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New York Battling Payday Lenders

December 9, 2013
Plain English Version

This is the time of the year when people need money. Holiday time is high-spending time.

It is better to give gifts that do not cost money than it is to  borrow from Payday lenders.

The loan industry is increasing its outreach to customers by using the Internet to get personal and financial information about people. They promise quick and easy loans. Many companies are so-called “lead generator” companies that sell the information to Payday loan companies.

For example, some TV ads feature Montel Williams, a well-known personality. He pitches for Money Mutual. It is one of the companies that has been subpoenaed by New York State to disclose its practices.

Money Mutual says the companies it does business with follow all the laws on interest rates and other loan terms.

Nevertheless, this is a predatory business. It works with well-known banks to use information obtained from bank customers. Money Mutual is then able go into bank checking accounts and remove money it claims is owed to them.

New York is charging that Payday loan interest rates rise as high as 400 percent annually. New York’s laws limit annual interest rates to 25 percent.

Some of the Payday lenders are working with Native-American tribes, claiming they are exempt from state laws.

It does not seem to matter to the lending companies that they give loans in states where their interest rates are illegal. Moreover, loan information finds its way into the hands of swindlers. Consumers complain they get are swamped by phone callers after applying for a Payday loan.

Consumers are well advised to do anything to avoid owing money to Payday lenders.

Source: The New York Times                                                                                              December 2, 2013

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