Feds to Crack Down on Abusive Online Payday Lenders
By Consumers Union on Monday, August 12th, 2013
Last week, at least six federal agencies including the Department of Justice, Treasury and the CFPB announced that they are coordinating a broad probe of online payday lenders that charge enormous interest and fees to low-income borrowers who need quick cash. The probe will also investigate the banks and payment processors that help online lenders make their loans.
For years now, payday lenders have tried to evade the law by closing brick-and-mortar locations and moving online. Some lenders have also moved their operations to Native American reservations in order to claim that tribal “sovereign immunity” protects them from Federal and state law.
Once these lenders get consumers’ bank information over the Internet, they’ll keep trying to debit consumers’ bank accounts to force them to pay up – even when consumers haven’t given them permission the debit the account or they don’t owe the money.
The decision to investigate the banks and payment processors involved in the loan transactions might change the game. The banks and processors can’t hide behind claims of tribal sovereign immunity – they have to follow the law, and that includes reporting any possible fraud to the Treasury department.
Have you or someone you know ever been harassed by online payday lenders? If so, tell us in the comments.