October 01, 2015
Credit and Finance

Led Astray

Online Lead Generation and Payday Loans

Aaron Rieke and Logan Koepke


Online commerce, once a luxury, is now central to people’s lives. The Internet is more than just a convenient place to shop for electronics or to book a vacation. Increasingly, it’s also where people go to find a loan, evaluate college degree programs, and seek financial advice. In order to ensure that vulnerable consumers are appropriately protected, consumer and civil rights advocates, regulators, journalists, and others need to understand the realities of new online marketplaces.

Lead generation is the business of selling leads — pieces of evidence that a consumer is interested in a product or service. Businesses have long relied upon leads to find new customers. However, the Internet ushered in sophisticated new lead generation practices, including highly-targeted online advertisements and automated, real-time auction houses for consumer data. These powerful techniques deserve special scrutiny when they are employed to promote potentially exploitative goods and services, such as payday loans and costly for-profit degree programs.

This report focuses on lead generators that encourage consumers to provide information about themselves in order to learn more about a product or service. These lead generators are middlemen. Many of them sell consumers’ data to businesses that offer risky financial products and other controversial services. Their practices can at times be reckless, unethical, or even illegal.

In this report, we explain how online lead generation works; describe the risks and legal complexities specific to lead generation for online payday loans; document the widespread use of search ads by payday lead generators; and recommend interventions.