> Posted by Elisabeth Rhyne, Managing Director, Center for Financial Inclusion at Accion

Millions of American households use payday loans each year. The question of whether these lenders are legitimate or scams is complicated, Elisabeth Rhyne finds.

I recently browsed the website of CashNetUSA, a company that offers payday loans and related products in 38 states across the United States. The website was easy to read and presented the application process and the (very high) charges simply and clearly. But I wanted to know more. Is this company legitimate? Does it live up to its promises? Will I experience any problems along the way? More broadly, how can a consumer tell whether an online payday lender is trustworthy?

I had no peer or family member to ask about this, so I turned to online credit provider reviews and began a Google-based armchair investigation.

The first review site that popped up was ConsumerAffairs (not to be confused with the better-known Consumer Reports*). Companies pay to be reviewed on ConsumerAffairs, and CashNetUSA had over 1,500 reviews on the site. CashNetUSA slides a few of the most favorable reviews directly onto its own website, like these:

Customer service is always perfect and always goes out of their way to help me! CashNetUSA is in my opinion the very best company with the best prices when you need a little extra help. I will recommend CashNetUSA to all my friends and family who need a little extra help, and need fast friendly service. (Rock Creek, Ohio)

This review suspiciously resembled advertising copy. The next one sounded a bit more like a real person, with a couple of mistakes included.

Today is a good day. Thanks CashNet USA. All your representatives even the online chat did a good job in helping me pay off my old loan and re applying for another. GREAT JOB Team. Thank you for information and help you provided with a Good Altitude (sic). (Mesquite, Texas)

Since the overwhelming majority of the 1,500 raters gave CashNetUSA 5 stars, I began to believe that actual people who have used the service appreciate its speed, simplicity and customer service quality. But what about the much smaller number of 3-star ratings, from people who are neither satisfied nor particularly angry? Many of these folks liked dealing with the company but complained about the high interest rates. The 1-star ratings were generally rants from people so angry they spluttered all over my computer screen. Clearly their reviews were a chance to vent and get a small bit of revenge. But these were a very small minority: the overall score was over 9 out of 10.

A very similar site is Trustpilot, with over 2,000 reviews of CashNetUSA, giving it an overall rating of 8.7. One wonders whether some of these reviews are provided by bots – though the site assures us that’s not happening.

Excellent customer service given by Alonda today at CashNetUSA! Thanks!!! (Johnny Kuhn)

All these positive reviews started getting boring, to tell the truth. I spent more time reading negative ones:

CASH NET USA, IS A RIP OFF, I SUGGEST YOU DO YOUR RESEARCH AND PLEASE TAKE THE TIME TO READ YOUR CONTRACT BEFORE SIGNING, A TOTAL DISAPPOINTMENT. (Connie Head Newman)

Another site, HighYa, only had a few ratings, but it was curious that HighYa’s CashNetUSA score was a low 1.8 out of 10, the opposite of the high ratings on Trustpilot and ConsumerAffairs. But HighYa offered an explanation. It explained that CashNetUSA is plagued by scammers who pose as the lender. A common tactic is to request applicants to send bank account details (to “test” a transaction) before approving a loan. Examining the experiences described by the 1-start ratings on all the sites, I concluded that a great many of the low raters had been scammed.

The next few sites I checked featured reviews written by the staff of the site, rather than consumer reviews. For example, Top Ten Reviews explained the service and praised CashNetUSA for ease of use. The big buttons allowing readers to click straight through to the CashNetUSA website revealed that the site is pretty cozy with the companies it reviews. However, at the same time, the site posted a warning to consumers to avoid use of payday loans whenever possible.

SuperMoney only had three customer reviews of CashNetUSA, with a mediocre 3 star rating. But this site helpfully informed that CashNetUSA is a brand of Chicago-based Enova International, which also operates in Europe and South America.

The last site I checked was Simple. Thrifty. Living., which summed up the picture I was beginning to get about CashNetUSA:

In general, among payday loan lenders, CashNetUSA fares pretty well when it comes to reviews. They are generally at or near the top of any payday loan rankings, mostly because of their organized business practices, easy availability and history in the payday loans field. To some, that may seem like saying a certain restaurant is the best of the restaurants with health code violations, but for someone who truly needs a payday loan, knowing which is the best and not a complete scam can be very helpful.

Or, as SuperMoney said, more succinctly:

The APRs are high, but it’s hard to beat as a fast source of cash in an emergency. 

This exploration of the review sites satisfied my curiosity about CashNetUSA, but it was only by visiting several sites that I got the full scoop. I’d like to know more about the business models behind these sites – and how their sources of income influence the ratings they display. The reviews from individual consumers on the bigger sites convinced me of the legitimacy and service quality of CashNetUSA, but I discounted those results somewhat, knowing that companies pay to be listed and encourage customers to place positive reviews, or place such reviews surreptitiously themselves. The staff-written reviews provided helpful information about the company that helped me draw my own conclusions – including that very important insight about the scamming problem. But without corroboration from the consumer reviews, I probably would have discounted them, too. Only by consulting both consumer and staff reviews could I piece together what seemed like a reliable picture.

I wonder how many people in search of a quick cash loan actually take the trouble to scan these reviews. With so much information at our fingertips, but without much ability to verify its sources, it makes perfect sense to fall back on the old reliable method: word of mouth from people we trust.

For more on how consumers try to verify the legitimacy of financial service offerings, see the report from CFI Fellow Alexis Beggs Olsen, Uniting Tech and Touch: Why Centaur Products Are Better for Consumers and Providers, Evidence from Kenya.

*Consumer Reports, possibly alone among organizations offering reviews, does not accept payment from any company it reviews, but instead operates through subscriptions from consumers. With no subscription, I was not able to access its information.

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