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Governor Lynch Comes To the Rescue of Would-Be Borrowers
February 21st, 2012
Loan veto protects consumers
Once again Governor Lynch has come to the rescue of New Hampshire consumers. On Jan. 27, 2012, he vetoed Senate Bill 160, which would create a new small loan product we don’t need. In his veto message he explained that SB 160 would legalize excessive interest rates for these so-called “installment loans”, meaning payday loans, that would hurt our families, communities and economy. “That is why 31 other states, including all the other New England states, ban these types of excessive interest rates for consumer credit.”
Example
As an example, SB 160 would allow a lender to charge nominal interest of $15.50 per $100 installment, but also allow as many as 26 installments per year. This could result in the Annual Percentage Rate being in excess of 400 percent! On a six-month loan with payments every two weeks, a lender would be able to charge a consumer over $1,100 to repay a $500 loan!
Regulation of lenders
Lynch also warned that oversight and regulation of lenders would be weaker under SB 160 than current practices for other forms of consumer credit. Thus, consumers would not receive the same level of protection as would normally be expected. SB 160 was strongly opposed by both Republicans and Democrats in the Legislature, the N.H. Attorney General’s Office and N.H. Legal Assistance, as well as other organizations interested in protecting consumer rights. Yet the Republican majority ignored their warnings and passed the legislation.
Court Blocks Colorado AG from Investigating Tribes’ Online Payday Loans
February 18th, 2012
Court rules in favor of tribes operating online payday loans
According to a court ruling this week, the Colorado Attorney General’s office can no longer investigate two American Indian tribes offering online payday loans. Denver District Court Judge Morris Hoffman ruled that the Miami tribe of Oklahoma and the Santee Sioux Nation of Nebraska are protected by tribal sovereign immunity laws from state investigation.
8 Years
The ruling culminates eight years of inquiries by the Attorney General’s office over allegations that Colorado residents were victimized by high-interest-rate payday loans that violated state laws. The ability of Indian tribes to conduct Internet commerce without regulatory oversight by states is “the bedrock of tribal sovereignty and it is refreshing to see that the court got it right,” said Barry Brandon, executive director of the Native American Fair Commerce Coalition, an advocacy group for tribes engaging in online business.
Disappointing
The Attorney General’s office termed the ruling “disappointing.” “We remain concerned at the proliferation of online payday lenders who are operating in violation of Colorado law and harming Colorado consumers,” said Jan Zavislan, deputy attorney general and head of the office’s consumer protection division. The office has not determined if it will appeal the ruling.
Payday lenders
Payday lenders issue short-term loans, typically at significantly higher interest rates than bank loans. Colorado in 2010 passed a law with more consumer protections on payday lending, but the loans investigated by the Attorney General allegedly violated even the looser regulations in effect prior to 2010. The AG’s office has alleged that the loan companies, Cash Advance and Preferred Cash Loans, are controlled by Overland Park, Kan. businessman Scott Tucker, and that the tribal affiliations were created to circumvent state regulations.
“Rent-a-tribe”
Hoffman said in the court ruling that “the state has failed to prove that the tribes do not own and operate these tribal entities” that are listed as the owners of the payday loan companies.
Watch Out For Phony Payday Loan Collection Calls
February 17th, 2012
Scare tactics being used
Everyone hates receiving calls from a bill collector, and it’s worse if the collector threatens to have you arrested. According to consumers who have recently contacted the BBB, these are exactly the types of calls they’ve received, but they don’t owe the debt and the collector isn’t who he says he is. While calls are coming from different numbers and the caller may even impersonate a police officer, the pitch is always the same. The caller tells the consumer they owe a debt on a payday loan and due to their nonpayment, they are going to be arrested unless they pay it over the phone immediately.
Scare tactics
“We have heard of these scare tactics being used in such scams before,” said Dale Mingilton, president and CEO of the BBB Serving Denver/Boulder. “But we urge consumers not to panic and to verify debts and know their rights before making any payment to anyone.” A consumer who contacted the BBB said the number she received the fraudulent collection call from was (408) 905-2092 and the caller said he was a police offer. He claimed she had a loan with Cash Advance America and needed to give him her credit card number in order to avoid being arrested for fraud. A Google search of this phone number show several posts from people who have been threatened in the same manner. Another consumer said she has received calls from (756) 852-1452 and the caller said he was an attorney for U.S. Payday Loans and they will have her arrested if she does not pay $5,000 immediately.
Protections
The Colorado Fair Debt Collection Practices Act provides many protections for consumers including the prohibition of threatening and harassing communications, false claims of government affiliations and misrepresentation.
File a complaint
People receiving such calls or letters are encouraged to file a complaint with the Colorado Collection Agency Board at www.coloradoattorneygeneral.gov/complaint, over the phone via 1-800-222-4444 or by e-mail to cab@state.co.us.
A Payday Loan Business
February 12th, 2012
From her Memphis shop, Lisa doles out cash to customers who pay her $30
“There is a segment of the population that can’t go to a bank and borrow $200. They don’t deal with banks,” said Lisa Brock, owner of a quick cash store. “But they need short-term loans. They need money to fix their car or go to a doctor.” Now, a new federal watchdog is gearing up to patrol the 36,000 loan shops like hers throughout the nation just like they were regular banks.
Paydays
Tens of thousands of Memphians long have relied on cash rather than paper checks or plastic credit cards, giving rise to about 400 quick-loan stores in the metropolitan area.
Instead of going to banks, many Memphians for years tapped pawn shops, loan sharks, friends, colleagues and relatives. Then the quick-loan business stepped up in the last decade, lining Memphis-area streets with almost two shops for every bank branch.
Social activists
Social activists contend the quick-loan trade works against the city’s poorer families. Loan fees and interest payments, activists say, can surpass the cost of a regular checking account by several hundred dollars per year for frequent borrowers. What’s not clear is whether Washington will scale back loan volumes by imposing sterner rules than Tennessee’s.
Toughen up
While some Republican members of Congress are still trying to derail the federal agency, Tennessee consumer advocates argue for tougher rules flowing from Washington.
In Nashville, some activists favor clearer records that identify the loan shop owners. And activists want payday rates dialed back.
Repayment
Payday customers often fail to repay the loan on time. Then they borrow again to retire the first loan. Caught in this cycle, 12 million of the nation’s 19 million payday customers take out at least five payday loans per year, according to a 2009 study by the Center for Responsible Lending, a liberal group in Durham, N.C. Tennessee law limits loans to $500, and allows no more than three loans at once to a single customer.
Meeting needs
Not everyone thinks that’s a deep problem. Tennessee state Rep. Steve McManus, R-Cordova, said payday shops fit a purpose. “If banks are reluctant to lend, and many are, this fulfills a need for these people,” said McManus, chairman of the House commerce committee, which oversees the state’s financial institutions agency. “With the unemployment rate as high as it is,” McManus said, “people have to have the means of trying to get some kind of liquidity.”
Why more paydays?
The 38 states that permit the trade counted 2,000 payday shops in 1996. Within a decade, the number had multiplied to 24,000, according to a report by the Federal Reserve Board, an agency regulating banks and the U.S. money supply. About 12,000 title-pledge shops lend money on cars.
No money
Brock, the payday lender on Summer Avenue. “They don’t understand what it’s like to not have money. You need money to open a checking account, but a lot of people don’t have it.” That doesn’t mean they’re destitute, Brock said. Her customers work, she said, often for low wages. They show her paychecks and sometimes tax forms. Tennessee financial department examiners enter Brock’s shop twice a year, she said, checking her records to make sure loan contracts follow the state rules. “I think the state regulates the industry very well,” Brock said. “I don’t see the need for a federal agency to oversee it.”
They Learned Hard Way; Payday Loans Are Illegal In NC
February 11th, 2012
It is difficult to enforce the law against companies that operate over the internet
It is illegal to operate a payday loan businesses in North Carolina. But companies still take on customers. Now, a Triangle couple has been hurt financially. When things got financially tough for Donna Seese and her husband, they surfed the internet and found “advancemetoday.com”.
Basics
“We were looking for basic necessities,” said Donna. “You know gas money, food money.” Donna said she told the advancemetoday rep she only needed $300. “What they charge is 30 percent per hundred dollars. So in reality, the total balance due would be $390,” said Donna. “So, what’s going to happen is, you’re going to see a $90 debit come out of your account on every paycheck until the loan is paid off. And I thought that sounded fair.”
Interest
Every two weeks, advancemetoday took $90 dollars out of Donna’s bank account. When the time came for the fourth $90 to be taken out, Donna thought she was close to paying off the loan, but she learned differently when she talked to an advancemetoday rep. “He said ‘the $90 payments have all gone to interest,’” recalled Donna. “And I said, ‘Excuse me? Can you please explain that again?’” What Donna never realized was that each $90 payment every two weeks never went to her original $300 loan. Instead she was charged interest of $90 every two weeks until she repaid the 300 in full. When Donna complained to advancemetoday, they debited the entire 390 from her account to close out her loan. In all, Donna paid over $660 for a $300 loan.
That hurts
“It’s definitely hurt us, because in the first place we were in a bad position,” said Donna. “This puts us in a much worse position. I don’t want to see more victims. I don’t want to see anyone else go through what I’ve gone through because it’s impacted us greatly.” The one bit of good news for Donna is that she did dispute the last charge of $390 with her bank, and for now that money has been put back into her account.
Illegal
The big red flag is that payday loan companies are illegal here in North Carolina.
Advancemetoday does have a disclaimer on their website that says their services are only available to those states permitted by law, and North Carolina is not one of them. A representative with the Attorney General Cooper’s office says it is difficult to enforce the law against companies that operate over the internet, especially if they’re located out of the country. They add, not only are these loans illegal but they also put consumers deeper in debt, which is what happened to Donna.
Ferratum Says Beware of Rogue Payday Loan Firms
February 9th, 2012
Unscrupulous payday loan lenders are hard at work
Consumers need to be on their guard against unscrupulous payday loan lenders who are stealing money from people’s accounts, says Ferratum. “The growing demand for the loans is paving the way for rogue operators.” Ian Porter, sales and marketing manager with Ferratum, said: “We have heard horror stories from customers about bad experiences they have had with other operators.
Payment up front
“One customer called in the police after falling victim to a scam in which the payday loan company demanded £100 up front before they would process his loan. The loan never came but the company used his bank details to take further money from his account. ”It was only after the customer noticed the shortfall in his account that he called in the police who then launched an investigation into the company.”
High rates of interest
“Rather than focussing on the bogus issue of high rates of interest, which are not relevant to short-term lenders such as ourselves, campaigners against the payday loan industry would be better served trying to root out the small number of unscrupulous operators trying to cash in on one of the fastest growing financial sectors.”
Take Note: “Debt Collector” Scam Reported
February 2nd, 2012
A Napa man says he’s being harassed by abusive calls over an unidentifiable loan.
Real estate broker Frank Trozzo of Napa says he has been targeted by a widespread scam in which callers demand payment for nonexistent payday loans based on financial information they may have received through identity theft.
I want proof
“I said, ‘mail us some proof,’” said Trozzo, who contacted Napa Patch on Monday to report the calls. “He yelled at me and hung up.” Trozzo says he’s baffled as to how the caller got personal information about the family member whose financial affairs Trozzo manages. There’s no documentation of the $350 loan the caller is seeking, Trozzo said.
F-bomb dropped
On his second call, in December, the man identifying himself as Austin White dropped an angry F-bomb on Trozzo and told him law enforcement authorities would be “coming to my house tomorrow,” Trozzo said. In his third contact on Monday, White again grew angry and threatened to call authorities, said Trozzo, who did some research after hanging up and found a warning from the Better Business Bureau: ‘According to reports received by BBB, the scammers accuse the victim of defaulting on a payday loan and claim they are being sued. The phony debt collector threatens that, if the victim doesn’t pay as much as $1,000 immediately via wire or by providing bank account or credit card numbers, he or she will be arrested.
Personal details
The scammers often have the victim’s Social Security, old bank account numbers or driver’s license numbers as well as home addresses, employer information and even the names of personal friends and professional references. Trozzo said when he asked White to furnish some documentation of the alleged loan, he was told “We can’t give you that.”
Better Business Bureau
The Better Business Bureau recommends that consumers
- Ask for official documentation from callers who claim to be debt collectors;
- Don’t provide or confirm any personal or financial information over the phone;
- File a complaint with the Federal Trade Commission if the caller is abusive and/or uses threats, both violations of federal telemarketing laws.
Scambook.com
On websites like scambook.com, where consumers report suspicious phone calls, there are many other reports like Trozzo’s of bullying calls from men who often have accents. A voicemail, requesting comment, from Napa Patch to the phone number White gave Trozzo was not returned Monday or Tuesday. The outgoing message at the toll-free number did not give a name.
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