For anyone with internet PDLs in Tennessee - you may want to read this and contact TDFI with any relevant info as they are trying to gather information in an attempt to bring IPDLs under their jurisdiction.
fromTDFI ConsumerResources <TDFI>
dateFri, Jan 9, 2009 at 4:20 PM
subjectRe: Question Regarding Payday Lending Laws
mailed-bystate.tn.us
Thank you for the information that you provided concerning your transaction involving an Internet Payday lender. You correctly referenced the Tennessee statute concerning the "traditional" payday loan transaction, or actually how it is defined in Tennessee Code Annotated ("TCA"), the Deferred Presentment Services Act ("DP Act"). This statute was passed in 1997 and at that time, Internet lending was not something that was envisioned at that time. We have been reviewing this matter in an effort to determine how Internet lending can come under this Department's jurisdiction.
The current DP Act requires the licensed DP company to hold a personal check from a consumer. The Internet company doesn't require a check and sets up the agreement on an ACH payment basis. The maximum rate and fee that a licensed DP company can charge is the lesser of 15% of the face value of the check, or $30. We've seen Internet lenders charging as much as $50 per $100 amount borrowed. These are just a few of the issues at hand with the Internet lenders.
As we continue to study this, we'd appreciate any information on your experience that you may be willing to share. Additionally, depending on the company that you may be involved, the reference to them being a Delaware company could possibly bring Delaware law into consideration on this as well. It's even remotely possibly that our counterparts in the Delaware Office of the State Bank Commissioner may license the company in question and we could look to them for assistance.
If your information is in an electronic format, feel free to attach to a return e-mail. If you only have a paper version, you can fax it to 615-253-7794.
Tennessee Department of Financial Institutions
Consumer Resources Division
414 Union Street, Suite 1000
Nashville, TN 37219
(Phone) 1-800-778-4215
(Facsimile) 615-253-7794
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