Internet Wild West of Payday Lenders Needs Regulation

Consumer Law

Internet Wild West of Payday Lenders Needs Regulation

Posted May 12, 2008, 02:04 pm CDT
By Martha Neil

Now that many states have laws in place to try to prevent payday lenders from bankrupting consumers with short-term loans at extraordinarily high interest rates, it turns out that a number of payday lenders are a step ahead of the government regulators.

They now offer such loans over the Internet, making it difficult to hold accountable the companies whose practices are the most objectionable, reports the Chicago Tribune.

The annual interest rate charged on some of these loans taken out by the working poor living paycheck to paycheck can exceed 500, 1,000 or even 2,000 percent, according to the newspaper. And even the Community Financial Services Association of America, a trade association for payday loan companies, acknowledges that more oversight is needed to address what stock analyst Henry Coffey describes as an industry of "bandits, cowboys and legitimate operators." Coffey, who is based in Baltimore, tracks the payday loan industry.

There is a legislative solution that would fix the problem, says CFSAA spokesman Steve Schlein: "Regulated Internet loans."

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Posted by Jay W. Ensley - 3 months, 2 weeks, 2 days, 14 minutes ago

Last week I applied for an online “payday advance” loan. After submitting all the requested information, including bank routing number and and account number, I received a message saying “Congraratulations . You Have Been Approved fo a $300.00 loan!” This was followed by a 6 page contract requiring an e-signature, all of which I read and completed. Now the company is sending me emails saying this was a “Pre-approval”, whatever that might mean, and refuses to honor the contract until I fax them numerous documents, and even then they say they can deny me the loan. My dictionary says that the word approval, as they used it, means they have agreed to make the loan. So, it seems to me they are breeching the contract. If anyone has a suggestion or comment, I would be happy to receive email at jaywensley2004@yahoo.com

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