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Sharpton Backs Away from Car Loans Commericals

by. Hazel Trice Edney
NNPA Washington Correspondent for BKNews.com

WASHINGTON (NNPA) – New York Activist Al Sharpton, under fire from opponents of predatory lending, says he has discontinued appearing in controversial television commercials for LoanMax, a car-lending agency that charges interest rates up to 300 percent.

The first round of commercials appeared over the past month and were mostly seen on the East Coast. The deal was paying Sharpton $20,000 a month or $240,000 for one year, according to sources familiar with the contract.

After he was challenged, Sharpton withdrew from the ad campaign.

“I respectfully, but firmly decline your offer for further engagement on my part, and will not engage in any business relationship to promote auto lending with LoanMax,” Sharpton wrote in a Dec. 7 letter to Rod Aycox, LoanMax president and chief executive officer. “I respect the fact that you have, according to our review of all data, respected regulators and the law, and I hope you respect the fact that I choose not to indirectly send mixed signals to the public on my views on interest caps on loans of any kind. I trust that all of us will move toward a nation that will not discriminate against people with no credit, or that are victims of economic discrimination.”

The letter terminates the $240,000 contract with Select Management Resources, the management arm of the Alpharetta, Ga.-based LoanMax, a firm that operates 200 stores in 21 states. Sharpton says the commercials aired during prime-time morning news shows in the Washington, D.C., Virginia and Maryland area.

“There are no other commercials. Whatever was scheduled has been cancelled,” Sharpton said in an interview with the NNPA News Service. “They were willing to pay a lot of money for me to go forward. But, I’m not going to do that because I’ve got to be convinced that this is the right thing to do…At this point there’s nothing to talk about with them.”

This marks the second time within three months that Sharpton has had to back away from an arrangement that ran counter to his pro-consumer reputation.

In September, even after it had been widely reported that Tyson Foods was the target of a lawsuit filed by 12 Black employees charging racial discrimination, Sharpton was proceeding to honor Tyson Foods, along with Wal-Mart, a firm accused of treating its employees poorly, a charge the company strongly denies. However, when contacted by the NNPA News Service, Sharpton said he would first look into the allegations and subsequently abandoned plans to present the controversial awards.

In this instance, Sharpton says his decision to end his dealings with LoanMax was based on learning that the company has interest rates that could skyrocket to 300 percent for a person who is not able to pay back a loan within a year. He said he had not done the research before agreeing to the commercials because he signed the first contract based on the word of a trusted friend, Lamell McMorris, a former executive director of the Southern Christian Leadership Conference under the administration of Martin Luther King III. McMorris, also a friend of Aycox, says he encouraged Sharpton to do the commercials because he believes the company to be fair.

Aycox has not returned repeated phone calls soliciting his response to Sharpton’s decision. However, in an earlier interview, while confirming the 300 percent interest rate, he stood by the fairness of his loans, saying, “We deal with hundreds of thousands of customers every year who are very satisfied.”

Sharpton initially suspended the commercials after Keith Corbett, senior vice president of the Durham, N.C.-based Center for Responsible Lending, a non-profit think tank, criticized him for the commercials that featured Sharpton on stage by a flag, appearing to be in his former roll as a Democratic candidate for president.

“I just wish he had talked to us earlier because a lot of the damage has been done,” Corbett responds to Sharpton’s cancellation. Corbett says he is not fazed by the amount of money offered by LoanMax for the commercials to expand.

“If it is true that he is making that much, I’m not surprised because the fringe financial services will go to any length to divide the Black community,” Corbett says.

In response to several news accounts of Corbett’s criticism of the Sharpton commercials, Aycox wrote Corbett a letter, threatening to take legal action for statements that he called “misleading and inaccurate.”

In one example, the letter quotes Corbett as saying: “If you miss one payment your car could be repossessed.”

Aycox’ Dec. 7 followup letter counters, “Surely you understand that LoanMax cannot repossess a car without first sending a Notice of Default or a Right to Cure letter. A car cannot be repossessed simply by missing one payment.”

Aycox adds, “I have worked hard to build a company that provides a reasonable product to a consumer group that was not being served.”

Corbett doesn’t waiver in response to the company’s lucrative offer to Sharpton: “This is how much money these guys make on the backs of the poor.”

Despite his rejection of the offer, Sharpton says he has received many calls in support of the commercials from people who lament that they can’t get loans from regular banks and lending institutions because of bad credit. Nevertheless, there must be controls, he says.

“I find no illegal practices that LoanMax has been accused of, and in no way am I trying to substantiate any claims that you have made in writing that your company has been miscast or even slandered,” Sharpton writes in his letter to Aycox. “However, I am concerned about a general industry-wide climate in auto lending that opens the door to possible predatory behavior, and an unbearable burden on the people I have struggled for all my life.”

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