When advertising executives in Baltimore sought to develop a national ad campaign warning about predatory lending, they turned to the source: "reformed" lenders who agreed to speak on a first-name-only basis.
Eisner Communications representatives, working with the Ad Council and the National Fair Housing Alliance, talked with former employees of companies accused of predatory lending to get the skinny on how clients are lured and deceived. The ad reps said they discovered, among other things, that lenders intentionally hired minorities to dupe minorities into signing up for loans with extremely high fees or interest rates.
"The sad irony is that predatory lenders use racial profiling on their victims," said Eisner's Karla Masters, who helped design the ad. "It's the wolf in sheep's clothing. That's what lenders do."
The product of their research is a recently launched public service announcement that features a black or Hispanic salesperson hawking a bad loan to a prospective minority homeowner. A cartoon talk bubble on the print ad reads, "You can trust me for a great loan because I'm black [or Latino] like you." In the background lurks a middle-aged white man who represents the shadowy boss, or "suit."
The campaign is the Ad Council's first on predatory lending and includes the ad for newspapers and magazines as well as television spots that started airing last year. The nonprofit group, which created Smokey Bear and McGruff the Crime Dog, has shown a knack for tapping into the societal angst of the day. Its 1970s anti-litter campaign featuring the image of a weeping Indian reflected an emerging environmental consciousness. That TV ad first aired for Earth Day.
The $2 million ad campaign on predatory lending comes amid fears that the practice is on the rise, and as housing prices hit historic highs and homeownership rates reach record levels.
Meanwhile, the banking industry has been beset by concerns that minorities are steered into high interest-rate loans, an issue that New York Attorney General Eliot Spitzer was investigating until a federal judge stepped in. Spitzer has said he would appeal the decision that he overstepped his authority. Banks defend the loans as a way to extend credit to people who otherwise wouldn't qualify because of their checkered credit histories.
The print ad Eisner developed is dominated by a large block of copy that's intended to look like the fine print that few people read. The words are what the lender is really thinking, poking fun at the victim and saying, "I make a fortune tricking people like you into loans you can't possibly pay back."
Shanna Smith, president and chief executive officer of the National Fair Housing Alliance, a nonprofit group that works to ensure equitable access to housing, said that she frequently runs across employees from "bad guy" lenders and that several agreed to speak with Eisner on a confidential basis.
Some of the former employees interviewed had worked for Household International Inc., which has been acquired by HSBC Holdings PLC. Household settled a case brought several years ago by regulators and state attorneys general in which it was accused of tricking customers into paying too much for mortgages. Others came from Associates First Capital Corp., which was acquired by Citigroup Inc. and folded into Baltimore-based CitiFinancial. Associates faced similar allegations and settled a case with the Federal Trade Commission.
"Most of them quit their jobs because they couldn't sleep at night," Smith said of the employees who revealed the predatory tactics to the ad executives. "It just got to their conscience."
Eisner also held a half-dozen focus groups with victims in the District of Columbia, which gave rise to the "favorite sucker" character described in the ad.
"The elderly are the easiest to fool," the lender says in the ad. "Sit at a kitchen table and eat some runny apple pie, and suddenly I'm like a long-lost cousin to you people."
The scenario is a familiar one in Washington, Eisner's Masters said. In neighborhoods that are rapidly gentrifying with young professionals moving in, many older homeowners are vulnerable. With most of their wealth tied up in their homes, they often turn to refinancing to repair leaky roofs or even pay for medications. Those are the people some lenders prey upon and who often wind up in foreclosure, she said,
Eisner used minority moderators to lead the focus groups and help minority victims be comfortable about discussing racial aspects. When designing the ads, the agency decided that issues of race should be front and center.
"In advertising, it has to be arresting," said Abe Novick, senior vice president at Eisner. "The lenders use race in how they operate, and we couldn't ignore that."
The Department of Housing and Urban Development, an early sponsor of the campaign, pulled its logo over concerns that the campaign could be seen as "inflammatory," said Jerry Brown, a spokesman for the agency. But other sponsors, including Fannie Mae, Wachovia Corp. and Ameriquest Mortgage Co., didn't have a problem with the racially charged content, according to Smith of the National Fair Housing Alliance.
Once the ads are developed, media outlets run them free of charge. The five-year campaign also includes posters that were put up by senior centers, religious organizations and fair housing groups across the country.
The TV ads have aired in Baltimore, New York, Chicago and other markets.