Here is how the state of Illinois treats lenders that try and follow the rules. There are states that are fair, but Illinois is not one of them. They will fine you $1,000 for a $300 loan. Does this make sense?
Every month they post their fines. Here is September’s Fine Report.
I guess this is what it’s come down to in Illinois. Fines subsidize state jobs for people that are “allegedly” protecting consumers. It’s not a surprise to me that Illinois is dominated by Democrats. Here is an example of a fine. This is a Veritec fine.
The lender entered improper information into the database. For example, if you put in the borrower’s GMI (gross monthly income) as $2,100 when it should be $1,200, you’re getting a $1,000 fine. Talk about playing GOTCHA.
To add insult to injury, the loan may be a writeoff. The lender loses the $300 and gets smacked with a fine.
Comments
One response to “Fines, Fines and more Fines.”
Nick,
As usual, good points. We all know the State’s are in need of revenue; particularly the Democratically controlled states. State auditors focus on generating income; not education or help with compliance. Consumer privacy and protection are the very last item on their agenda. And of course, it’s not just properly licensed and regulated payday loan companies that they scrutinize. States look to pawn shops, check cashers, liquor stores, tanning salons… even yogurt shops to generate fine and licensing revenue.
It’s no wonder that more and more microlenders are contemplating tribe and offshore lending models. The costs associated with state-by-state licensing vs. an Internet enterprise can be daunting.
Too bad the various state legislators and regulators can’t comprehend that consumers demand access to our payday loan products. The loss of jobs, taxes, higher commercial vacancy rates, etc. that result from the friction created by state auditors should be easily identified. But then again, we are dealing with government mindsets…
Thanks again for the heads-up!
Jer – Trihouse