Internet payday loans are illegal in the state of Virginia. Many other forms of internet loans violate Virginia’s usury cap, because they aren’t exempted from the law. The VaPERL Coalition stands with Senator Merkley, and others who filed the 2013 SAFE Lending Act in order to combat internet lenders and others from shamelessly skirting state lending laws.  Also on the horizon are bank payday loans, that while they are not yet here in Virginia, may pose a new more sinister threat to Virginia borrowers – control of their bank accounts without recourse. Current internet payday loans, internet installment loans, internet line of credit loans, and bank payday loan products all do or would violate Virginia law if made to Virginia residents. We applaud the efforts to give states who have serious lending laws the Federal support to enforce them. Read the press release on this issue by coalition member, the Virginia Poverty Law Center.

The SAFE Lending Act is a bill filed by U.S. Senators Merkley, Durbin, Blumenthal, and Udall and would ensure that all lenders are playing by the same rules by:

• Requiring all online small-dollar lenders (such as payday lenders) to comply with state law if it provides better consumer protections than federal law;

• Preventing banks from making payday loans in violation of the state law where the consumer resides;

• Providing new federal enforcement measures to protect consumers from online payday lenders that seek to evade state consumer protection laws, such as by locating their businesses off-shore, or affiliating with a Native American Tribe and claiming the right to assert the tribe’s sovereign immunity; and

• Empowering Native American Tribes to enlist the help of the CFPB where needed to protect their members from abusive payday lending on the reservation, and respecting tribal laws that provide stronger consumer protections than are available under state law.

The SAFE Lending Act would also protect consumers’ bank accounts by:

• Closing the single payment loophole in the Electronic Fund Transfer Act and ensure that consumers have control over how lenders access their bank accounts for payment and collections of high-cost loans;

• Safeguarding consumers’ personal information by banning “lead generators” who collect information like Social Security numbers, income and bank account information; and

• Prohibiting lenders from using a borrower’s bank account numbers to create unsigned checks used to withdraw funds, even when consumers have opted out of making payments electronically.

Learn how to stop automatic or unauthorized electronic debits from your bank account by unscrupulous lenders or companies.

3 Sample ACH Withdrawal Letters

RICHMOND, VA (WWBT) -

Local consumer advocates are warning about an online payday loan company targeting the public. Tom Gallagher, with the Richmond Better Business Bureau, is sounding the alarm. The organization is suspicious about an online payday loan company called Qxlonline.

“The very first thing they ask you, go right to their splash page and before anything, they want your social security number and some other personal information,” Gallagher said.

The company has an “F” rating with the BBB. Gallagher says attempts to reach anyone with Qxlonline has been unsuccessful. There have been at least five complaints in Virginia. They include threatening collection calls about loans consumers say they never applied for — and the company obtaining personal information then locking customers out of the website.

“This is really tragic because the victims in these things are just desperate,” said Gallagher.

He says there have been over 600 inquires about the company. Gallagher says a big problem, no one seems to know where the company is located. Victims have reported the company could be located in Pakistan and Australia.

“Wherever it is, you don’t want to be doing business with these people. It is an advance fee loan operation - an advance fee loan online is illegal in Virginia,” Gallagher told us.

On the website, there is no email or address information, only a phone number. We called and all you get is an automated message asking for your social security number. The BBB is not only consumer organization warning about Qxlonline - Dana Wiggins, with the Virginia Poverty Law Center and Virginia Partnership to Encourage Responsible Lending, says consumers should stay away from any company offering online payday loans.

“Bottom line people need to understand that online payday loans are not an easy road to money, they are and easy road to get scammed,” she said.

Beware: Online Payday Loan Traps

See the full story and watch the video

Get help if you are stuck in an internet payday loan

Published: August 23, 2012

“I can’t blame anyone but myself,” Covington, 61, of Manassas, said. “But it’s highway robbery.”

Virginia’s car title-lending business is booming, but consumer advocates say it’s nothing to celebrate. Since a change in Virginia law last year, the commonwealth has become a magnet for people who need cash but live in the District, Maryland or another neighboring jurisdiction where laws capping interest rates have effectively driven such lenders out of business.

Read the Full Story

Jul 24, 2012 (Bloomberg)

The Internet’s “don’t-call-us- payday” lenders are making a bid for more respect in Washingtonand less control from state regulators.

Firms offering short-term online loans, including Fort Worth, Texas-based Cash America International Inc. (CSH), are ramping up political contributions, hiring lobbyists and asking Congress to largely transfer oversight from states to the U.S. Office of the Comptroller of the Currency. A House committee today will hold a hearing on the proposal, which the OCC itself opposes.

As the $11 billion online loan industry bulks up in Washington, it also aims to shed the “payday lenders” label, according to talking points drafted by Peter Barden, a spokesman for the Online Lenders Alliance.

The memo advised lenders making lobbying visits to Capitol Hill this summer to “avoid using the term ’payday.’ Talk about short-term, small-dollar lending.”

Behind it all is more spending. The political action committee for Cash America is on pace to double its annual campaign contributions from the $200,000 it gave in 2007, according to federal election records, and the lender is bankrolling a new coalition to push for the legislation.

The core of the bill, sponsored by Representatives Blaine Luetkemeyer, a Missouri Republican, and Joe Baca, a California Democrat, would give the OCC authority to designate lenders as National Consumer Credit Corporations and require the regulator to treat storefront and online lenders equally.

Read the Full Story

Americans spend $7.4 billion per year on payday loans, including an average of $520 in interest per borrower for eight $375 loans or extensions. The Pew Charitable Trusts establishes a new understanding of borrowers and their needs in Payday Lending in America: Who Borrows, Where They Borrow, and Why.

July 18 (Bloomberg)

Capital One Financial Corp. will pay a total of $210 million to settle charges of deceptive marketing of credit card “add-on” products such as payment protection and credit monitoring.

It was the first public enforcement case brought the Consumer Financial Protection Bureau, established by the Dodd- Frank Act to increase oversight of consumer financial products.

The bureau and the Office of the Comptroller of the Currency, the bank’s primary regulator, said Capitol One agreed to provide between $140 million and $150 million in restitution to 2 million customers and pay an additional $60 million in penalties

– $25 million to the CFPB and $35 million to the OCC.

The McLean, Virginia-based company did not admit or deny wrongdoing.

“Today’s action puts $140 million back in the pockets of two million Capital One customers who were pressured or misled into buying credit card products they didn’t understand, didn’t want, or in some cases, couldn’t even use,” said CFPB Director Richard Cordray, referring to the refund amount in the consumer bureau’s settlement. “We are putting companies on notice that these deceptive practices are against the law and will not be tolerated.”

The CFPB said its supervisors discovered that Capital One’s third-party vendors engaged in deceptive tactics to sell ancillary products to the company’s credit cards. The products included “payment protection” that allows customers to cancel up to 12 months of minimum payments if they face unemployment or temporary disability.

The vendors also sold credit-monitoring services, which promised identity-theft protection and access to “credit education specialists,” the CFPB said.

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If predatory lenders had a trade publication – say, “Usury Today” – they’d undoubtedly rank Virginia near the top in annual roundups of the best places in the nation to do business.

Although dozens of states have severely restricted the activities of storefront loan sharks in recent years, the Old Dominion remains ever hospitable.

Triple-digit interest rates – scorned by the Pentagon, consumer advocacy groups and most state legislatures – are still welcome here.

Last year, 220 percent was the average annual interest rate in Virginia for folks who borrowed money using the titles to their automobiles as collateral. For borrowers who used paychecks as collateral, the average annual interest rate was 282 percent.

Repeated efforts to cap interest rates at a more modest 36 percent have failed in the General Assembly, thanks in no small part to $1.4 million in donations to lawmakers by the industry between 2007 and 2011 and tens of thousands of dollars in contributions ahead of a vote this year.

Read the Full Editorial

1. Stop any electronic access that the lender has to your bank account. This may require sending the lender a letter withdrawing ACH authorization. You may need to also alert your bank or credit union that you have revoked such rights from the lender. If you have not paid back what you borrowed from the lender, make alternate arrangements to send payments to them by money order.
2. If debiting from your bank account doesn’t stop, first open a new account at a different bank or credit union, then close the account tied to the lender. Your balance cannot be in the negative to do this.
3. If you receive harassment calls, file complaints with the Virginia Bureau of Financial Institutions, the Consumer Financial Protection Bureau, and the Federal Trade Commission. If Harassment is particularly bad or by people you did not borrow from, it may also be a good idea to file with the Internet Crime Complaint Center.
4. If you have questions or are unsure of next steps, call our Hotline if you need help with internet payday loans: 866-830-4501

U.S. regulators and Congress are scrutinizing partnerships between Native Americans and outside investors in online payday lending businesses accused of exploiting tribal sovereignty to evade state consumer-protection laws.

The push has divided Native American groups, with critics of payday lending opposing tribal involvement in the businesses, which charge interest rates as high as 521 percent for short-term loans. Other Indian groups, formed to represent the nascent industry in Washington, are pushing back against the regulators.

Charles Moncooyea, vice chairman of the Otoe-Missouria Tribe, called the interest of the Consumer Financial Protection Bureau “a declaration of war” and vowed to fight federal intervention into the new businesses.

“The fact is our tribe – and tribes nationwide – benefit from the positive economic impact from these and other businesses activities, with revenues directed towards such critical needs as medical care, education and many other basic necessities,” Moncooyea said in a written statement.

The partnerships have drawn the attention of federal regulators largely because of sovereign immunity, the legal doctrine that restricts state interference in tribal affairs.

“It’s a model that could go into any kind of area where the states regulate,” said Colorado Attorney General John Suthers.

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