[Plura-list] When you hear "fintech," think "unlicensed bank"

Mon May 1 16:59:14 EDT 2023

Read today's issue online at: https://pluralistic.net/2023/05/01/usury/

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Tomorrow (May 2) at 7PM, I'll be at the Cedar Hills Crossing (PDX) Powell's with Andy Baio:

https://www.powells.com/book/red-team-blues-martin-hench-1-9781250865847/2-1

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Today's links

* When you hear "fintech," think "unlicensed bank": "...with a computer."

* Hey look at this: Delights to delectate.

* This day in history: 2003, 2008, 2013, 2018, 2022

* Colophon: Recent publications, upcoming/recent appearances, current writing projects, current reading

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🧟 When you hear "fintech," think "unlicensed bank"

In theory, patents are for novel, useful inventions that aren't obvious "to a skilled practitioner of the art." But as computers ate our society, grifters began to receive patents for "doing something we've done for centuries...with a computer." "With a computer": those three words had the power to cloud patent examiners' minds.

Patent trolls - who secure "with a computer" patents and then extract ransoms from people doing normal things on threat of a lawsuit - are an underappreciated form of "tech exceptionalism." Normally, "tech exceptionalism" refers to bros who wave away things like privacy invasions by arguing that "with a computer" makes it all different.

These tech exceptionalists are the legit face of tech exceptionalism, the Forbes 30 Under 30 set. They're grifters, but they're *celebrated* grifters. There's a whole bottom-feeding sludge of tech exceptionalists that don't get the same kind of attention, like patent trolls.

Oh, and the fintech industry.

As Riley Quinn says, "when you hear 'fintech,' think: 'unlicensed bank.'" The majority of fintech "innovation" consists of adding "with a computer" to highly regulated activities and declaring them to be *unregulated* (and, in the case of crypto, *unregulatable*).

There are a lot of heavily regulated financial activities, like dealing in securities (something the crypto industry is *definitely* doing and claims it isn't). Most people don't buy or sell securities regularly - indeed, most Americans own little or no stocks.

But you know what regulated financial activity a lot of Americans participate in?

Going into debt.

As wages stagnate and the price of housing, medical care, childcare, transportation and education soar, Americans fund their consumption with debt. Trillions of dollars' worth of debt. Many of us are privileged to borrow money by walking into a bank and asking for a loan, but millions of Americans are denied that genteel experience.

Instead, working Americans increasingly rely on payday lenders and other usurers who charge sky-high interest rates, on top of penalties and fees, trapping borrowers in an endless cycle of indebtedness. This is an historical sign of a civilization in decline: productive workers require loans to engage in useful activities. Normally, the activity pans out - the crop comes in, say - and the debt is repaid.

But eventually, you'll get a bad beat. The crop fails, the workshop burns down, a pandemic shuts down production. Instead of paying off your debt, you have to roll it over. Now, you're in an even worse situation, and the next time you catch a bad break, you go further into debt. Over time, all production comes under the control of creditors.

The historical answer to this is jubilee: a regular wiping-away of *all* debt. While this was often dressed up in moral language, there was an absolutely practical rationale for it. Without jubilee, eventually, all the farmers stop growing food so that they can grow ornamental flowers for their creditors' tables. Then, as starvation sets in, civilization collapses:

https://pluralistic.net/2022/07/08/jubilant/#construire-des-passerelles

As the debt historian Michael Hudson says, "Debts that can't be paid, won't be paid." Without jubilee, indebtedness becomes a chronic and inescapable condition. As more and more creditors attach their claims to debtors' assets, they have to compete with one another to terrorize the debtor into paying them off, first. One creditor might threaten to garnish your paycheck. Another, to repossess your car. Another, to evict you from your home. Another, to break your arm. Debts that can't be paid, won't be paid - but when you have a choice between a broken arm and stealing from your kid's college fund or the cash-register, maybe the debt can be paid...a little. Of course, digital tools offer all kinds of exciting new tools for arm-breakers - immobilizing your car, say, or deleting the apps on your phone, starting with the ones you use most often:

https://pluralistic.net/2021/04/02/innovation-unlocks-markets/#digital-arm-breakers

Under Trump, payday lenders *romped* through America. A lobbyist for the payday lenders became a top Trump lawyer:

https://theintercept.com/2017/11/27/white-house-memo-justifying-cfpb-takeover-was-written-by-payday-lender-attorney/

This lobbyist then oversaw Trump's appointment of a Consumer Finance Protection Bureau boss who deregulated payday lenders, opening the door to *triple digit* interest rates:

https://www.latimes.com/business/lazarus/la-fi-lazarus-cfpb-payday-lenders-20180119-story.html

To justify this, the payday loan industry found corruptible academics and paid them to write papers defending payday loans as "inclusive." These papers were secretly co-authored by payday loan industry lobbyists:

https://www.washingtonpost.com/business/2019/02/25/how-payday-lending-industry-insider-tilted-academic-research-its-favor/

Of course, Trump doesn't read academic papers, so the payday lenders also moved their annual conference to a Trump resort, writing the President a check for $1m:

https://www.propublica.org/article/trump-inc-podcast-payday-lenders-spent-1-million-at-a-trump-resort-and-cashed-in

Biden plugged many of the cracks that Trump created in the firewalls that guard against predatory lenders. Most significantly, he moved Rohit Chopra from the FTC to the CFPB, where, as director, he has overseen a determined effort to rein in the sector. As the CFPB re-establishes regulation, the fintech industry has moved in to add "with a computer" to many regulated activities and so declare them beyond regulation.

One fintech "innovation" is the creation of a "direct to consumer Earned Wage Access" product. Earned Wage Access is just a fancy term for a program some employers offer whereby workers can get paid ahead of payday for the hours they've already worked. The direct-to-consumer EWA offers loans without verifying that the borrower has money coming in. Companies like Earnin claim that their faux EWA services are free, but in practice, everyone who uses the service pays for the "Lightning Speed" upsell.

Of course they do. Earnin charges sky-high interest rates and twists borrowers' arms into *leaving a "tip"* for the service (yes, they expect you to tip your loan-shark!). Anyone desperate enough to pay triple-digit interest rates and *tip* the service for originating their loan is desperate and needs to the money *now*:

https://prospect.org/power/05-01-2023-fintech-ewa-payday-loan-scam/

EWA annual interest rates sit around *300%*. The average EWA borrower uses the service two or three times *every month*. EWA CEOs and lobbyists claim that they're banking the unbanked - but the reality is that they're acting as sticky-fingered brokers between banks and young, poor workers, marking up traditional bank services.

This fact is rarely mentioned when EWA companies lobby state legislatures seeking to be exempted from usury rules that are supposed to curb predatory lenders. In Vermont, Earnin wants an exemption from the state's 18% interest rate cap - remember, the true APR for EWA loans is about 300%.

In Texas, payday lenders are classed as loan *brokers*, not loan *originators* and are thus able to avoid the state's usury caps. EWAs are lobbying the Texas legislature for further exemptions from state money-transmitter and usury limit laws, principally on the strength of the "it's different: we do it *with a computer*" logic.

But as Jarod Facundo writes for *The American Prospect*, quoting Monica Burks from the Center for Responsible Lending, a loan is a loan even if it's with a computer: "The industry is trying to create a new definition for what a loan is in order to exempt themselves from existing consumer protection laws… When you offer someone a portion of money on the promise that they will repay it, and often that repayment will be accompanied with fees or charges or interest, that's what a loan is."

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🧟 Hey look at this

* Fuck the Monarchy https://www.antipope.org/charlie/blog-static/2023/04/fuck-the-monarchy.html

* Punctuation Personified (1824) https://publicdomainreview.org/collection/punctuation-personified

* Cory Doctorow's Red Team Blues: a refreshingly hopeful finance thriller about cryptocurrency https://boingboing.net/2023/04/27/cory-doctorows-red-team-blues-a-refreshingly-hopeful-finance-thriller-about-cryptocurrency.html

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🧟 This day in history

#20yrsago Corporate lobbyists get US into treaties that ban DMCA reform https://web.archive.org/web/20031231034523/http://www.lessig.org/blog/archives/2003_04.shtml

#15yrsago Musicians tricked into appearing in anti-piracy propaganda movie https://www.theage.com.au/technology/musician-duped-into-anti-piracy-video-20080501-gdsbpo.html

#15yrsago HOWTO keep your laptop from being searched at the border (it’s hard) https://www.eff.org/deeplinks/2008/05/protecting-yourself-suspicionless-searches-while-t

#15yrsago EFF and security experts to Congress: We need hearings on Customs laptop seizures and snooping https://www.eff.org/press/archives/2008/05/01

#10yrsago Mozilla to FinSpy: stop disguising your “lawful interception” spyware as Firefox https://www.wired.com/2013/04/finfisher-firefox/

#10yrsago EFF challenges bogus 3D printing patents https://www.eff.org/deeplinks/2013/04/eff-partners-challenge

#10yrsago How Congress flies https://www.bloomberg.com/news/articles/2013-04-30/the-pampered-world-of-congressional-air-travel

#10yrsago Necessary Evil – a triumphant end to the Milkweed Triptych where Nazi X-Men fight English warlocks https://memex.craphound.com/2013/04/30/necessary-evil-a-triumphant-end-to-the-milkweed-triptych-where-nazi-x-men-fight-english-warlocks/

#10yrsago What’s big, corrupt, terrifying and worse than ACTA? TPP. Here we go again! https://memex.craphound.com/2013/04/30/whats-big-corrupt-terrifying-and-worse-than-acta-tpp-here-we-go-again/#more-56211

#10yrsago Teaching TCP/IP headers with legos https://righteousit.wordpress.com/2010/06/27/practical-visual-three-dimensional-pedagogy-for-internet-protocol-packet-header-control-fields/

#10yrsago Future Tense: Neal Stephenson and Tim Wu talk future, sf and tech https://www.slate.com/articles/podcasts/future_tense/2013/04/neal_stephenson_joins_us_for_the_first_stranger_than_fiction_podcast.html

#10yrsago SOPA’s daddy is now in charge of government science funding, and he hates peer-review https://www.science.org/content/article/us-lawmaker-proposes-new-criteria-choosing-nsf-grants

#5yrsago Hope Larson’s “All Summer Long,” lively YA graphic novel about tween friendships, rock and roll, and being yourself https://memex.craphound.com/2018/05/01/hope-larsons-all-summer-long-lively-ya-graphic-novel-about-tween-friendships-rock-and-roll-and-being-yourself/

#5yrsago Speaking in my professional capacity as a dystopian science fiction writer… https://memex.craphound.com/2018/05/01/speaking-in-my-professional-capacity-as-a-dystopian-science-fiction-writer/

#5yrsago It’s back! British Conservative politicians’ habitual “go ahead, kick me in the balls, I can take it” pose https://www.theguardian.com/politics/2018/apr/30/sajid-javid-tory-power-stance

#5yrsago McDonald’s workers across the UK are striking https://www.theguardian.com/business/2018/may/01/mcstrike-mcdonalds-workers-walk-out-over-zero-hours-contracts

#5yrsago George Mason economics department admits it sold hiring control to anonymous, super-rich donors https://crookedtimber.org/2018/05/01/the-public-choice-of-public-choice/

#5yrsago Thousands of prominent AI researchers tell Nature they won’t have anything to do with its new paywalled journal https://openaccess.engineering.oregonstate.edu

#5yrsago Parliament to Zuck: show up or else https://www.theverge.com/2018/5/1/17306684/uk-zuckerberg-testimony-facebook-data-privacy

#5yrsago Right wing snowflakes moaning about Michelle Wolf’s hilarious White House Press Corps monologue show us real “PC” https://www.currentaffairs.org/2018/04/what-being-politically-incorrect-actually-looks-like/`

#5yrsago The UK is finally cracking down on its Russian money-laundry, but hasn’t hired people to do the job https://www.heraldscotland.com/news/16192718.staff-shortages-threaten-crackdown-shell-firms/

#5yrsago The UK’s surveillance regulator changed names and dropped its domain, which is now squatted by a premature ejaculation scammer https://www.vice.com/en/article/ywx8gj/uk-watchdog-iocco-surveillance-spam-premature-ejaculation

#5yrsago In just 7 months, the US public domain will get its first infusion since 1998 https://www.theatlantic.com/technology/archive/2018/04/copywritten-so-dont-copy-me/557420/

#5yrsago Debullshitifying Microsoft’s smear campaign against the recycler it helped send to prison https://techcrunch.com/2018/04/27/microsoft-attempts-to-spin-its-role-in-counterfeiting-case/

#5yrsago A LaTeX mod to draw coffee cup rings on your technical papers https://legacy.hanno-rein.de/hanno-rein.de/archives/349

#5yrsago For $4k/year, Moscow cyber-arms-dealer Gleg will sell you 25 0-day bugs for attacking hospitals https://www.vice.com/en/article/j5a7p3/russian-company-zero-days-hospital-medical-software

#1yrago Disney's writer wage theft, a year on https://pluralistic.net/2022/04/30/disney-still-must-pay/#pay-the-writer

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🧟 Colophon

Today's top sources:

Currently writing:

* A Little Brother short story about DIY insulin PLANNING

* Picks and Shovels, a Martin Hench noir thriller about the heroic era of the PC. FIRST DRAFT COMPLETE, WAITING FOR EDITORIAL REVIEW

* The Bezzle, a Martin Hench noir thriller novel about the prison-tech industry. FIRST DRAFT COMPLETE, WAITING FOR EDITORIAL REVIEW

* Vigilant, Little Brother short story about remote invigilation. ON SUBMISSION

* Moral Hazard, a short story for MIT Tech Review's 12 Tomorrows. FIRST DRAFT COMPLETE, ACCEPTED FOR PUBLICATION

* Spill, a Little Brother short story about pipeline protests. ON SUBMISSION

Latest podcast: How To Make a Child-Safe TikTok https://craphound.com/news/2023/04/17/how-to-make-a-child-safe-tiktok/

Upcoming appearances:

* Red Team Blues at Powell's with Andy Baio (PDX/Cedar Hills Crossing), May 2
https://www.powells.com/book/red-team-blues-martin-hench-1-9781250865847/2-1

* Red Team Blues at Books, Inc with Mitch Kapor (Mountain View), May 5
https://www.booksinc.net/event/cory-doctorow-books-inc-mountain-view

* Bay Area Bookfest (Berkeley), May 6/7
https://www.baybookfest.org/session/cory-doctorow/

* Open Source Summit (Vancouver), May 10
https://events.linuxfoundation.org/open-source-summit-north-america/

* Massy Books Red Team Blues event with Sean Cranbury (Vancouver), May 10
https://www.eventbrite.ca/e/red-team-blues-cory-doctorow-in-conversation-with-sean-cranbury-tickets-608877016547

* Wordfest (Calgary), May 11
https://wordfest.com/2023/event/wordfest-presents-cory-doctorow/

* Gaithersburg Book Festival, May 20
https://www.gaithersburgbookfestival.org/featured_author/cory-doctorow/

* Public Knowledge Emerging Tech keynote (DC), May 22
https://www.eventbrite.com/e/emerging-tech-tickets-600582126307

* WEPFest with Ron Diebert, Dave Bidini and Nancy Olivieri (Toronto), May 23
https://www.westendphoenix.com/shop/wepfest-spring-fundraiser

* HowTheLightGetsIn (Hay), May 28
https://howthelightgetsin.org/events/the-ai-enigma-12147

* HowTheLightGetsIn (Hay), May 29
https://howthelightgetsin.org/events/the-danger-and-desire-of-the-frontier-12246

* Red Team Blues event with Tim Harford (Oxford), May 29
https://www.eventbrite.co.uk/e/cory-doctorow-red-team-blues-with-tim-harford-tickets-574673793787

* Red Team Blues event with Christian Reilly (Nottingham), May 30
https://www.waterstones.com/events/an-evening-with-cory-doctorow/nottingham

* Red Team Blues event with Ian Forrester (Manchester), May 31
https://www.waterstones.com/events/in-conversation-with-cory-doctorow/manchester-deansgate

* UCL Peter Kirstein Lecture, Jun 1 (London):
https://www.eventbrite.co.uk/e/peter-kirstein-lecture-2023-featuring-cory-doctorow-registration-539205788027

* Cymera Festival, Jun 3 (Edinburgh)
https://www.cymerafestival.co.uk/cymera23-events/2023/4/4/connection-interrupted-with-nina-allan-cory-doctorow-and-ian-mcdonald

* Red Team Blues with Martha Lane Fox at the British Library, Jun 5 (London):
https://www.bl.uk/events/an-evening-with-cory-doctorow-techno-thriller

* Re:publica keynote, Jun 7 (Berlin)
https://re-publica.com/de/news/rp23-keynote-von-cory-doctorow-rebecca-giblin-kreative-arbeitsmaerkte-und-monopole

Recent appearances:

* The Next Chapter/CBC
https://www.cbc.ca/player/play/2199394372000

* Media Death Cult
https://www.youtube.com/watch?v=24k8r-p6ibQ

* IFTF Future Now
https://soundcloud.com/institute-for-the-future/future-now-003-chokepoint-capitalism-with-cory-doctorow?si=b46c7320d8bd48789fa2783ff52975d8

Latest books:

* "Chokepoint Capitalism: How to Beat Big Tech, Tame Big Content, and Get Artists Paid, with Rebecca Giblin", on how to unrig the markets for creative labor, Beacon Press/Scribe 2022 https://chokepointcapitalism.com

* "Attack Surface": The third Little Brother novel, a standalone technothriller for adults. The *Washington Post* called it "a political cyberthriller, vigorous, bold and savvy about the limits of revolution and resistance." Order signed, personalized copies from Dark Delicacies https://www.darkdel.com/store/p1840/Available_Now%3A_Attack_Surface.html

* "How to Destroy Surveillance Capitalism": an anti-monopoly pamphlet analyzing the true harms of surveillance capitalism and proposing a solution. https://onezero.medium.com/how-to-destroy-surveillance-capitalism-8135e6744d59 (print edition: https://bookshop.org/books/how-to-destroy-surveillance-capitalism/9781736205907) (signed copies: https://www.darkdel.com/store/p2024/Available_Now%3A__How_to_Destroy_Surveillance_Capitalism.html)

* "Little Brother/Homeland": A reissue omnibus edition with a new introduction by Edward Snowden: https://us.macmillan.com/books/9781250774583; personalized/signed copies here: https://www.darkdel.com/store/p1750/July%3A__Little_Brother_%26_Homeland.html

* "Poesy the Monster Slayer" a picture book about monsters, bedtime, gender, and kicking ass. Order here: https://us.macmillan.com/books/9781626723627. Get a personalized, signed copy here: https://www.darkdel.com/store/p2682/Corey_Doctorow%3A_Poesy_the_Monster_Slayer_HB.html#/.

Upcoming books:

* Red Team Blues: "A grabby, compulsive thriller that will leave you knowing more about how the world works than you did before." Tor Books, April 2023

* The Internet Con: A nonfiction book about interoperability and Big Tech, Verso, September 2023

* The Lost Cause: a post-Green New Deal eco-topian novel about truth and reconciliation with white nationalist militias, Tor Books, November 2023

This work - excluding any serialized fiction - is licensed under a Creative Commons Attribution 4.0 license. That means you can use it any way you like, including commercially, provided that you attribute it to me, Cory Doctorow, and include a link to pluralistic.net.

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