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Meet the Man Who Made a Fortune Exploiting the Poor With Payday Loans

Allan Jones, founder of Check Into Cash, invented the modern-day payday loan industry. This is the story of how he made the working poor very, very big business.

Editor's Note: The author adapted and wrote the following for AlterNet, based on his book Broke USA: From Pawnshops to Poverty, Inc.: How the Working Poor Became Big Business, out now from HarpersBusiness.

The first time I spoke with Allan Jones, one of the pioneers of subprime lending, he practically ordered me down to Tennessee. Jones is responsible for the modern-day payday loan industry. While he didn't coin the term “payday loan,” he was the first to spot the vast moneymaking potential in making these small-denomination loans of maybe $200 or $400 against a person's next paycheck. Jones opened his first payday store in 1993 in his hometown of Cleveland, Tenn. By 2006, the payday loan was a $40-billion-a-year industry with more storefronts scattered around the country than the combined numbers of McDonalds and Burger King, each offering a kind of fast-food finance to the working poor at annual interest rates as high as 500 and 600 percent, depending on the state. 

“If you're a'gonna write about payday, you gotta get down here and see me,” Jones told me the first time we spoke. “I created the industry and the rest of 'em just copied me.” At that point, I was just starting work on a book chronicling the rise of a poverty industry in the U.S. so large it rivals the casino business in terms of annual revenues generated, and here one of the princes was insisting I come spend some time with him. But then, after dozens of emails and phone conversations with the assistant in charge of his schedule, I received a curt email from the communications director for Check Into Cash. Mr. Jones, it seemed, had changed his mind.  

I decided to travel to Tennessee anyway, to see for myself this improbable birthplace of the cash advance business. A few days before my arrival in Cleveland, I sent Jones an email informing him that I'd be in town and talking with people about him. An hour later my phone rang. It was Jones. He'd be happy to see me while I was in town, he said -- and that weekend Allan Jones and I became BFFs.

We attended a wrestling match on the campus of the University of Tennessee in Chattanooga, one hour's drive away, and then had lunch. Back in Cleveland, he showed me the hospital where he was born and drove me by the house where his childhood friend Doug lived. He pointed out where his sister lived and confided in me that his weight had grown so out of control he had recently had gastro-bypass surgery. He drove me up the hill to show me the spectacular home that had cost him tens of millions to build and invited me to watch the Super Bowl with him and his sons, but I declined because we had already spent more than five hours together and had plans to meet the next morning. Even best friends need time apart. 

* * * 

Destiny, as Allan Jones sees it, was awaiting him even as he exited the womb. The big news in Cleveland in the fall of 1952 was the opening of a new hospital and the first baby delivered there. “The day I'm born and I'm already in the newspaper,” Jones said shaking his head in amazement. Is it any wonder, he asked me, that he had accomplished “great things” in his life? A few years back he had the idea of building a “First Mother's Garden” on the grounds of the hospital in honor of his mother. “There was all this attention on me,” Jones reasoned generously, “but it was her who gave labor.”