Recently I contacted LLS (Little Loan Shoppe) in reference to payday loans being illegal in the state of Connecticut.This is their response to me.
Dear (name removed),
We are in receipt of your letter, and would like to take this opportunity to address your concerns. The Little Loan Shoppe ("LLS") prides itself in complying with the law and providing excellent products and customer satisfaction. We take very serious all complaints and allegations against our practices and procedures.
In order to provide the best services available to our clients we comply with best practices including federal banking guidelines such as the Truth in Lending Act and Regulation Z disclosures. As part of those disclosures, and more particular to the instant matter, is the fact that LLS clearly presents the following disclosure to its borrowers:
GOVERNING LAW: You acknowledge that we are a Utah-based lender, and you acknowledge that this consumer Unsecured Short-Term installment Loan Agreement that is governed by the laws of the State of Utah. You acknowledge that Utah laws governing this Unsecured Short-Term installment loan agreements may differ significantly from the laws of the state where you reside. You agree that courts located in Salt Lake City, Utah shall have exclusive jurisdiction and venue of any disputes arising from this Unsecured Short-Term installment Loan Agreement.
By supplying LLS with your “E-Signatures,” you acknowledged and agreed that Utah laws govern your relationship with LLS, and that Utah laws may differ significantly from the laws of the state where you reside.
In your letter, you indicate that LLS is a “payday” loan company. It is important to begin by confirming that LLS is not a “payday” loan company, but rather it is an unsecured short-term installment loan company. The difference being, an example of a typical payday loan is where a consumer obtains a $300.00 payday loan for a $90.00 fee. As security for the loan, the consumer would issue a check to the payday loan company for $390.00. The payday loan company would then hold the check, until the consumer received their next paycheck from their employer, and then the payday loan company would cash the check at that time. Should the consumer be unable to pay that amount by their next pay period, then the payday loan company “rolls-over,” the debt, until the consumer’s next payday, by charging an additional $90.00 fee. If the consumer is unable to pay the fees, plus a portion of the original $300.00 principal balance, the consumer could potentially “roll” the debt over for years and end up owing thousands of dollars.
LLS wanted to create a better loan product, whereby our customers do not end up in a never ending cycle of debt for a loan that is only supposed to be used as a short-term financial solution. Our disclaimer on our website at
littleloanshoppe.com states:
Customer Notice: Unsecured short-term installment loans should be used only for temporary financial needs, not as long-term financial solutions. Customers with credit difficulties should seek credit counseling.
The loan product that LLS designed is an unsecured short-term installment loan, meaning that the customer does not have to write LLS a check, plus fees, in exchange for a loan. Instead, we obtain their “E-signature,” as authorization to debit their account when their loan balance is due. LLS provides its customers with the option of paying off their loan, at anytime, without any pre-payment penalties. Page one (1) of the customer’s contract reads as follows:
PREPAYMENT: Other than as described below, there is no penalty for early repayment of the balance of this unsecured short-term installment loan and you may prepay the balance owed in full at any time. The initial processing fee becomes non-refundable at the time your loan is funded. Although you may pay all or part of your loan in advance without penalty, you will not receive a refund of any portion of the initial processing fee. However, you may rescind this
Loan Agreement by the close of the next business date, following the date your loan is funded, at no charge.
LLS offers a second option for those customers that are unable to pay their loan in full within two (2) weeks of taking out a loan with LLS. This is the “installment loan process.” This allows the customer to make a series of bi-weekly installment payments, until the loan is paid off. While, this sounds much like a payday loan, the major difference is that LLS automatically applies a portion of the bi-weekly fee towards the principal balance. This cuts off the never-ending cycle of debt that can be potentially created with a payday loan.
It is LLS’s position that the statute you provided is not applicable since LLS is not a payday loan company, but more importantly it is not applicable since you agreed that Utah laws would govern your Agreement with LLS.
We hope to have addressed your concerns and certainly are willing to cooperate with and resolve any outstanding issues. We acknowledge that you have revoked any additional ACH debits for the balance of your loan. Please contact our Resolution Department at 866-223-7549 to make payment arrangements. We understand that these are difficult economic times, and we can schedule payment arrangements that work around your particular needs. While LLS does not report to the various credit bureaus, if LLS is unable to make payment arrangements with you, then LLS does sell off the outstanding debt to a third-party collector that does report to the various bureaus.
If you have any further questions, or need additional information, please don’t hesitate to contact our Resolution Department at 866-223-7549.
Thank you,
I still plan on reporting them to the BBB. I have paid back more that the principal balance and am looking to be refunded anything paid in excess of the principal balance.
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