdoing.

On Thursday, CMS revealed that Mylan has also not been paying Medicaid another rebate required when the price rise of a brand drug is higher than inflation. Average percentage increase in EpiPen price has been more than 10 times higher each year since 2007.