Arkansas ran the last of its payday lenders out this past year. Now they’re setting their eyes on Internet lenders. Their district attorney has sent out over 30 warning letters to Internet lenders.
It will be interesting to see how this plays out. I’m sure many of these lenders are off shore companies or Indian reservations. These lenders thought they were immune to local laws, but recentl, a British Internet lender paid $1M in fines to the FTC and state of Nevada.
Today, they’re just telling Arkanasas borrowers to close their bank accounts and sending a letter to the lender to cancel the loan.
The big question is what can they do about it? Are offshore Internet lenders immune from state law enforcement? I guess we’ll see.
Here’s what the Deputy Attorney General of Arkansas had to say: “Sometimes you try to trace them and they end up being in the Philippines or Botswana or somewhere like that, to the extent that you can even figure out where they are,”
It looks like payday lending is going the way of Internet gambling. Internet gambling’s major blow was a federal law named the “Safe Port Act“. This made it illegal for financial instiutions to transfer funds to an Internet lending site.
You can read the story in full here.
