Washington, DCYou have to know that something is a definitive issue when the venerable Cable News Network aka CNN gets into the act. This time it’s CNNMoney, reporting on Internet payday loans and the efforts of the Pew Charitable Trusts to establish a snapshot of just how bad things can get. Given the availability and ease of acquiring a payday loan online, little wonder so many Americans and even state Attorneys General are filing a payday loan lawsuit.
The Online Lenders Alliance (OLA) defends its industry. Noting the existence of bad actors that paint the online lending industry with a negative brush, the OLA notes in comments to CNNMoney (10/2/14) that “consumer advocates and industry should work together to encourage federal laws and rules that preserve access to short-term credit, encourage innovation and protect consumers from the bad actors who would defraud them.” The OLA also said there are many ethical companies that play by the rules and provide a valued service to consumers in need of short-term cash.
However, the Pew Charitable Trusts found a different story. According to CNN, the non-profit group contacts nearly 50,000 Americans for its survey, identifying 451 in-store borrowers and 252 online borrowers.
Payday loans are not new. Consumers who need a quick hit of cash to get them through to their next paycheck are required to pay interest rates that are generally higher than those offered by established banks. That said, storefront operators are required to abide by state regulations that recognize a cap on interest rates and other fees.
And while online Internet payday lenders extend to consumers the convenience of accessing quick cash from the comfort of their own homes, many online lenders attempt to skirt the rules and charge exorbitant fees, amongst other affronts to regulations that leave many a consumer seeking payday loan legal help.
Pew found that about 30 percent of Internet payday loan borrowers claim they have received at least one threat from the lender. Borrowers who were threatened with arrest translate to 19 percent for online borrowers v. 7 percent for storefront borrowers. Twenty percent of online borrowers claim to have been told that their employers would be contacted over an outstanding debt v. 7 percent for storefront operations.
Thirty-two percent of respondents noted that online payday loan lenders made unauthorized withdrawals from their bank accounts. A total of 39 percent of respondents told Pew that their personal information, including confidential bank account information, was sold to a third party.
Interest rates and fees are also higher, with respondents to the Pew survey noting that they were required to pay an APR as high as 700 percent v. storefront APRs that are generally 300 percent and applied according to state regulatory caps.
Pew noted that the online payday loan sector, in spite of rapid growth in the last few years, accounts for about 30 percent of the entire payday loan industry. And yet, according to Pew, nine out of 10 complaints to the Better Business Bureau (BBB) involve Internet payday loans.
Little wonder consumers go running to their payday loan lawyer.
“Abusive practices in the online payday loan market not only exist but are widespread,” said Nick Bourke, a project director at Pew, in comments published online by CNNMoney. “State and federal regulators have taken steps to rein in fraud and abuse, but they need to do considerably more to keep borrowers from being harmed or further entrenched in unaffordable debt.”
If you or a loved one have suffered losses in this case, please click the link below and your complaint will be sent to a financial lawyer who may evaluate your Payday Loans claim at no cost or obligation.