Steven M. Rosenberry, of Wyomissing, Pa., doesn't want a loan in the form of a cash-and-spend check. He has asked Household Finance Consumer Discount Co. to strike his name from its mailing list.
Mr. Rosenberry is an electrical engineer and a computer hardware specialist. Greeting him at the top of the letter Household Finance sent him was, "$1,500 for your summertime pleasure!" Then came the salutation, "Dear Mr. Rosenberry," and the following:"We've enclosed a SPECIAL $1,500 CHECK for your summertime pleasure. Just endorse and cash it before the expiration date, and you'll have an IMMEDIATE $1,500 loan. There's nothing else you have to do. THE MONEY IS YOURS!
"We are making this offer because your EXCELLENT CREDIT RECORD with us qualifies you for a loan. It's that simple! We also want to make it as convenient as possible for you to get the money. YOU DON'T HAVE TO VISIT THE OFFICE OR EVEN CALL US.
"Think of all the ways you could put this money to use. Fix up your car, buy those new summer clothes, or take a long overdue summer vacation. FACT IS, YOU CAN USE THE MONEY FOR ANYTHING YOU WANT."
Mr. Rosenberry's "EXCELLENT CREDIT RECORD" was earned when he bought some furniture and paid off a one-year installment loan in three months. Household financed the loan.
To reject the "money for anything you want," Mr. Rosenberry was told: ''Destroy the check." He kept the check and printed "VOID" across it. If he accepted the loan the total cost at 21.902 5/8 interest for three years would be $559.56. He'd have to pay $2,059.56 for $1,500. What bothered Mr. Rosenberry was this. Suppose the check has been lost or stolen in the mail; suppose a forger cashed it. Then trouble.
"I would have absolutely no manner of knowing something was amiss until Household Finance started invoicing me for repayment of a loan I never contracted . . . I would be faced with the very difficult task of proving I did not use the check, which would certainly cost me time and money, cause unnecessary and unneeded aggravation, and could possibly damage my credit rating."
Household Finance is one among many lenders eager to get people into debt. Frank Sennott, president and chief operating officer of Transamerica Financial Services, a subsidiary of Transamerica Corp., has written me a "Dear Neighbor" letter notwithstanding the long distance that intervenes between him in Los Angeles and me in Philadelphia. And, in a neighborly fashion, Mr. Sennott closed his letter "Cordially," even though we have only a mailing- list acquaintance.
"Almost anyone could use extra cash," he assured me. "That's why we've started filling out the enclosed Money by Mail Application for You." I was offered $1,500, $2,000 or $2,500 to spend as I please - "to clean up nagging bills, remodel or refurbish your home, buy a second car, perhaps even set up an IRA to get that extra tax break you need." And if I needed more money, ''We make loans up to $150,000."
Fast action is promised. "Once your request is approved we'll mail the check to you," or, "you can avoid delay by coming to our office to pick up your check." The interest rates are specified: 20 percent on the $1,500 loan, 19.75 percent on the $2,000 loan, and 19.50 percent on the $2,500 loan.
The Household Finance cash-and-spend check to Mr. Rosenberry and Transamerica Financial's Money by Mail Application to me are examples of today's mass merchandising of debt. My 12-year-old grandson was offered a credit line up to $50,000 by a bank that made no effort to find out if he owned a home, which he doesn't. Mailing-list merchants of debt consider a home that isn't mortgaged to its rooftop an under-achievement : Debt it up!
To entice people to borrow is irresponsible, imprudent, and immoral. It can lead to capricious overspending and endanger the economy. If consumer income doesn't rise as rapidly as debt, widespread defaults and bankruptcies could occur.
Lenders should be servants of borrowers even as borrowers are servants of lenders. Is a loan sensible, purposeful and repayable? Mass merchandising of credit tortures that relationship. Know thy debtor is a sound lending precept.
Let's call a spade a spade. Officials of banks, finance companies, and credit-card issuers who merchandise debt by mail don't deserve to be referred to as bankers and lenders. Their actions designate them. They're debtmongers.