The Register Citizen (Torrington, CT)
Lender sought high interest rates while Stefanowski was its CEO
Bob Stefanowski says he is a corporate reformer who was not responsible for gouging consumers when he was chief executive officer of one of the world’s largest short-term loan companies.
But during the same period when the Republican candidate for governor claims he was changing the corporate culture of DFC Global Corp., one of his top lieutenants fought Hawaiian lawmakers in a successful campaign to retain the company’s highinterest rates in that state.
Separately, a former co-worker of Stefanowski’s from General Electric in the 1990s, who as a U.S. Army major had to deal with the aftermath of short-term loans taken out by his troops, has joined Democrat Ned Lamont’s campaign for governor.
Archie Elam of Stamford, a 1976 graduate of the United States Military Academy, is featured in TV and radio ads criticizing companies such as DFC, charging they take advantage of unsavvy, financially strapped consumers — including military personnel with young families.
During a recent interview, he
said that his soldiers had no direct dealings with Dollar Financial, but he is speaking out against such entities, as well as against Stefanowski’s candidacy.
Kendall Marr, Stefanowski’s spokesman, said Elam’s criticism is a “false line of attack.”
“As we have already made clear, when Bob arrived at DFC he sought to correct the issues the company had struggled with in years prior, including ensuring that those who were wronged were fully compensated and seeking reforms to make the products offered more fair and consumerfriendly,” Marr said.
Marr declined to specifically address the issue of the Hawaiian lobbying effort. It happened a few months after Stefanowski took over the company, and the campaign has said Stefanowski worked to change the way DFC operated.
$21,000 on lobbyists
DFC, known at various times as Dollar Financial Corp. or Dollar Financial Group, spent more than $21,000 on lobbyists in 2015 and 2016, aimed at derailing reform legislation, according to the financial-reporting records of the Hawaii State Ethics Commission.
The records indicate that a lobbying firm, Capitol Consultants of Hawaii, a Honolulu company, was contracted in the effort.
At the time — February, 2015 — social-service and legal advocates including Goodwill Inc. supported capping interest rates at 36 percent in an attempt to protect lower-income residents of the islands from annual interest rates that could reach 459 percent.
Such short-term, highinterest loan operations are virtually prohibited in many states, including California, New York and Connecticut, which caps interest rates at 12 percent for loans under $10,000. Twenty-two other states, including Hawaii, Florida, Kansas, Texas and Virginia, allow for so-called high-cost loans — sometimes known as payday loans because they’re used by people who don’t have enough money to make it to their next payday.
In February 2015, four months after Stefanowski’s hiring as CEO, Kerry Palombo, the company’s director of North American compliance, complained to Hawaiian lawmakers that the proposed consumerfriendly legislation would slash the company’s revenue in that state by 60 percent.
“Not only would the 36 percent rate cap referenced in one of these bills prohibit us from operating profitably, it would put payday lenders out of business completely,” Palombo said in testimony to the Hawaiian state Senate Committee on Commerce and Consumer Protection. “We oppose legislation that would put us out of business and leave our customers only with less desirable credit alternatives.”
The bill died in the Hawaii Legislature.
Stefanowski was CEO of the company from November 2014 until January 2017. He says he changed the culture there, firing 30 executives.
His campaign for governor is his first run for elective office. Stefanowski was hired by DFC in the wake of a lending scandal in the United Kingdom.
Some of the company’s tactics were revealed in a recent Hearst Connecticut Media Group report, which noted that some British consumers were gouged in loans that they took out as late as five months after Stefanowski joined the company. Some of the British loans included interest rates of over 2,900 percent, leading the Financial Conduct Authority of the United Kingdom to order Dollar Financial to reimburse 147,000 customers $24 million.
Broke young soldiers In 2013, the year before Stefanowski was hired, a Dollar Financial subsidiary in the U.S. agreed to reimburse $3.3 million to military service members and veterans who were attracted to high-interest car loans.
Elam, 63, was a U.S. Army major stationed in Virginia in the early ‘90s, when he saw first-hand the dire financial straits and cycle of debt that his young soldiers faced.
“Victimizing people who are vulnerable doesn’t ring true to me,” said Elam, a permanently disabled veteran of the first Gulf War. He first found out about payday loans when receiving letters from lenders about delinquent soliders. When he read through a payday-loan contract, he became disturbed by the terms and conditions.
“It’s a persistent problem,” Elam said. “If I had my way, I’d just ban it nationwide and not allow it anymore. These are young people, 19 years old, their early 20s, very often with families and small kids, who find themselves short of money. They’re told, ‘hey if you need $1,000 it will only cost you $100.’ You’re not told it’s compounded every two weeks. Next thing you know they’re over their heads. Ninety-nine percent of them are buying food for their families.”