Arizona Payday Loans are Illegal

Internet payday loans may offer quick cash for consumers, but in some states, such online payday loans are illegal. Arizona payday loans, for example, are not legal. This means that companies offering such loans— which often come with high interest rates and fees—in Arizona, even if they are offered from out-of-state via the internet, are illegal.

Arizona internet payday loans are loans offered via the internet that come with the expectation they will be repaid as of the borrower's next payday (hence the "payday loan"). Often the loans are approved quickly, with no credit check. The loans, however, often come with massive interest rates and charges, in some cases interest rates can be as high as 1,400 percent, according to some reports. Because they are offered online, these Arizona payday loans often come from companies that operate out of the state.

Furthermore, consumers have complained that loans have been renewed month-to-month without the customer's consent, and that unauthorized withdrawals have been made from their accounts (to obtain an internet payday loan, the borrower has to provide banking information so the money can be deposited to the bank account). Consumers say this has happened despite their requests that banks that hold their accounts stop allowing these unauthorized withdrawals.

Internet payday loan companies may be breaking the law in a variety of ways: by offering payday loans in states such as Arizona, where payday loans are illegal, by offering loans in states in which the companies are not properly licensed, by taking unauthorized payments from accounts, or by charging illegal or exorbitant interest rates.

Meanwhile, large banks may also be breaking the law if their practices—such as allowing internet payday companies access to bank accounts—enables these companies to continue to operate illegally.

In Arizona, payday loans are no longer legal. According to the Arizona Department of Financial Institutions, the law allowing payday loans by payday lenders expired in 2010. Furthermore, consumer lenders must be properly licensed and loans of $1,000 or less must not have an annual interest rate of more than 36 percent. Consumers who took out payday loans prior to June 30, 2010, are still responsible for their loan.

In some states, officials are investigating whether banks that hold customer accounts are enabling illegal payday lenders to operate by allowing those lenders access to consumer bank accounts, especially in situations in which the consumer has requested the bank block the payday loan company's access to their accounts.

On May 13, 2011, the Arizona Attorney General warned that consumers might be targeted by debt collectors seeking to collect on illegal Arizona payday loans. These calls could be made even if consumers simply entered their information on a website regarding payday loans but did not accept the loan.

Consumers are still responsible for payday loans taken out before June 30, 2010, but debt collectors are governed by laws that set out how and when they are allowed to contact consumers.

Arizona Internet Payday Loans Legal Help

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Last updated on Jan-3-14