But critics say they're a ripoff because of high interest rates and also could lead to fraud if someone else diverts and cashes them. They want such checks banned. Mr. Goldberg said he was especially wary. No forms to fill out, not even a phone call. Convenient, perhaps, but also expensive.
Lenders say they solicit people with good credit histories.
They defend the check-loans, calling them a convenience to consumers, and argue they contain enough protections to ensure a consumer isn't penalized if someone else cashes the check. The Goldbergs, however, complained to their congressman, Rep. Maurice Hinchey, a Democrat on the House Banking Committee. Mr. Hinchey proposed a bill that would ban the loans. Mr. Hinchey and co-sponsor Rep. Henry B. Gonzalez of Texas, the Banking Committee's senior Democrat, see a parallel with a 1970 law that banned the practice of sending unsolicited credit cards through the mail. Because the check-loans are fairly new, it's difficult to determine how widespread they are.