8 Reasons Not to Get an Online Payday Loan

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.

While online payday loans are advertised heavily on the internet, consumers should be very, very wary of giving out their personal information on the internet.  It may appear that you are giving your personal information to a lender, but oftentimes you are giving your personal information to a lead generator, who will then take your information and sell it to lenders, oftentimes to multiple lenders.  Or, they may sell your information to companies who contact you and harass you to try and collect money for loans you never received, as the stories below demonstrate.

We will continue adding stories about the dangers of applying for online payday loans, so check back soon.

8.  The owner of two online payday loan businesses that charged interest rates ranging from 89% to 169%, plus fees, will no longer be doing business in Pennsylvania. According to the state’s Department Banking and Securities in Harrisburg, Pa., the Anaheim, Calif.-based companies were not licensed by the state and made loans to more than 18,000 consumers for more than seven years. Pennsylvania Bans Online Payday Lender (Peter Strozniak, Credit Union Times. July 25 2014).

7. Many online payday loan companies will sell off the contact information provided when you got the loan. They will also sell off the lists of individuals who may not have repaid the loan, although the loan may have been illegal in the first place. This information then gets diffused among some of the most unethical, illiterate and inconsiderate scam artists on the planet, who will in the future start to phone or email the names on the list. Scams engender fear of legal consequences (E. Kent Winward, Standard Examiner. July 25, 2014)

6. Consumers say they were contacted after filing out loan applications online. Some of the applications were on Cash Advance USA or Fast Cash USA’s websites. Others say they filled out applications on sites that appeared unrelated. The victims say they were told to make upfront payments but never received their loans.  Bogus payday loan offers siphon money from victims (Kimberly Essex, 48WAFF.com July 24, 2014)

5.  Tiffany Kelker was stuck. In January 2011, finding herself in need of some financial assistance after the holidays, she had taken out a $600 “payday loan” from an online lending business that advertised fast cash. In the ensuing months, however, the Billings, Mont., mother of five watched as the company withdrew money electronically from her bank account, according to court documents. Eventually the lender took more than $1,800 in interest charges alone, which court records calculated as an annual percentage rate of 780 percent. Kelker would eventually file suit against Geneva Roth Ventures Inc., an Internet-based lending operation headquartered in Mission, Kan. Payday loan case showcases brutal interest rates in an industry under fire  (Dugan Arnett, Kansas City Star, July 19, 2014)

4. “According to the complaint, the defendants used consumers’ personal financial information it had collected through its websites to withdraw $30 from the bank accounts of tens of thousands of consumers, without authorization and without providing anything of value in return. ‘These defendants deceived consumers to get their sensitive financial data and used it to take their money,’ said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. ‘The FTC will continue putting a stop to these kinds of illegal practices.’” Phony Payday Loan Brokers Settle FTC Charges (FTC Press Release, July 11, 2014)

3. “Many consumers in this case were victimized twice,” said Jessica Rich, Director of the Federal Trade Commission’s Bureau of Consumer Protection. “First when they inquired about payday loans online and their personal information was not properly safeguarded, and later, when they were harassed and intimidated by these defendants, to whom they didn’t owe any money.” At the FTC’s Request, Court Halts Collection of Allegedly Fake Payday Debts (Federal Trade Commission, July 1, 2014)

2. “The scammers use your personal information to hack your bank account and steal your identity. Remember, the information they purchase from the website lead generators includes names, addresses, phone numbers, social security numbers, bank account numbers, routing numbers, email addresses and even IP addresses. ” Payday loan pretender comes clean (Connie Thompson, KOMOnews.com, June 19, 2014)

1.  “Once you made that application, you basically sent up a red flag with them that you are someone in need of this money, and you need it on a short-term basis,” he told me. “That’s when the vultures come out.” I Applied For An Online Payday Loan. Here’s What Happened Next (Pam Fessler, NPR News, November 6, 2013)

CONSUMERS:  Have you had a bad experience with an online payday loan?  You should file a complaint with the Consumer Financial Protection Bureau.  Not only will it likely help with your case, but you’ll be giving this agency important information as they design new rules to regulate payday lending this year.  You can file a complaint with the CFPB here, and you can read about their work on payday lending, including enforcement actions here.

Action step: If you’re angry about what you read, 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.

The Payday Lender Hall of Shame

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.

 

Cartoon - Shark Infested Waters

Ever wonder why people are concerned about payday loans and some of the companies that make them?  Is it the high interest rates? The debt traps they create for their customers?  Their shady collection tactics?  The amount of money they spend lobbying state legislators in order to protect their profits instead of their customers? Maybe it’s the extra fees they don’t disclose? All of the above?

We’ve compiled excerpts from a few of the articles that highlight some of the worst practices of payday lenders below.  You may also enjoy our compilation of newspaper editorials against payday lenders (click here).

If you are a customer with a complaint about your payday lender, we suggest filling out a complaint with the Consumer Financial Protection Bureau (click here).  The online process is fast, and it’s important for the CFPB to hear when companies are breaking the law, especially since they’re writing rules for payday lenders this year.

A graphic from the Ace Cash Express training manual confirmed advocate suggestions that the payday loan industry profits the most off of people who continualy renew their loans because they can’t afford to pay them off.  The end result?  The consumer pays hundreds or even thousands of dollars for a loan that was originally only a couple of hundred dollars.

ACE Cash Express

 

 

“Over the next five years, those five short-term loans of $500 each would cost him more than $50,000 in interest.” KC man pays $50,000 interest on $2,500 in payday loans (Donald Bradley, Kansas City Star, May 17, 2016)

For her part, Mitchell said she’s done with payday loans, noting that she tells her 12-year-old daughter to stay clear of the products. “I would starve before getting another payday loan,” she said. “I just think it’s robbery.” 1,000% loans? Millions of borrowers face crushing costs (Alain Sherter, MoneyWatch, April 25, 2016)

Judge: $1,820 repayment on $200 loan ‘unconscionable’

Monday’s ruling by Vice Chancellor J. Travis Laster involved a loan that Gloria James of Wilmington took out in 2013 to pay for food and rent. James, who was earning $11.83 an hour as a part-time housekeeper at the Hotel DuPont, went to a storefront business called Loan Till Payday. It is run by National Financial LLC, a Utah company that specializes in small-dollar, high-interest loans. She obtained what the business called a Flex Pay Loan, requiring her to make 26, biweekly, interest-only payments of $60, followed by a final payment comprising both interest of $60 and the original principal of $200. The total repayments added up to $1,820, equating to an annual percentage rate of more than 838 percent. “That level of pricing shocks the conscience,” wrote Laster, who said the loan could be rescinded because it was “unconscionable.” He also concluded that National had violated the federal Truth in Lending Act. (Randall Chase, AP, March 14, 2016).

Report of Examination gives look inside payday lender’s alleged wrongdoing                    Banking examiners say the over-charges are actually “double-charges” the lender collects by requiring a post-dated check from the borrower for the loan amount and fees when a loan is made. The lender gets the double-charge by processing the check through the Automated Clearing House, a nationwide electronic network for credit and debit transactions, while also collecting an in-store cash payment from the customer, according to examiners. All American had an “unwritten” policy of not refunding customers for overpayments, unless and until the customer specifically requested a refund, examiners say. (Ted Carter, Mississippi Business Journal Feb 18, 2016).

As regulators put a price tag — $1.32 billion — on what Scott Tucker’s payday-lending enterprises have squeezed out of poor people, a grand jury convenes  On January 20, the FTC asked a federal judge in Nevada to find Tucker and his companies liable for $1.32 billion. That sum, the FTC says, equals what Tucker’s customers have overpaid above the disclosed costs of their loans since 2008 alone. The FTC’s request to the judge was accompanied by thousands of pages of evidence, unsealed for the first time, that show how Tucker made his money, what he spent it on, and how he has attempted to shield himself from the glare of authorities. (Steve Vockrodt, The Pitch News, Feb. 2, 2016)

EZCorp settles federal payday lending complaint: The $10.5 million charge will be included in the company’s financial statements for the year ended Sept. 30. EZCorp also agreed to forgive all outstanding payday and installment debt, which had already been written off for financial purposes, the release indicates. (Christopher Calnan, Austin Business Journal, Dec 16, 2015).

Justices crack down on high-interest usury The court rejected defendants’ expert witnesses’ view that an 11,000 percent – or even an 11 million percent – interest rate would be acceptable in New Mexico because there is no usury statute.  (Marshall Martin, guest column for Albuquerque Journal, September 1, 2014)

High-Interest payday loans called predatory, but regulations die In Iowa Legislature Contributions from the payday loan industry amounting to over $83 million have poured into state campaigns across the country, according to data from the National Institute on Money in State Politics. The institute shows Iowa legislators have pocketed more than $360,000 from donors associated with the payday loan industry since 1998. (Lauren Mills, Iowa Watch, August 10, 2014).

Payday loan firms drove Samantha’s dad to suicide. But even death didn’t stop them hounding him He killed himself last November, too embarrassed by his debts to seek help. Giving evidence, Samantha told the inquest that after his death her father was sent more than 1,000 texts from loan companies demanding repayment.She has no idea how many texts Ian received before he killed himself, because he’d deleted his phone’s history, but she can’t believe they only started afterwards. She also found letters from payday lenders at his home demanding immediate repayment of outstanding arrears. One, delivered two days after his death, threatened court action and bailiffs unless he paid up.

ACE Cash Express paying $10 million to settle debt collection probe When a consumer “exhausts the cash and does not have the ability to pay,” ACE “contacts the customer for payment or offers the option to refinance or extend the loan.” Then, when the consumer “does not make a payment and the account enters collections,” the cycle starts all over again — with the formerly overdue borrower applying for another payday loan, the bureau said.   (Barry Shlachter, Star Telegram, July 10, 2014)

Will the Government Finally Regulate the Most Predatory Industry in America?  “Jones was almost lucky compared to Thelma Fleming, another Baton Rouge resident who pawned her jewelry, had her checking account shut down and lost her car trying to keep up with a string of loans she took in order to make ends meet after she lost one of her two jobs. “For me, it was devastating,” she said. “It got the best of me to the point where I considered suicide.””  (Zoë Carpenter, The Nation. June 27, 2014).

Payday loans may help, but at what price? “Almost half the borrowers are the people who are have fixed incomes, so they’re never going to have any more than they had this month,” Cook said. “Once they start down the payday loan route, they’re really trapped.” (Eric Schwartzberg, Journal-News. June 23, 2014)

Judgment Day for Payday Lenders  In a 2012 report, the watchdog organization Public Campaign found that the payday lending industry had spent more than $1 million during the previous decade to influence Missouri’s elections. In 2011, the legislature had voted to “cap” the APR for payday loans at 1,656 percent. “Members who voted for this pro-industry bill,” according to the report, “received nearly three times more payday money on average … than members who voted in opposition.” (Theo Anderson, In These Times, June 16, 2014)

McDaniel Files Suit Against Online Payday Lenders McDaniel’s suit says that the defendants issued short-term loans to Arkansas consumers with varying interest rates, but all loans had interest rates that were extraordinarily higher than the 17 percent limit set by state law. One loan had an annual rate of 782.14 percent. Others were 640 percent and higher. ( McDaniel Press Release, June 9, 2014)

Fast loans often come with high price tags  The company Hill used, Progressive Debt Relief, charged him a $25 fee for every $100 he borrowed. When Hill fell behind on monthly payments, the company, which required Hill to submit his bank account number before he could get any money, was able to draw the entire amount of the loan from Hill’s account. “They cleaned me out,” he said. (Susan Sharp, FME News Service, June 8, 2014)

Race-car driver’s payday lending business ‘deceived borrowers’ In a typical case, the company would tell someone borrowing $500 that they would only have to repay $650. But in reality, the company would rely on confusing language deep in the fine print to automatically renew loans borrowers thought they were paying off, the judge ruled. So a $500 loan could actually cost the borrower $1,925.  Navarro noted that the company’s own training material encouraged employees not to explain the true cost of the loan to borrowers.  (David Heath, Center for Public Integrity, June 6, 2014)

payday lobbyist

Payday Lenders Pay Premiums Of course, those weren’t the only ways Cash America and other payday lenders tried to elude the reach of federal investigators. As CREW chronicled in earlier reports, including Payday Lenders Pay More, released in 2011, the payday lending industry ramped up lobbying and campaign contributions over the past several election cycles while unsuccessfully attempting to ward off federal oversight and derail the Dodd-Frank Wall Street Reform and Consumer Protection Act. CREW’s latest analysis shows the industry is still spreading money around in hopes of limiting federal regulation of payday lending.  (David Crockett, Citizens for Responsibility and Ethics in Washington January 14, 2014)

Payday loan managers with Las Vegas ties to pay $100,000 in penalties The managers of an illegal payday loan business with operations in Las Vegas have been ordered to pay $100,000 in penalties and forfeit more than $1 million in outstanding loans, according to a final settlement announced by California regulators.  (Chris Sieroty, Las Vegas Review-Journal, December 25, 2013).

truth in lending crackdown on payday

Banks Must Stop Financing High-Cost Consumer Lenders Some of the retail storefront payday lenders financed by these banks lend those dollars back out to the community at rates of as high as 500%.This type of behavior is a net loss that outweighs many of the good things that banks do elsewhere in communities. (Adam Rust, BankThink Blog, December 16, 2013)

Cashing Out: The Usury Suspects, Part 2 “On average, repeat customers account for 40-50% of the Company’s annual loans,” the overview reads. “The Company’s average customer will borrow ~$1200 (~3 loans) and repay ~$2350 over a 4-year timeframe. Margins on loans to repeat customers average 150% higher than loans to new customers.”  To translate: The average person who takes out a loan from Kimball and Furseth ends up paying back double what he or she initially borrowed. Factor in the 500,000 loans that Evergreen Capital Partners says it has issued since its inception, and a picture emerges: Operators and investors can get pretty rich with a business model like this.  (David Hudnall, The Pitch, December 10, 2013)

How KC’s wealthiest enclaves became a shadowy nexus of predatory lending Over the next five years, Tucker, through CLK, is believed to have pioneered many of the shadowy hallmarks that now define the online payday-loan industry, such as constructing byzantine trails of front companies and merging with Indian tribes to provide his businesses with regulatory immunity. (Only the federal government can sue businesses on tribal lands. That makes it difficult for states to prosecute Tucker when his companies lend at interest rates surpassing the caps they have in place.)  (David Hudnall, The Pitch, December 3, 2013)

Payday lender Cash America fined over claims of robo-signing, gouging military members Problems at Cash America came to light when the bureau conducted its first exam of the company in 2012. Before the visit, examiners told the company to retain documents and call recordings for review. But bureau agents learned that employees were instructed to shred files and erase calls. Employees confessed that managers had also coached them on what to say to examiners, according to the compliant.  (Danielle Douglas, Washington Post, November 20, 2013).

payday vultures I Applied For An Online Payday Loan. Here’s What Happened Next “Once you made that application, you basically sent up a red flag with them that you are someone in need of this money, and you need it on a short-term basis,” he told me. “That’s when the vultures come out.” (Pam Fessler, NPR News, November 6, 2013)

 The Payday Playbook:  How High Cost Lenders Fight to Stay Legal Outrage over payday loans, which trap millions of Americans in debt and are the best-known type of high-cost loans, has led to dozens of state laws aimed at stamping out abuses. But the industry has proved extremely resilient. In at least 39 states, lenders offering payday or other loans still charge annual rates of 100 percent or more. Sometimes, rates exceed 1,000 percent.  (Paul Kiel, Propublica, August 2, 2013, part of the Debt Inc. Lending and Collecting in America series)

Usury Cartoon RJ Matson St. Louis Post Dispatch Jan 12 2012

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.

New Report Finds that State of California Could do More to Help Families with Debt Collectors

NCLC Report on Debt Collection

photo credit: ABC News

A new report from the National Consumer Law Center surveyed laws around debt collection and what is and what is not “exempt” from debt collectors when they are pursuing debts. The report examines state laws that protect wages, assets in a bank account, and property from seizure by creditors.

The report, entitled “No Fresh Start: How States Let Debt Collectors Push Families into Poverty” explains that no single state (or District of Columbia, or Puerto Rico, or Virgin Islands) met the five basic standards of exemptions that NCLC suggests would allow debtors to continue working productively while also paying off debts.

The standards are:

  • Preventing debt collectors from seizing so much of the debtor’s wages that the debtor is pushed below a living wage;
  • Allowing the debtor to keep a used car of at least average value;
  • Preserving the family’s home—at least a median-value home;
  • Preventing seizure and sale of the debtor’s necessary household goods; and
  • Preserving at least $1200 in a bank account so that the debtor has minimal funds to pay such essential costs as rent, utilities, and commuting expenses.

Robert Hobbs, the Deputy Director at NCLC, explained: “In 2012, the FTC received more than 125,000 consumer complaints about debt collection, representing almost 25% of all consumer complaints it received. Debt collection lawsuits are clogging up civil courts across the nation.  This report serves as a wake-up call for states to update their exempt property laws and stop putting millions of families at risk. Doing so will allow local courts to redirect their focus from the insatiable appetite of a debt machine that churns out millions of undocumented debt collection lawsuits each year.”

California was rated poorly on some standards, and rated higher on others:

1) While NCLC’s Model Family Financial Protection Act Recommendation is that a state exempt 80 times federal or state minimum wage or 10% of disposable income (15% if weekly disposable income  exceeds $1200), California received a “D” grade because it only preserves 40 times the state minimum wage for an individual, more if a debtor proves a higher amount is needed.

2) While NCLC’s Model Family Financial Protection Act Recommendation  is to exempt up to a $15,000 car ($25,000 if adapted for disability), plus $10,000 wild card (see report for detailed explanation of wild card, briefly, the “wild card” allows consumers to apply an exemption to several items- for example, a car and a refrigerator, if the total is less than the wild card limit), California received a “D” grade because it only protects a car valued at up to $2,900.

3) While NCLC’s Model Family Financial Protection Act Recommendation is to exempt the value of a house up to the median house price, California received a “C” grade because it only protects a home value of up to $75,000 ($100,000 for people who are married, and $175,000 for certain elder, disabled, or low-income debtors).

4) California did receive an “A” for one category: NCLC’s Model Family Financial Protection Act Recommendation is that all household goods are exempt, but creditor can seek court order to seize any item worth over $3,000.  California follows this recommendation, exempting “all necessary household goods.”

5) California received a “B” in the category of “Family Bank Accounts.”  While NCLC’s Model Family Financial Protection Act Recommendation is to exempt $10,000 in a bank account, or $700 in a bank account plus car and household goods worth at least $9,000 or to explicitly exempt deposited wages, California received a “B” because it explicitly protects deposited wages.

NCLC makes specific recommendations to reform state exemption laws in the following ways:

  • Preserve the debtor’s ability to work, by protecting a working car, work tools and equipment, and money for commuting and other daily work expenses.
  • Protect the family’s housing, necessary household goods, and means of transportation.
  • Protect a living wage for working debtors that will meet basic needs and maintain a safe, decent standard of living within the community.
  • Protect a reasonable amount of money in bank accounts so that debtors can pay commuting costs as well as upcoming rent and utility bills.
  • Protect retirees from destitution by restricting creditors’ ability to seize retirement funds.
  • Be automatically updated for inflation.
  • Close loopholes that enable some lenders to evade exemption laws. For example, states that allow payday lending enable these lenders to evade state laws that protect wages and exempt benefits from creditors. States that allow lenders to take household goods as collateral enable these lenders to avoid state household good exemptions.
  • Be self-enforcing to the extent possible, so that the debtor does not have to file complicated papers or attend court hearings.

Model language for states to achieve these goals is provided in the National Consumer Law Center’s Model Family Financial Protection Act, available at www.nclc.org/mffpa.

The model law also includes steps that states can take to reduce the pervasive abuse of the court system by debt buyers. Seizure of debtors’ wages and property would not be such a problem if debt buyers did not churn out such an endless stream of judgments on old, poorly documented debts—of which many are based on mistaken claims.

By updating exemption laws, states can prevent over-aggressive debt buyers from reducing families to poverty. These protections also benefit the state by keeping workers in the work force, helping families stay together, and reducing the demand on funds for unemployment compensation and social services.

The CFPB, FTC, and advocates have also raised the alarm about the fact that 3rd party debt collectors may be pursuing people who never owed a debt.  NCLC cites a 2013 study from the Federal Trade Commission that found nine of the largest debt buyers purchased nearly 90 million consumer accounts (with a face value of $143 billion).  While consumer disputed at least one million of these debts, only half of the disputed debts were verifiable by the debt buyer.

Need more resources on debt collection?   We’re pasting in a few below:

CRC’s Blog: TWO LAWS SIGNED BY GOVERNOR BROWN WILL HELP CONSUMERS IN CALIFORNIA FACING ILLEGAL DEBT COLLECTION PRACTICES

Consumerist: DEAR DEBT COLLECTORS: USING THIS ENVELOPE WILL ONLY GET YOU IN TROUBLE WITH THE FTC

CFPB Puts Companies on Notice About Harmful Debt Collection Practices

FTC: Fake Debt Collectors

FDIC: Contacted By a Debt Collector? Proceed with Caution 

Dear Debt Collectors: Using This Envelope Will Only Get You In Trouble With The FTC

Gee, we can’t imagine why debt collectors get a bad name? As a reminder, CA passed two laws protecting consumers from illegal debt collection- you can read them in our previous post: “TWO LAWS SIGNED BY GOVERNOR BROWN WILL HELP CONSUMERS IN CALIFORNIA FACING ILLEGAL DEBT COLLECTION PRACTICES”

Consumerist

Remember that rundown of debt-collection practices that violate federal law? Here’s one to add to the list: When sending debt collection notices to consumers, don’t use an envelope that depicts a man being turned upside-down and having his pockets emptied.

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Two laws signed by Governor Brown will help Consumers in California Facing Illegal Debt Collection Practices

Two laws were recently signed into law by Governor Jerry Brown, both laws are positive developments for California consumers.

1) Deficiency Collections on Foreclosure   SB 426 prohibits deficiency collections and adverse credit reporting on non-recourse loans following a non-judicial foreclosure. A deficiency is the outstanding balance of a mortgage and the foreclosure sale amount. In spite of existing anti-deficiency protections for residential borrowers in California, some creditors and debt collectors have been attempting to collect debts by non-judicial means after a foreclosure. SB 426 makes clear that this practice is illegal. CRC and Housing Economic Rights Advocates co-sponsored the legislation. For more information, visit Senate Majority Leader Corbett’s webpage: Governor Signs Corbett Bill Protecting Struggling Homeowners, Borrowers

2. Debt Collectors in California will have to prove that the borrower owes a debt  SB 233 requires debt buyers and collection agencies to prove in court that a borrower owes a debt that they agency owns, the balance of that debt and that the debt is still within the statute of limitations and subject to collections before any judgment can be issued against the borrower. Public Good Law Center sponsored this legislation. An article in the Visala Times Delta explains the need for this bill- “Governor signs bill that holds debt collectors to stricter standards“ by Valerie Gibbons, July 12, 2013

According to the article, the bill traces its origins to State Senator Lou Correa (D-Anaheim), who was told his wages would be garnished after a default judgment on a debt. The only problem was that Senator Correa didn’t know about the debt because he didn’t owe it. According to the article, the mix-up took years for him to clear up the mistake the collection agency made.  And, Correa isn’t alone- according to the article, debt collectors/buyers hold the unenviable spot of #1 industry for complaints to the Federal Trade Commission, which has over 100,000 cases “in the federal pipeline against the firms.”

Resources from the CFPB if you are dealing with debt collectors  If you’re dealing with debt collectors who are engaging in illegal practices, you will also be happy to know that the Consumer Financial Protection Bureau is taking steps to regulate the collection industry. As of July 10, 2013, the CFPB will begin taking complaints about debt collectors on their website. (Click on “debt collection.”)

Model letters to use with debt collectors The CFPB also recently released five model letters that consumers can use if they’re dealing with a debt collector. Click here to access them.

1) Needs more information on the debt- For consumers who need more information about a debt.

2) Wants to dispute the debt and wants debt collector to prove responsibility or stop communication- Tells collector that you’re disputing the debt, instructs the collector to stop contacting you until they provide evidence that you’re responsible for the debt.

3) Restrict how and when debt collector contacts you- to tell the collector your preferred way to be contacted.

4) Have hired a lawyer- this will direct the collectors to contact your lawyer instead of you.

5) Wants debt collector to stop any and all contact- it’s important to note that sending this letter doesn’t stop a debt collector from continuing to pursue other remedies, like a lawsuit.

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 Twitter, watch our movies on our YouTube Channelsign up to receive our newsletter and action alerts, and of course, visit our website.

FTC sues and settles against web payday lender AMG

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.

More enforcement against payday lenders!

Coalition Against Payday Predators

Partial screen shot of 500FastCash payday lending website advertising “real solutions for real people” and “60 seconds can make a world of difference. Apply now."The Federal Trade Commission (FTC) has reached a settlement with some defendants in its case against the web-based payday lending company AMG Services Inc.  The FTC had sued AMG, alleging that defendants threatened borrowers in debt collection calls and violated the Electronic Fund Transfer Act (EFTA).

According to News Room America, “The FTC has sued a number of payday lenders for engaging in unfair and deceptive practices against consumers.”

A United States Magistrate judge found that AMG could not avoid the FTC Act, the Truth in Lending Act, and the Electronic Fund Transfer Act, by aligning themselves with American Indian tribes.

Read more here.

http://www.ftc.gov/opa/2012/04/amg.shtm

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