Category: Internet payday loans

  • Banks and Payday Loans

    Minneapolis-based U.S. Bancorp, Wells Fargo & Co. of San Francisco, and Fifth Third Bancorp of Cincinnati — are now marketing payday loan type products, with triple-digit interest rates, to their checking account customers.

    “Banks are in a strong position to steal a big chunk of the $35 billion-a-year payday lending market — with its estimated $7.3 billion in fees from borrowers, say industry analysts.”

    The banks are charging $10 per $100. These fees claim to be half (for the record, they’re not) of what a typical payday lender would charge. They estimate the typical payday lender charges about $17 per $100. Banks fees should be lower. They incur less risk than traditional payday lenders. Banks own the checking accounts and may additionally run credit reports for approval. Of course, they will have lower delinquencies due to smaller risk pool and full access to the borrowers checking account for collections.

    When banks offer payday loans, the “on the fence” general public will start to accept the payday loan product. Let’s face it, the industry is never going to change a self righteous, bleeding heart liberals’ mind. All we can do is go after the middle 80%.

    The only issue I have today is that banks don’t operate under state law. They can offer payday loans in the 15 “black out” states like New York, New Jersey, North Carolina, Georgia, Arkansas among them. These states should open their doors. It’s discrimination, otherwise.

    I think the industry should use this as a sounding board. Let the banks offer payday loans. Let anyone offer cash advances.

    You can read the full article in Minneapolis Star Tribune titled “Biggest Banks Stepping into the Payday Loan Arena“.

  • Most rediculous statement of the day

    “these are toxic loans, just like those in the disastrous subprime mortgage industry, because they are made knowing that desperate borrowers cannot repay the loans when they become due.”

    Do they really think lenders do NOT want to get paid back?

    This rediculous comment was brought to you by Legal Aid Society’s litigation director Peter M. Koneazny.

    You can read more about Wisconsin and payday loan battles in the WisBusiness.com.

  • Wisconsin legislature entertaining 36%

    Same story different state. I guess we’ll see what happens.

    I thought this was worth sharing:

    Payday lenders have seen an explosive growth of 391 percent in Wisconsin over the last ten years, rising to $723 million in loans in 2008 from $147.2 million in 1998.

    There’s lots of demand out there. You can read the full article in the Wisconsin State Journal.

  • Phony debt collectors

    Allegedly, there are phony debt collectors trying to get money out of consumers.

    The Better Business Bureau thinks it’s a data breach. I’m not saying that this is not going on, but can they confirm that victims do not have any payday loans currently outstanding. Regardless of the validity of this claim, the collection tactics are totally out of bounds:

    “…accuse the victim of defaulting on a payday loan and claim they are being sued. The phony debt collector threatens that, if the victim doesn’t pay as much as $1,000 immediately via wire or by providing bank account or credit card numbers, he or she will be arrested and extradited to California within the hour to stand trial. The scammers often have the victim’s Social Security, old bank account numbers or driver’s license numbers as well as home addresses, employer information and even the names of personal friends and professional references.”

    Payday loan leads, more than any other lead, are being resold. What’s the solution? I don’t know.

  • Wisconsin strikes again

    If you’re an Internet lender in Wisconsin, you better keep your head on a swivel.

    Although Arrowhead Investments admits to no wrong doing, they settled the class action law suit. The agreed to forgive all the debt and pay back $180k.

    “The Justice Department said approximately 1,300 consumers could receive relief. The settlement covers Wisconsin consumers who received a loan from Arrowhead Investments between Dec. 1, 2001, and Dec. 21, 2007, and who paid more than their principal loan amount to Arrowhead. They will receive a cash payment.

    Arrowhead will also close all outstanding loans with a zero balance, totaling more than $432,000 in loan, cost and fee forgiveness, and also agreed to no longer solicit loans to Wisconsin consumers for five years, among other settlement provisions.”

    You can read the full article in BizJournals.

  • Internet Payday Loan Mess

    The Little Loan Shop has a big problem (badabing). They’re filing for bankruptcy protection claiming that it owes more than $100M to 1,300 investors.

    Many investors are accusing the principal, Doris Nelson, of running a ponzi scheme.

    The deal is just a mess. How do you turn $100M into $2.7M in accounts receivable?

    I feel for the investors, but when someone guarntees you a return of 55% per year, run like hell.

    You can read more about this story in the Spokesman review.

  • Payday loans Internet Fraud

    This is a follow up on an a story from a week ago, in the Chicago Tribune. Here are the facts:

    • Contract worker at AT&T steals 21,000 employees identities.
    • Gets $70k in payday loans.
    • Payday One and QuickClick are the victimized online payday lenders.

    Here’s what’s wrong w/ the article:

    The Chicago Tribune reporter blames the bank and the internet lenders. “more restrictions on online payday loans. Some banks also need to tighten their rules, he said. Some allow checking accounts to be opened online without running credit checks or verifying addresses, he said.”

    Hello? Anyone home? What about AT&T? Didn’t they give access for all this data to a contract worker?

    Obviously, there were some Internet lenders that said “no”, while others said yes. So how does the industry prevent this in the future?

    1. There should be a better way to verify the identity of a bank account. Unless the identity thief opened the online bank accounts in the name of the ATT employee.
    2. Next question: Can you open up an checking account in another person’s name? If so, what banks are these. This is a big red flag.
    3. Payday loans do not affect your credit rating. This article claims that they can. To my knowledge none of the big 3 credit bureaus take this data.