LENDING SCAM: Online Payday Lending Said Problematic By Pew Foundation
October 13, 2014
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By: Dave Rogers
Consumers who struggle to stretch their money out until the next paycheck received yet another warning about rushing online to find a quick-fix payday loan.
The Pew charitable Trusts recently released a study that indicated that many online borrowers report being threatened by lenders or debt collectors.
The study noted:
- Nine out of 10 complaints to the Better Business Bureau about payday loans involved online lenders.
- About 30% of online payday loan borrowers report being threatened by a lender or debt collector.
- Nearly one in three online borrowers said they had unauthorized withdrawals from their bank accounts in connection with online payday loans.
- And 46% of online borrowers report that a lender made a withdrawal from their account that overdrew their checking account, twice the rate of storefront borrowers, according to Pew Charitable Trusts research.
The report also maintained that online payday loans are usually more expensive than even the costly payday loans from a storefront. Lump-sum loans online tend to cost $25 per $100 borrowed per pay period.
In Michigan, there are limits on fees involving payday loans. On a $400 payday advance, the fee would be $54 - and in Michigan the payday lender may charge an additional database verification fee of 45 cents per transaction.
Pew recommends that the Consumer Financial Protection Bureau adopt strong regulatory guidelines.
Pew's report found that aggressive and illegal actions are concentrated among about 70% of lenders that are not licensed in every state where they lend and among fraudulent debt collectors.
Dave Rogers is a former editorial writer for the Bay City Times and a widely read,
respected journalist/writer in and around Bay City.
(Contact Dave Via Email at firstname.lastname@example.org)
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