Focus and Topics
Predatory loans, by definition, can be abusive and take advantage of people without them being aware that this is the case. Team Sprocket seeks to understand predatory loans in greater detail to find out how we would potentially improve this scenario.
We intend to explore the parties involved directly, and indirectly, with predatory loans. Along with the parties we will seek to educate ourselves more about the process associated with these types of loans. Also of importance is discovering the origin of necessity as well as the general societal perception of predatory loans.
The objective of the research is to further understand predatory loans and why people utilize them, being unfair or abusive in their nature, rather than alternatives. Our research will help better understand:
- The general perception of predatory loans and whether or not everyone understands the inherent abusive nature of said loans.
- The way in which predatory loans are positioned to potential borrowers.
- The process involved in applying for predatory loans.
- How these loans are processed.
- What exactly is involved in paying back predatory loans.
- What other solutions exist, if any at all.
Participants and Context
The participants that take part in the ecosystem that is predatory loans are few and far between. It is not a particularly prevalent issue. To observe and interview, we have identified the following groups of people and the unique points of view that they bring to the overall conversation:
From lenders we will gain insight into the why and how of the efficacy and morals of a predatory loan situation. The spectrum of Borrowers that come to them for services. As well as a view into what kinds of objects are commonly put on the line and the ripple effects the loss/gain has on people’s lives.
From borrowers we will learn the direct circumstance by which someone is put in the position of using a predatory loan and how it feels.
Family members will bring other perspectives on how the above groups of individuals are affected by taking part in predatory loans, in their lives outside of work.
Those Owed Money by the Borrower (besides the Lender):
Previously borrowed from lenders will enhance our insight into the events leading up to this need.
Non-profit employees who help individuals get out of debt (?):
“Get out of debt” do gooders will have a perspective of the overall loan and debt space as a whole.
Collection Agency Employees:
Collection agency personnel will have seen the ins and outs of all types of debts and loans, including the endings and beginnings of them.
Bank employees (Possibly):
Bank employees will more fully understand how loans as a whole work.. And what the criteria is for someone being rejected.
Entering the environment:
Predicting that the predatory loan space will have a difficult entry point, we plan to broadcast the work we are trying to do at the forefront of our research, expressing the need for these interviewees across platforms of social media (Facebook, Instagram, Twitter etc.), public commerce(craigslist, loan offices/services etc.), non-profits oriented towards debt and the low income population(Mission Capital).
Entering a vulnerable space:
Predatory loans is a sub-sector which encapsulates a population who exist on the bottom rung of the ladder of society and almost definitely feel that reality daily. The delicateness to which these issues need to be approached will be at the forefront of our awareness so as to receive information that is not voiced out of defensiveness.
Behavior will be most easily Observable when the Borrower is in their home environment relating to their family. This context will give us insight into how the earlier phases, taking out the loan and the decision to do so etc., went and the ripple effect they have had.
We can observe documents, what their parameters are, and the words that are used.
Borrower’s, Family Members, and those owed money by the Borrower we will try to observe in their home.
Lenders, Non-profit, collection agency, and bank employees will be observed in their work context.
Activities and Method
Contextual Inquiry will be utilized to conduct research. Contextual Inquiry is important with the focus being Predatory loans for the fact that the life context of the individuals is so important. These are people that could fall under the “basic needs” category and to understand through immersion the weight that that reality has is important. A clear focus gives us the capability to dive into the how and why of where they are and how they got there. The aim is to understand the consecutive nature of the events that led them to needing this type of loan as well as the process, feeling of interfacing between Lender and Borrower and the undercurrent intents.
Driving this research is a deep desire to understand the full life cycle of the process of a predatory loan. Starting at the catalyst creating the need and ending at the route of payback or loss of property put on the line. A key component is the power of choice, and if it feels like it is present in the transactions and decisions made. A step further begs the questions, if the choice is jeopardized through manipulation of a less well off individual.
A moderator will be facilitating conversations with the research participants while a note taker is annotating key phrases, actions, reactions, and scenarios. All alongside a photographer who is snapping photos of key incidences as inconspicuously as possible. All members of the team will be aware of places that call for further questioning.
We are expecting our research process to run for approximately 12 days.
Discussion Guide / Script
Introduction. Hi, my name is ________. We’re conducting research with [Borrowers, Lenders, Collection Agents, etc] to understand loan options in Austin. What I’m hoping we can do today is ask you some questions, and then have you show us some of the things that help you [manage your finances, manage your loan, manage customer payments].
If at any time you don’t feel comfortable with what we’re asking, just let us know.
Explain and distribute informed consent.
(30 min) During this section of the interview, we will seek to build rapport and gather context about their motivations, processes, and artifacts to inform the rest of the interview. We will seek to gain an understanding about loan processes, how they understand their progress towards [taking out a loan, paying off a loan, issuing a loan, etc.], their current perception of their progress against this goal, and the milestones, markers, and artifacts used to inform this perception. (Past / Present / Future).
Foundational Interview Questions:
How many loans have you taken out? What is the amount in total?
When did you first take out the loan(s)?
What is the interest for the loan(s)?
For what purpose did you take out the loan(s)?
Would you mind if we contacted this business/individual?
What measures did you take to avoid taking out a loan?
Who is your Lending Company?
How often are you in touch with your Lending Company? Do you contact them or do they contact you? How do you communication (e.g. via phone, in-person, mail, e-mail)?
How are you paying off the loan(s)? Check? Cash?
Do you pay in-person or online?
What tools do you use to track your finances?
What tools do you use to track your loan payments?
How many revenue streams go to paying off the loan(s)?
Do you expect to take out another loan in the future?
How would you describe your personal capabilities with technology?
Whom do you go to for financial advice?
Whom do you go to for financial support, if you’re in a pinch?
How did you find out about the Lending Company?
What opportunities opened up by taking out a loan?
Tell me about the process of taking out a loan. (Who was involved, when did you first find out about loans?)
If you could go back right now and tell your past self anything about loans, what would you say?
If your future self were to come back in time, to this very moment and tell you anything, what do you think he/she would say?
How long have you worked here?
Walk me through the process of issuing a loan.
What is the loan range (e.g. $100-$5,000)?
What is the average size of a loan issued by this company?
How do you handle the stress of your job?
For what purpose do Borrowers usually take out loans?
How do you determine the lending risk?
What kind of collateral do you normally accept?
Those Owed Money by the Borrower
How many of your customers have needed to take out a loan to make their payment?
Did you receive your payment directly from the Lender or from the Customer (Borrower)?
How often do you find that your customers have difficulty making the payment?
How do your customers normally pay you? (Cash, Check, Credit)
Non-profit employees who help individuals get out of debt
How many clients use Predatory Loans to make a payment?
Can you show me the tools you provide to help clients out of debt?
Do you ever have face-to-face contact with the Lender?
At what point do clients seek your help? What level of desperation?
What role do secrecy and shame play in debt and financial management?
What factors drive clients towards Predatory Lending? Convenience? Lack of education?
What puts clients most at risk for taking out a Predatory Loan?
What are the criteria for taking out a loan?
Why might the bank reject a loan request?
What is the rate of rejection?
Collection Agency Employees
How do you get the list of names to contact?
How do you contact the Borrowers?
How many times do you have to follow up with someone to get in touch?