North American Title Loans Repossesses Car from Injured Customer

Editor’s note: The CFPB, a federal agency, has proposed new rules for payday, car title, and high-cost installment lenders.

 

BUT, they need to hear from consumers- that means you! We have an easy-to-use page where you can weigh in- it only takes a minute and will help bring about important consumer protections with these loans. Please share a line or two in the comments box about why you care about this issue and want to see strong federal reforms.

PS: You do NOT have to be a payday, car title, or installment borrower to sign the petition.

 

How does the debt trap work?

Watch this PBS NewsHour episode about T.J. McLaughlin, who had to take some time off work after a medical problem.  Short on money for bills, he borrowed $1,200 from a car title lender (North American Title Loans), at 300% interest rate.  But when he lost his job and was unable to make the payments on this loan, they took his car.

If you’re in California and have had a similar experience with car title, payday lender, or high-cost installment loans, please share it with CRC (Click on this link to share your story- it only takes 3 minutes).

The CFPB (Consumer Financial Protection Bureau) is writing rules about high-cost payday, car title, and installment loans. By sharing your experience, you can help the CFPB understand how to make these products safer.  Ultimately, that can mean fewer people going through financial heartaches like the one TJ McLaughlin experienced.

Six Reasons the Narrative of Complaints Should be Included in the CFPB Complaint Database

Editor’s note: CRC submitted a copy of the letter below in support of the Consumer Financial Protection Bureau adding complaint narratives to the CFPB’s complaint database.

September 22, 2014
The Honorable Richard Cordray
Director, Consumer Financial Protection Bureau
1700 G Street N.W.
Washington, DC 20552

Re: CFPB Complaint Narrative Comments, Docket Number: CFPB-2014-0016

Dear Director Cordray,

The California Reinvestment Coalition represents about 300 community based non-profit and social service agencies across California that serve low and moderate income communities, including communities of color, immigrants, women, and rural communities. While our members work directly with households and small businesses to protect against financial losses such as foreclosure and to build financial capabilities and assets, CRC advocates for reforms among financial services providers and their regulators that will lead to better access to affordable, high quality financial products and practices.

We write today in strong support of the bureau’s proposal in this docket to expand the highly successful Public Consumer Complaint Database to include narrative fields.

Currently, consumers that submit complaints know only that their complaint will be seen by the company about which they are complaining. There is no assurance that anyone at the CFPB will read it, follow up to ensure a meaningful response, or use the consumer’s experience to pursue a regulatory of enforcement action. As a result, companies can freely provide pro forma responses that do not actually address the consumer’s concerns. After all, no one but the complainant is likely to see or respond to the company’s action. An inadequate response to a complaint can leave a consumer completely out to dry, left to pursue the issue outside of the CFPB or any regulatory arena, in favor of other forums where the court of public opinion reigns such as Facebook or Twitter, or, if they have the resources to do so, pursuing private legal action. While that consumer may achieve her goals, all information about that interaction is lost to other consumers and regulators.

We encourage the CFPB to add more detailed information to the database, including complaint narratives, detailed complaint categories and subcategories, complaint resolution details, consumer dispute details, and data regarding membership in classes protected from discrimination by law. We support using technology to both give consumers the right not to provide details, using technology to scrub identifying information, and taking steps to prevent the release of personally-identifiable information or the re-identification of consumers. It is critical that the bureau achieve the disclosure of more individual complaint details while simultaneously making every reasonable effort to protect personal data. Finally, we also support allowing financial institutions to provide a reply narrative and making this available to consumers, researchers and other firms.

By allowing consumers to publish the content of their complaints, and institutions to publish response narratives, the CFPB will dramatically help level the playing field on which consumers engage with financial institutions in several ways:

  1. With access to greater detail about others’ experiences with a financial service provider, consumers can make more informed decisions about which companies to work with.
  2. Consumers that submit complaints will know that they are helping others by publishing their experience, not merely submitting a complaint in hopes of solitary relief or potential enforcement or regulatory action by the CFPB that they may never know about.
  3. The CFPB, consumers, researchers and financial institutions alike will be able to better identify bad practices in need of reform as well as effective responses to complaints and other good practices.
  4. Researchers and regulators will be able to more quickly and accurately identify practices that can lead to system wide crises.
  5. Knowing that complaint information and resolution can be made public, providers are more inclined to provide better responses to complaints submitted rather than pro forma responses that may never be seen by anyone other than the complainant.
  6. More consumers will use the database before, during and after their engagement with a services provider, yielding more data that can help the industry improve products and services.

We also urge the CFPB to expand their proposal to allow consumers to update their complaint narratives. This will ensure that important information is not lost, such as whether the complaint was adequately addressed or if new related issues have come up. Such new information can be identified as dated “updates” to the original complaint.

Sincerely,

Andrea Luquetta, Policy Advocate

 

Why we need Operation Choke Point to stop Illegal Online Payday Lenders

Editor’s note: The CFPB, a federal agency, has proposed new rules for payday, car title, and high-cost installment lenders.

BUT, they need to hear from consumers- that means you! We have an easy-to-use page where you can weigh in- it only takes a minute and will help bring about important consumer protections with these loans. Please share a line or two in the comments box about why you care about this issue and want to see strong federal reforms.

PS: You do NOT have to be a payday, car title, or installment borrower to sign the petition.

Operation Choke Point is the name given to the Department of Justice’s increased focus on banks and other enablers of illegal online payday loans and other scams.

Wondering why this focus is necessary?  Take a look at a recent DOJ settlement with Four Oaks Bank.

According to the complaint against Four Oaks Bank, its business relationship with a payment processor essentially allowed illegal online lenders access to customer’s bank accounts to make illegal loans, charges, and withdrawals:

As of today, approximately 97 percent of TPPP-TX’s merchants for which Four Oaks Bank permits debits to consumers’ accounts are Internet payday lenders. A payday loan typically is a short-term, high interest loan that is not secured (made without collateral) and that has a repayment date coinciding with or close to the borrower’s next payday. Most payday loans are for $250 to $700. Annualized interest rates for Internet payday loans frequently range from 400 percent to 1,800 percent or more – far in excess of most states’ usury laws.

Wonder how these loans affect the consumer? Read more from the complaint:

The design, intent, and effect of these fraudulent Internet payday lenders’ conduct
creates a false pretext to withdraw money from borrowers’ bank accounts in amounts far exceeding the reasonable understanding and expectations of borrowers. Through this process of misleading and deceptive Internet payday lending, many of the borrowers are sucked into a vortex of debt and their bank accounts are debited until they are bled dry. Moreover, as a consequence of unanticipated loan extensions, rollovers, and unanticipated interest payments debited from their bank accounts, many of the borrowers incur further harm in the form of substantial overdraft or “insufficient funds” fees from their own banks.

If you want to see the personal impacts, read these stories from the complaint:

During the 20-month period from January 2011 until August 2012, Four Oaks Bank
received at least hundreds of Requests for Proof of Authorization from borrowers’ banks in connection with debits originated by TPPP-TX on behalf of some of its Internet payday lenders. In nearly all cases, the only evidence that a debit had been authorized is an Internet payday loan contract with the kind of facially misleading and deceptive loan repayment language described above.

The borrowers who have stated under penalty of perjury that their bank accounts have been debited without authority include:

a. A.H. is a resident of Arizona, which prohibits loans with an annualized
interest rate above 36 percent. Over the Internet, A.H. received a $400
loan from Payday Lender 2, purportedly of Montana, at an annualized
interest rate of 664.38 percent.

b. L.N. is a resident of Colorado, which effectively prohibits payday lending.
Over the Internet, L.N. received a $355 loan from Payday Lender 3,
purportedly of Montana, at an annualized interest rate of 664.38 percent.

c. C.D. is a resident of Georgia, which prohibits payday lending. Over the
Internet, C.D. received a $305 loan from Payday Lender 4, at an annualized
interest rate of 762.14 percent.

d. D.H. is a resident of Maryland, which prohibits loans with an annualized
interest rate above 33 percent. Over the Internet, D.H. received a $1,000 loan
from Payday Lender 1, purportedly located in Belize, Central America,
at an annualized interest rate of 995.45 percent.

e. I.C. is a resident of Massachusetts, which prohibits loans with annualized
interest rates above 23 percent. Over the Internet, I.C. received a $305
loan from Payday Lender 5, at an annualized interest rate of 644.12 percent.

f. A.H. is a resident of Missouri, which prohibits loans in which the interest
and fees exceed 75 percent of the loan amount, and loans of less than 14
days in duration. Over the Internet, A.H. received a $500 loan from
Payday Lender 6 (operating under a fictitious name), purportedly of San
Jose, Costa Rica, at an annualized interest rate of 1,825 percent for a term of
seven days.

g. D.A. is a resident of New Jersey, which prohibits loans with an annualized
interest rate above 30 percent. Over the Internet, D.A. received a $200
loan from Payday Lender 7, at an annualized interest rate of 612.13 percent.

h. A.W. is a resident of New York, which prohibits loans with an annualized
interest rate above 25 percent. Over the Internet, A.W. received a $305
loan from Payday Lender 4, at an annualized interest rate of 1,095 percent.

i. D.M. is a resident of New York, which prohibits loans with an annualized
interest rate above 25 percent. Over the Internet, D.M. received a $500
loan from Payday Lender 8, at an annualized interest rate of 1,161.36
percent.

j. D.H. is a resident of New York, which prohibits loans with an annualized
interest rate above 25 percent. Over the Internet, D.H. received a $200
loan from Payday Lender 7, purportedly of Utah, at an annualized interest
rate of 1,804.72 percent.

k. D.G. is a resident of New York, which prohibits loans with an annualized
interest rate above 25 percent. Over the Internet, D.G. received a $500
loan from Payday Lender 6, at an annualized interest rate of 1,825 percent.

l. D.R. is a resident of New York, which prohibits loans with an annualized
interest rate above 25 percent. Over the Internet, D.R. received a $200
loan from Payday Lender 7, at an annualized interest of 1,804.72 percent.

m. A.F. is a resident of North Carolina, which prohibits loans with an
annualized interest rate above 36 percent. Over the Internet, A.F. received
a $600 loan from Payday Lender 1, purportedly of Belize, Central America,
at an annualized interest rate of 608.33 percent.

The California Reinvestment Coalition recently signed onto a letter with 26 other state and national consumer protection organizations, calling on the US Senate to support the efforts of Operation Choke Point, you can read the letter here.

UPDATE: If you’re angry about the damage caused by payday loans, consider signing our new petition to the Consumer Financial Protection Bureau, calling on Richard Cordray to implement strong consumer safeguards in the new rules they’re designing for payday loans.  You can sign it here: CFPB Petition

To stay up to date on financial justice issues in California, especially as they relate to low income communities, and communities of color, you can follow the California Reinvestment Coalition on our Facebook page, via TwitterGoogle+, watch our movies on our YouTube Channelsign up to receive our newsletter and action alerts, and of course, visit our website.

Another Payday Lender Is Caught For Illegal Debt Collection

Editor’s note: The CFPB, a federal agency, has proposed new rules for payday, car title, and high-cost installment lenders.

 

BUT, they need to hear from consumers- that means you! We have an easy-to-use page where you can weigh in- it only takes a minute and will help bring about important consumer protections with these loans. Please share a line or two in the comments box about why you care about this issue and want to see strong federal reforms.

PS: You do NOT have to be a payday, car title, or installment borrower to sign the petition.

 

The Federal Trade Commission announced a new settlement today with a payday lending operation that includes  Payday Financial LLC, also Payday Financial, LLC, Great Sky Finance, LLC, Western Sky Financial, LLC, Red Stone Financial, LLC, Financial Solutions, LLC, Management Systems, LLC, 24-7 Cash Direct, LLC, Red River Ventures, LLC, and High Country Ventures, LLC.

Under the settlement, the operation and it’s owner will pay almost a $1 million fine for as part of a settlement related to charges related to their unfair and deceptive tactics they used to collect on payday loans, including forcing people to travel to South Dakota and appear before a tribal court that did not have jurisdiction over their cases.

From the FTC press release:

Under the terms of the settlement, Martin A. Webb and his companies have agreed to a $550,000 civil penalty for violating the Credit Practices Rule – which prohibits payday lenders from requiring borrowers to consent to have wages taken directly out of their paychecks in the event of a default. Following a partial judgment in favor of the FTC in September 2013, the defendants surrendered $417,740 in ill-gotten gains stemming from their prior practice of attempting to garnish consumers’ wages without court orders.

In addition to the monetary payment imposed on the defendants, the settlement prohibits them from further unfair and deceptive practices, and bars them from suing any consumer in the course of collecting a debt, except for bringing a counter suit to defend against a suit brought by a consumer.

 

 

Five of the most obnoxious debt collection tactics ever seen

Editor’s note: The CFPB, a federal agency, has proposed new rules for payday, car title, and high-cost installment lenders.

 

BUT, they need to hear from consumers- that means you! We have an easy-to-use page where you can weigh in- it only takes a minute and will help bring about important consumer protections with these loans. Please share a line or two in the comments box about why you care about this issue and want to see strong federal reforms.

PS: You do NOT have to be a payday, car title, or installment borrower to sign the petition.

 

5 Debt Collector Stories

The Consumer Financial Protection Bureau has asked the public to share their recommendations on rules they are designed for debt collectors.  If you’ve ever had a bad experience with a debt collector, (like harassing phone calls, calling the wrong person, making up amounts that you owe, etc) then you should spend 5 minutes to share your experience with the CFPB. (Click here to add your comments). Your five minutes today can help ensure that consumers aren’t left behind when these rules are designed.  There’s not much time left- comments are due by February 28, 2014.

There are more stories out there, and the CFPB needs to hear them.

These are five example of some of the more obnoxious debt collector tactics:

1) Threatening a senior citizen that you’ll put them in jail if they don’t pay their debts.

2) Calling a cell phone company and impersonating a person’s father in order to be added to their cell phone account in order to get personal details about them, and then sending text messages to them calling them “Fat  Pig” and a “200 pound slob.”

3) Sending an Illinois breast cancer survivor to jail for a debt she didn’t owe.

4) Using racial slurs (while racist, illegal, and obnoxious, the good news is that the recipient of these calls  successfully sued the debt collector for $1.5 million).

5) Threatening to dig up a dead family member’s body.

If you’ve had similar bad experiences with a debt collector, NOW is the time to speak up.  It’s a very simple process- you simply visit this website  and share your experience by clicking on “COMMENT NOW.”  If you have suggestions on how the CFPB can design the rules, be sure to include them.

The clock is ticking- the CFPB is only accepting comments until February 28, 2014.

Consumers: Now is the Time to Act Against Debt Collectors

Debt Collection Rules to be updated by CFPB

Debt Collectors: You’ve probably heard the horror stories- whether it’s calling people at work, threatening to come to their homes, or even threatening to send the police.   CNNMoney has a list of some of the worst offenders- (Debt collection horror stories) including one firm who pretended to be a law firm and threatened a borrower that they would come to their office and their co-workers would have to pick them out of a line-up.

In California, a debt collector kept bothering a state senator about a debt he had never taken out and never owed.  You can read about the legislation that was subsequently passed, in part due to his experience here:  Two Laws Signed by Governor Brown Will Help Consumers in California Facing Illegal Debt Collection Practices.

Is there a way to stop the madness?  To give power back to consumers?  To require collectors to follow the rules, and if they don’t, shut them down?

You betcha.  But you have to act NOW.  The deadline is February 28, 2014.

The Consumer Financial Protection Bureau has announced that it will be updating the Fair Debt Collection Practices Act.  As part of this process, it is seeking input from everyone that will be affected.

Debt collection is a profitable business, and so the people that own these companies (and that benefit from the status quo of harassing borrowers) will give their input and would probably prefer the rules don’t change.

That’s where consumers can help.

If you’ve had an experience with a debt collector, NOW is the time to speak up.  It’s a very simple process- you simply visit this website  and share your experience by clicking on “COMMENT NOW”

As they say in weddings: “Speak now or forever hold your peace!”

Interested in learning more about laws to protect consumers?  You might be interested in our earlier post on this topic: New Report Finds that State of California Could do More to Help Families with Debt Collectors.