Payday Lending (sometimes called cash advance): is the practice of using a post-dated check or electronic checking account information as collateral for a short-term loan.
To qualify, borrowers need only personal identification, a checking account, and an income from a job or government benefits, like Social Security or disability payments. In a bad economy consumers often turn to payday loans and end up getting trapped on a never-ending cycle of debt!
Who offers Payday Loans?
Check cashers, payday storefronts, and sometimes pawnbrokers. You can find these locations in strip malls, near convenience or liquor stores, and in neighborhoods where there are few bank branches. Payday lenders also sell their loans on the internet. Recently the FTC and the State of Nevada stepped in to curb abusive and deceptive practices;
FTC Charges 10 Internet Payday Lenders with Deceptive Lending and Collection Tactics
The Federal Trade Commission and the State of Nevada have charged 10 related Internet payday lenders and their principals, based mainly in the United Kingdom, with violating federal and state law by not disclosing key loan terms to U.S. consumers and using abusive and deceptive collection tactics.
According to the complaint filed by the FTC and the State of Nevada, through Web sites such as www.cash2day4u.com, the defendants offered consumers loans of $500 or less within 24 hours without requiring a credit check, proof of income, or documentation. Consumers who applied for a loan on the defendants' Web site were required to provide their bank account and Social Security numbers.
As stated in the complaint, the defendants' representatives called applicants and told them that they qualified for a loan, typically around $200, that had to be repaid by their next payday with a fee ranging from $35 to $80. They explained that if the loan was not repaid by then, it would be extended automatically for an extra fee that would be debited from the consumer's bank account "until the loan is repaid." Consumers were required to give the defendants access to their accounts for payment of the fees. Some consumers were told to call the defendants before their payday to ask them to debit the full loan amount from their accounts.
The complaint states that the defendants did not disclose key loan terms in writing, including the annual percentage rate, the payment schedule, the amount financed, the total number of payments, and any late payment fees. Consumers who asked for written disclosures were told that the transaction was oral only. According to the complaint, the defendants told consumers that they would send written disclosures after the phone call, but consumers never received them. After paying the defendants - sometimes hundreds of dollars above the loan amounts - many consumers concluded that they had more than repaid their loans and terminated the defendants' access to their bank accounts, often by closing the accounts. Many consumers then received abusive and deceptive collection calls from the defendants aimed at regaining access to their accounts.
According to the complaint, the defendants falsely claimed that consumers were legally obligated to repay the loans, even though the loans did not comply with payday lending laws in many consumers' states and the defendants were not licensed to make consumer loans in thosestates. The defendants falsely threatened consumers with arrest, lawsuits, property seizure, or wage garnishment, and repeatedly called consumers, coworkers, and employers at their workplace, using abusive language and disclosing consumers' purported debts.
The corporate defendants are:
Cash Today, Ltd.,
The Heathmill Village, Ltd.,
Leads Global, Inc.,
Waterfront Investments, Inc.,
ACH Cash, Inc.,
HBS Services, Inc.,
Lotus Leads, Inc.,
First4Leads, Inc.,
Rovinge International, Inc.,
The Harris Holdings, Ltd.,
And each also doing business as Cash Today, Route 66 Funding, Global Financial Services International, Ltd., Interim Cash, Ltd., and BIG-INT, Ltd. The individual defendants are Aaron Gershfield, Ivor Gershfield, and Jim Harris.
The defendants are charged with violating the FTC Act by using unfair and deceptive collection tactics, including falsely threatening consumers with arrest or imprisonment, falsely claiming that consumers are legally obligated to pay the debts; making false threats to take legal action that they cannot take; and repeatedly calling consumers at work and using abusive and profane language and disclosing consumers' purported debts to coworkers, employers, and other third parties.
The defendants are also charged with violating the Truth in Lending Act and Regulation Z by failing to make required written disclosures, clearly and conspicuously, before consummating a consumer credit transaction, including the amount financed, itemization of the amount financed, the finance charge, the annual percentage rate, the payment schedule, the total number of payments, and any late payment fees.
In addition, they are charged with violating Nevada's Deceptive Trade Act by not disclosing loan terms, making false representations in collecting debts, and selling loans to consumers without licenses.For more information on Payday Loans visit AFFIL.org.
For additional information on predatory lending see earlier blog.
Do you know your rights under the Fair Debt Collection Practices Act?
See earlier blog: The Importance of Knowing your Rights & Hiring an Experienced Attorney to Protect them.
To qualify, borrowers need only personal identification, a checking account, and an income from a job or government benefits, like Social Security or disability payments. In a bad economy consumers often turn to payday loans and end up getting trapped on a never-ending cycle of debt!
Who offers Payday Loans?
Check cashers, payday storefronts, and sometimes pawnbrokers. You can find these locations in strip malls, near convenience or liquor stores, and in neighborhoods where there are few bank branches. Payday lenders also sell their loans on the internet. Recently the FTC and the State of Nevada stepped in to curb abusive and deceptive practices;
FTC Charges 10 Internet Payday Lenders with Deceptive Lending and Collection Tactics
The Federal Trade Commission and the State of Nevada have charged 10 related Internet payday lenders and their principals, based mainly in the United Kingdom, with violating federal and state law by not disclosing key loan terms to U.S. consumers and using abusive and deceptive collection tactics.
According to the complaint filed by the FTC and the State of Nevada, through Web sites such as www.cash2day4u.com, the defendants offered consumers loans of $500 or less within 24 hours without requiring a credit check, proof of income, or documentation. Consumers who applied for a loan on the defendants' Web site were required to provide their bank account and Social Security numbers.
As stated in the complaint, the defendants' representatives called applicants and told them that they qualified for a loan, typically around $200, that had to be repaid by their next payday with a fee ranging from $35 to $80. They explained that if the loan was not repaid by then, it would be extended automatically for an extra fee that would be debited from the consumer's bank account "until the loan is repaid." Consumers were required to give the defendants access to their accounts for payment of the fees. Some consumers were told to call the defendants before their payday to ask them to debit the full loan amount from their accounts.
The complaint states that the defendants did not disclose key loan terms in writing, including the annual percentage rate, the payment schedule, the amount financed, the total number of payments, and any late payment fees. Consumers who asked for written disclosures were told that the transaction was oral only. According to the complaint, the defendants told consumers that they would send written disclosures after the phone call, but consumers never received them. After paying the defendants - sometimes hundreds of dollars above the loan amounts - many consumers concluded that they had more than repaid their loans and terminated the defendants' access to their bank accounts, often by closing the accounts. Many consumers then received abusive and deceptive collection calls from the defendants aimed at regaining access to their accounts.
According to the complaint, the defendants falsely claimed that consumers were legally obligated to repay the loans, even though the loans did not comply with payday lending laws in many consumers' states and the defendants were not licensed to make consumer loans in thosestates. The defendants falsely threatened consumers with arrest, lawsuits, property seizure, or wage garnishment, and repeatedly called consumers, coworkers, and employers at their workplace, using abusive language and disclosing consumers' purported debts.
The corporate defendants are:
Cash Today, Ltd.,
The Heathmill Village, Ltd.,
Leads Global, Inc.,
Waterfront Investments, Inc.,
ACH Cash, Inc.,
HBS Services, Inc.,
Lotus Leads, Inc.,
First4Leads, Inc.,
Rovinge International, Inc.,
The Harris Holdings, Ltd.,
And each also doing business as Cash Today, Route 66 Funding, Global Financial Services International, Ltd., Interim Cash, Ltd., and BIG-INT, Ltd. The individual defendants are Aaron Gershfield, Ivor Gershfield, and Jim Harris.
The defendants are charged with violating the FTC Act by using unfair and deceptive collection tactics, including falsely threatening consumers with arrest or imprisonment, falsely claiming that consumers are legally obligated to pay the debts; making false threats to take legal action that they cannot take; and repeatedly calling consumers at work and using abusive and profane language and disclosing consumers' purported debts to coworkers, employers, and other third parties.
The defendants are also charged with violating the Truth in Lending Act and Regulation Z by failing to make required written disclosures, clearly and conspicuously, before consummating a consumer credit transaction, including the amount financed, itemization of the amount financed, the finance charge, the annual percentage rate, the payment schedule, the total number of payments, and any late payment fees.
In addition, they are charged with violating Nevada's Deceptive Trade Act by not disclosing loan terms, making false representations in collecting debts, and selling loans to consumers without licenses.For more information on Payday Loans visit AFFIL.org.
For additional information on predatory lending see earlier blog.
Do you know your rights under the Fair Debt Collection Practices Act?
See earlier blog: The Importance of Knowing your Rights & Hiring an Experienced Attorney to Protect them.
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