How Check-Cashing Services Impact Low-Income Americans Research Paper

How Check-Cashing Services Impact Low-Income Americans - Research Paper Example â€Å"[W]hen a San Francisco-based bank began to offer commercial check-cashing services in the Los Angeles area, it was criticized as ‘ripping off’ the poor† (pp. 142). B. How Did They Begin? These check-cashing services often started out as small, mom-and-pop operations that sold antiques, jewelry, televisions, and other odds-and-ends items and knick-knacks. Pretty soon, check-cashing services included everything from getting a check cashed (without having to have a bank account)—to other financial services, including getting cashier’s checks and money orders. A. Who Started the Service? These services were started by people who had a little bit to invest in their business. Usually, these service providers started out small, and, as their wealth grew, they could either expand their pawnshops or check-cashing services—which didn’t require a checking account at the bank, which was a novelty for poor people who traditionally didn’ t have financial services available to them due to their socioeconomically-disadvantaged status. II. How Did Check-Cashing Services Become Popular? Check-cashing services became popular when people realized that they needed some kind of banking services in order to cash their checks for pennies on the dollar. What they didn’t realize was that these currency exchanges were often charging exorbitant fees for providing said services. III. What Groups Were Targeted A. How Were These Groups Selected? These groups were most likely selected due to their low socioeconomic status. People who are living in poverty rarely have less cash flow, and less capital to be able to put towards financial services—such as, say, having a checking and/or savings account at the bank. Thus, this can drive people into even more poverty because they are not saving money. Since they are not saving money, unfortunately, this is causing them much distress—having to usually live paycheck to pa ycheck. Many of these people are struggling economically. With many people out of work and the national unemployment rate at 9%, several people do not have jobs and are just living on their earnings from part-time jobs and unemployment checks, not to mention welfare checks from the government. A large percentage of the American population is now living on welfare. These currency exchanges (or ‘check-cashing’ services) just prey upon the fact that the poor don’t have access to good financial services because banks usually don’t cash checks for people who don’t have accounts with their banks. B. What Do Critics Say About Targeting These Groups? Critics would generally agree that targeting this low-income, socioeconomically-disadvantaged groups would be morally and ethically wrong—speaking from the standpoint of a consumer.