Helpful finance tips, or sneaky payday loan ad?

Econ4u.org seems like a happy place to learn simple lessons about money.  The Web site is full of smiling faces and quick, fun questions like: How long will it take to double your money if you are earning 5 percent interest? (14 years, by the way).

So what's a fun Web site like that doing in the middle of a bitter battle over the payday loan industry, or for that matter, the smoking industry?

Research commissioned by the Econ4u.org's operator, The Center for Economic and Entrepreneurial Literacy, has made its way into newspapers around the country – fewer than 1 in 5 members of Congress have any formal economics training, the organization said after a recent study.  The Wall Street Journal, The New York Times, Bloomberg, Reuters and dozens of papers have all cited the center's research.

Econ4u's owners say the site has a straightforward, noble mission: to "teach important economic concepts."  But while the site offers plenty of useful money basics, there is one oddity: information on controversial payday loans is unusually positive.

And more curious: The man behind the site is Rick Berman, a notorious Washington, D.C., publicist famous for taking up the cause for unpopular industries like alcohol and tobacco. In fact, many believe Berman –- who's known by opponents as Dr. Evil -- was the model for the lobbyist viewers loved to hate in the 2005 movie "Thank You for Smoking."

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The Econ4u.org Web site has appeared as Congress is on the verge of passing legislation that could severely restrict the $25 billion short-term loan industry, which has been under attack for many years. A law proposed by Sen. Dick Durbin (D.-Ill.) – the "Protecting Consumers from Unreasonable Credit Rates Act" – would cap payday loan rates at 36 percent annually, far lower than the current rate of 400 to 800 percent.

Econ4u.org is marketed most heavily in the Washington D.C. area, where it is hawked by bold advertisements in subway cars.  There, its puzzlers are printed on bright orange posters. But one of the fun quiz questions seems to be posed far more often than others:

If faced with an unexpected cash need, which of these options will typically cost the most?

• Bounce a check
• Get a short-term payday loan
• Initiate a wire transfer
• Pay credit card late fee

The *right* answer, the poster indicates, is bounce a check, which can cost twice as much as the other alternatives. A $100 payday loan costs $15, the poster says, far less than the average late fee or wire charge.

By itself, that might not cause the raising of any eyebrows.  But following the poster's instructions to learn more on the Econ4u.org Web site adds a bit more to the mystery.  Listed on the site's "About" page are merely a form for entering an e-mail list and a phone number. The name of an executive, or even a public relations contact person, isn't listed.

A Google search for the phone number unmasks the anonymity quite a bit. The number also appears on press releases issued by the Center for Economic and Entrepreneurial Literacy, belonging to a spokesman named Tim Miller.

Information about Miller is easy to find online. He has also worked for another Berman organization called the Center for Consumer Freedom. It supports industry efforts to oppose laws aimed at limiting access to tobacco, fattening food and alcohol.

Miller, meanwhile, wrote an op-ed piece last year titled "Payday Loans Help Many of the Poor," that appeared in The Wall Street Journal and was reprinted in several newspapers around the country. The letter, in which Miller identifies himself as a spokesman for the Center for Consumer Freedom, makes a case against limitations on the payday loan industry.

"Short-term payday loans are actually cheaper than similar financial products like overdraft fees, credit-card cash advances, or paying bills late," he wrote.

'Ambush education'

In an interview, Miller said that Econ4u.org is published by a nonprofit group headed by Berman that is concerned about the lack of financial education among consumers.  The Center for Economic and Entrepreneurial Literacy is a spin-off of the Center for Consumer Freedom, he said.

"As an organization, we'd like to advocate the need for increased economic education in schools," he said.  "Only three states have mandates for personal finance classes."

Miller said that Berman created the site "as a vehicle for (him) to talk about something that he is passionate about."

The quiz questions are part of an "ambush education" campaign that he said is more effective than traditional methods for teaching money lessons.  Television ads for the site have appeared around the country, he said, but poster ads are primarily appearing in Washington D.C.

"We have a lot of twentysomethings working in town, working in The Hill, that don't have a lot of economic literacy and they are making big decisions," he said.

He rejected the suggestion that the site is a subtle marketing tool for the payday loan industry.

"We have a lot of information on our site. I wouldn't know how we could favor one industry," he said.  Instead, questions involving payday loans simply indicate how bad some consumer other options are. "We're trying to drive home the silly mistakes people make.  Bank overdrafts are as raw a deal as you can get."

Miller said he didn't know where the funding for Econ4u came from, and he directed additional questions to Berman.

'Information isn't unbiased'

Berman's day job is running the Washington D.C.-based public affairs firm Berman & Company. He is best known as the paid defender of unpopular industries. He runs numerous nonprofit groups and media campaigns that target consumer advocacy groups, and has waged campaigns ridiculing efforts of groups that call attention to the dangers of smoking, drunk driving and obesity, among others. He has a celebrated rift with the organization Mothers against Drunk Driving.  Miller described him as a libertarian.

In an e-mail exchange, Berman said he had a policy of not disclosing supporters, but asserted that Econ4u doesn't receive money from the payday industry, and that his PR firm currently does "not have any payday lenders as clients."

He reiterated that Econ4u was merely a labor of love.  He did say that the Center for Consumer Freedom has a "long history of planting its flag in defense of consumer choices and attacking those who want to take them away."

Berman said his PR firm represents businesses against "activist attacks" by making "controversial, but factual, arguments to dispel many of the myths that are out there."

Econ4u.org,  however, is different, he said.  He pays for the site by himself, he said.

He called the lack of economics and finance knowledge among the American population "astounding."

"However, the information I put out isn't unbiased," he wrote. "It reflects the issues that I personally believe need to be addressed. The bank overdraft fees are one of the biggest scams running, and the reason we use that ad in the metro is because it's one of the questions that people seem most surprised by."

'A sock puppet'

The Center for Responsible Lending, a consumer group that has long advocated restrictions on payday loans, isn't buying that explanation.

"It's a PR firm's attempt to put a nice face on payday lending by couching it in terms of broader advice, said Ellen Schloemer, executive vice president of the agency. "They don't disclose who they are. There is no way an average consumer would know this is a sock puppet for a PR firm."

In Washington D.C., interest groups disguised as unbiased research organizations are sometimes called "astroturf" groups.  Schloemer dismissed Econ4u as the work of such an astroturf firm, and for evidence pointed to the keywords purchased by the site from Google's ad service – because keywords are purchased via auction, information about them can be gleaned by market research companies like KeywordSpy.com.  Schloemer pointed to that site's research on Econ4u.org, which shows about nearly 80 of the 97 keywords purchased by Econ4u.org's operators involve some variation of the words payday loan – terms like "instant payday loan", "military payday loan", or "payday loan Oregon" --indicating its owners are principally interested in getting their site in front of people looking for information on payday loans.

Schloemer said she had no problem with the firm taking out advertisements – and conceded that much information on Econ4u.org is useful – but said Berman's group should disclose its identity in the advertisements and on the Web site.

"I have no problem with them trying to advance their views, we do that too.  But it's not fair to consumers who are thinking this is objective advice," she said.  

Berman, however, insists the site is his own personal project, and he plans to work even harder in the future to improve the state of financial education in America.

"Our last round of advertising...was a round of national (public service announcement) focusing on mortgages and basic business economics. And I am exploring getting our information into public schools in D.C." he said.