Why Out of State Licensing Fails - Sonic Cash

Recently there have been posts about Sonic Cash, a licensed Idaho lender, exporting rates into states that "accept out of state licenses", such as PA. While there has been an opinion here that this is acceptable, HERE IS WHY IT IS NOT VALID. Read the email contact below with the Idaho Department of Finance. You will find that, regardless of what your state says, this argument fails. If you are confronted by a lender with an out of state license, don't just defend yourself in your state. Go after them in theirs.

Hello,

I have seen multiple lenders claim sanctuary under Idaho Law and have a question. Does a Payday Loan License apply to transactions deemed to have taken place in Idaho or does it specifically apply to Idaho residents only.

Thank You,
James Rogersen

Dear Mr. Rogersen:
Idaho's payday lending law applies to payday loans made in Idaho. In addition to traditional face-to-face transactions at licensed locations in Idaho, that also includes payday loan transactions entered into in Idaho where the lender has solicited or advertised in this state by any means, including mail, brochure, telephone, print, radio, television, internet, or any other electronic means. A loan is not considered made in this state where an Idaho resident enters into the transaction while physically present in another state.

I don't know what you are referring to by use of the term "sanctuary" in your email, but I hope that this provides you with the information you are seeking.

Michael Larsen
Consumer Finance Bureau Chief
Idaho Department of Finance
Office Phone: 208-332-8000
Office Fax: 208-332-8096

Notice: This e-mail message and any attachment to this e-mail message may contain information that may be legally privileged and confidential from the State of Idaho, Department of Finance. If you are not the intended recipient, you must not review, transmit, convert to hard copy, copy, use or disseminate this e-mail or any attachments to it. If you have received this e-mail in error, please immediately notify us by return e-mail or by telephone at 208-332-8000 and delete this message. Please note that if this e-mail message contains a forwarded message or is a reply to a prior message, some or all of the contents of this message or any attachments may not have been produced by the State of Idaho, Department of Finance.


Hi Mr. Larsen,

Thank you for your response. By "sanctuary" I was referring to internet lenders that export Idaho rates and claim that transactions with out of state residents are governed by Idaho law. Based on the comment "A loan is not considered made in this state where an Idaho resident enters into the transaction while physically present in another state" is it safe to assume that a loan would not be considered made in Idaho for a resident of a state other than Idaho and physically located outside of Idaho?

Thanks Again,
James

Dear Mr. Rogersen:

For purposes of application of the Idaho Credit Code, you are correct that a payday loan would not be considered to be entered into in Idaho where a person enters into the payday loan contract while physically located in another state -- regardless of the person's "residency." Physical location at the time of entering the payday loan contract is the area of inquiry -- at least for application of the Idaho Credit Code.

Thank you.

Michael Larsen
Consumer Finance Bureau Chief
Idaho Department of Finance
Office Phone: 208-332-8000
Office Fax: 208-332-8096

Notice: This e-mail message and any attachment to this e-mail message may contain information that may be legally privileged and confidential from the State of Idaho, Department of Finance. If you are not the intended recipient, you must not review, transmit, convert to hard copy, copy, use or disseminate this e-mail or any attachments to it. If you have received this e-mail in error, please immediately notify us by return e-mail or by telephone at 208-332-8000 and delete this message. Please note that if this e-mail message contains a forwarded message or is a reply to a prior message, some or all of the contents of this message or any attachments may not have been produced by the State of Idaho, Department of Finance.



Ball Game

I am not sure what that means...

Can i fight them on the loan?


here is what they said to me.

According to Pennsylvania statute 6203.A: Since the Company will not have any offices of any kind in Pennsylvania or people physically present in Pennsylvania acting as principal, employee, agent or broker as those terms are contemplated in Section 3 of the CDCA, the Company is not "in this Commonwealth" as that term is used in Section 3 of the CDCA. Therefore, it is the position of the Department that the Company is not required to obtain a license under the CDCA in order to originate unsecured consumer loans via the internet to Pennsylvania residents. This position is conditioned upon the Company being licensed or otherwise authorized under the Company's home state law to engage in this type of lending activity.
In our email response to you last week we advised you that we do not have any store fronts in your state. We are strictly internet based. You are bound by Idaho State Law. As per your loan agreement that you electronically signed you MUST pay the balance in full. That balance is $560. We recommend that you set up arrangements on that amount. If you fail to do so we will secure funds as per your loan agreement to pay this loan off in full as we see fit. Please respond with an arrangement.

In our email response to you last week we advised you that we do not have any store fronts in your state. We are strictly internet based. You are bound by Idaho State Law.

For purposes of application of the Idaho Credit Code, you are correct that a payday loan would not be considered to be entered into in Idaho where a person enters into the payday loan contract while physically located in another state -- regardless of the person's "residency." Physical location at the time of entering the payday loan contract is the area of inquiry -- at least for application of the Idaho Credit Code.

This states that Idaho disagrees with their premise that they govern the loan. Email them and copy Michael Larsen referenced above. I created a new post because I couldn't find your question. Check my blog article on sonic cash and comment.

I sent Sonic the info you provided and included Michael Larsen and his references.

Here is Sonic Cash's response:

If Pennsylvania had a clause that regulated payday loans then a licensed company in that state would be subject to those specific laws. I have provided you Pennsylvania law that our compliance officer received directly from Pennsylvania's Deparment of Banking. It states that we DO NOT need to obtain a license to provide payday loans in that state. I can provide that to you again if you would like to review it.
You still have a past due balance of $560. I've marked your account with the arrangements you've provided in a previous email which is four payments of $140. Those payments are due via MoneyGram on 5/23, 6/6, 6/20, and 7/4. Failure to complete this arrangement as scheduled will result in this account being turned over to a third party collector.

I just emailed this person with my complaint against Sonic Cash and the emails sent by them. I will post his reply when received.

David Bleicken | Director of Licensing, Investigation
and Consumer Services
File a complaint, ask a licensing question, give us a tip
about illegal activity.

did you agree to the moneygram?if not offer to paty

I did not agree to the money gram. I told her I was not paying the fees associated and she said pay by moneygram or else.

or else what?maybe getting turned over to CA is better here.you can request validation then.i would not pay any other way than money orders.

yes, 3rd party collections she said..

if I understand, their latest response says they do not need a license to loan in PA?

3rd party collections would be willing to work out payment arrangments and wouldn't say no to money orders.

I just dont want it on my credit report?

rom
to rywalsh@state.pa.us,

subject Payday Loan Question


Hi Ryan,

If an out of state license defines itself as valid for residents of its state only, can it still be used across state lines. Please see my copied email below with the State of Idaho.

Thanks,

rom Mike Larsen <MLARSEN>
to
date Mon, May 5, 2008 at 5:31 PM
subject RE: Payday Loan Inquiry

hide details May 5 (1 day ago)


Reply


Dear Mr.

For purposes of application of the Idaho Credit Code, you are correct that a payday loan would not be considered to be entered into in Idaho where a person enters into the payday loan contract while physically located in another state -- regardless of the person's "residency." Physical location at the time of entering the payday loan contract is the area of inquiry -- at least for application of the Idaho Credit Code.

Thank you.

Michael Larsen
Consumer Finance Bureau Chief
Idaho Department of Finance
Office Phone: 208-332-8000
Office Fax: 208-332-8096

Notice: This e-mail message and any attachment to this e-mail message may contain information that may be legally privileged and confidential from the State of Idaho, Department of Finance. If you are not the intended recipient, you must not review, transmit, convert to hard copy, copy, use or disseminate this e-mail or any attachments to it. If you have received this e-mail in error, please immediately notify us by return e-mail or by telephone at 208-332-8000 and delete this message. Please note that if this e-mail message contains a forwarded message or is a reply to a prior message, some or all of the contents of this message or any attachments may not have been produced by the State of Idaho, Department of Finance.


Name,



The Department would likely take exception to an entity not following the licensed home state laws and regulations.



The above should not be considered a formal legal opinion of the Department of Banking. The above information is based on the facts as provided and may change given a change in the facts.





Ryan M. Walsh | Enforcement Administrator

17 North Second Street, 13th Floor | Hbg PA 17101
Phone: 717.772.3889 | Fax: 717.787.8773

rywalsh@state.pa.us | banking state.pa us

The information transmitted is intended for the person or entity to which it is addressed. Review, transmission, dissemination or other use by persons or entities other than the intended recipient is prohibited. If you received this message in error, please contact the sender and delete the material from any computer.

-----Original Message-----


- Show quoted text -


Idaho clearly states that transactions where the customer is not physically located in Idaho do not apply to the Idaho Credit Code. Therefore, the argument that Pa will acknowledge the license fails as the terms of the license are not met. Since that is the case, and PA has no specific law regarding payday lending, the default law would be that of your state, PA, and would be the Consumer Discount Act. Which, they are in violation of.

You people kill me. When you applied for the payday advance, you agreed to the ridiculous terms therefore you should pay it back as agreed. Quit trying to get out of your obligations.