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Posted: Thu Aug 03, 2006 6:14 am Subject: nationwide langhorne law

Okay I know there is a lot of post about this company. I just have to ask another question and would like advice as to how to handle it. I had a loan with nationwide...have paid over $700 on a $300 loan. I sent them the letter. I got the same response as everyone else....rude phone calls, can't get Denise on the line etc... I sent them a second letter requesting that they not contact me at work. I recieved the same email as everyone else stating that they don't have to honor my request. BUT then something else happened. I stopped payment last month at my credit union (where the loan was deposited and where the payments were being made.) Right after that they tried to debit $450 from my account with 6 different ACH's of course they were all denied because I stopped payment......Now this is where it really gets interesting and questionable... I have a different account at a totally different bank...(yes I do have two PDL"S that were credited there) But I did not give Nationwide the permission to draft there. But I had 6 ach's for the amount of $450 tried to debit there this month. I stopped payment on those and called the company. They tried to tell me that because I had a loan with one of their sister companies that the information changed in there system and that is why this happened. I aske them to see a copy of the transaction where I authorized this activity on my account. I have not heard anything from them since this request. Is this legal? How should I handle this situation. They want to make payment arrangement with me for the $450 (keep in mind I have already paid $710 on a $300 loan). I had thought about making the arrangement just to get out from under this and chalk it up as a learning experience...but now they have made me really mad.
Sorry this is so long just needed to vent a little....

Posted: Thu Aug 03, 2006 6:27 am Subject:

If you have another account with payday loans still active why would you be trying to get out of paying Nationwide? I understand that you overpaid them but if you read posts on here most of the people using "the letter" are getting out of the payday loan cycle not just using "the letter" to stop paying on their loans. I'm sorry to be blunt but if you continue to use payday loans then you will continue to have problems. Stop getting payday loans because most of the companies are related in one way or another and yes they will use your information and share it with each other. Ask for a settlement agreement with Nationwide, they will do that, pay it off and chalk it up to a learning experience and stay away from payday loans. I know it's hard to believe me but it will be worth it in the long run.

Posted: Thu Aug 03, 2006 6:35 am Subject:

I guess I did not make myself clear. I did not get new loans since I sent the letter out. I am also not tring to get out of paying what I owe. I am tring to get out from under these loans that I will never be able to payoff and have already paid way more then what I borrowed and owed. My question was if they could legally debit an account that I did not sign any authorization form on. I have contacted the AG office I guess they can give me an answer to that question...

Posted: Thu Aug 03, 2006 6:51 am Subject:

We are all in the same boat. I don't know if they can legally do that but I know that I did not and will not give my new account number out to any payday loan agencies after I closed the account that they were all coming out of.

I made a settlement agreement with Nationwide and they honored it through by debt management company. They were tough to deal with at first but it became easier once I was closer to paying them off and now have them paid off. Good luck.

Posted: Thu Aug 03, 2006 6:57 am Subject: Nationwide Cash

You're better off paying now,then seek justice! Or they
will just hound you.

If you send them any letters cc the same letter to your state Attorney general,and send them.

Save all your emails and any relevant documentation.
You will need it when you seek justice!

Posted: Thu Aug 03, 2006 12:01 pm Subject:

Mepate, take one suggestion from my side. Check if Nationwide Cash is licensed to do business in your state. If they are doing their business illegally, you have stronger reasons to dispute with them and give the matter a legal shape.

Guest · Posted: Thu Aug 03, 2006 12:19 pm Subject:

Thank you
How do I go about checking to see if they are licensed to do business in Texas?

Posted: Thu Aug 03, 2006 12:49 pm Subject:

Mepate- they are not allowed to draft another account within the same bank, much less a totally separate bank. What state are you located in, and what is the "finance charge" per pay period that they are deducting? Ex: I'm in TX, and TX has some specific laws about interest caps on short term or "deferred presentment" transactions, and I was able to get a couple of PDL's to mark my account paid in full after I presented them with the TX's short term loan info.

Marcia Brady's Lovechile · Posted: Thu Aug 03, 2006 7:21 pm Subject:

Actually, there is no such thing as a licensed payday lender in Texas. Texas' safe harbor legislation died in the 2005 legislature and the issue can't come up till the next legislature meets in 2007. What you have in Texas are storefronts operating under the CSO model and internet lenders operating in other states that you can use at your own risk.

If you want to look up licensees for other types of consumer loans, just go to the Texas Finance Commission's website, http://www.fc.state.tx.us/

However, the lack of a Texas license does not end the issue. While just about everyone in this forum is absolutely convinced that the borrower's state controls the loan, I think the jury is very much out on that legally. I'll give you a few examples of why I feel this way:

1) There is a major case coming up in Kansas between Quik Payday and the Acting Bank Commissioner in which the lender sued the Commissioner for an injunction against her enforcing Kansas law against a Utah lender. That case is moving forward and the decision will probably come next year.

2) No state attorney general has ever successfully brought a lawsuit against an out-of-state internet lender for violating usury laws. Not even aggressive guys like New York's Spitzer. The closest was settlement - with no admission of wrongdoing - between Colorado and Quik Payday that was reached before a suit was filed. In contrast, Massachussetts sent out 91 C&D's and there only enforcement has been to complain to the media that few lenders responded, let alone obeyed them.

Most AG's only bring action in the easy cases, i.e., storefront guys who claim their offering rebates instead of payday loans, etc. They're politicians who make grand pronouncements about the "evils" of payday lending, but take only the most feeble action. A perfect example - California's attorney general just got big headlines for filing a lawsuit against a storefront chain for collection violations. His press release neglected to mention that a) the chain has been out of business for months; b) there are no known assets to pay any judgment; and c) the chain's owner is believed to have left the country. In other words, the AG did what state AG's normally do. He avoided the difficult case take one with maximum press and no likely no opposition in court. (Of course, last year a federal judge laughed at California's attempt to regulate an online timeshare broker from Texas. So, I can't blame him for being a little gunshy.)

3) Some states, like Pennsylvania, concede that their laws only apply to lenders with a physical presence in the state. Lenders soliciting residents from elsewhere are not required to be licensed as long as they are licensed and compliant with their home state laws.

4) Some states, like Texas, have no payday lending law at all. Those states must look to other parts of their banking laws to see where the loans were made in a legal sense. And many of these favor the lender on the question. (Since they were enacted to protect the state's own businesses from outside suits, rather than the state's consumers from outside businesses.)

5) Since the lender is operating from another state, even if the borrower's state has a legitimate claim logic suggests that lender's state has some auhority over the lender, too. Where these regulatory schemes collide a conflict of law exists. (Assuming, of course, that the choice-of-law clause in the contract is invalid.) Many states, like Minnesota, have longstanding policies for these situations wherein courts generally must apply the state's law which would save, rather than void, the contract.

Even though payday loans weren't even invented when these policies came into being, a payday loan contract is still a contract and whether its valid or not still must be determined under general contract principles.

6) Most payday loan contracts contain a binding arbitration clause. Earlier this year, the U.S. Supreme Court ruled - in a case specifically about payday loans - that even illegal contracts must go to an arbitration if the arbitration clause standing alone is not invalid. And the arbitrator gets to decide which state's laws apply.

7) Courts generally don't throw out choice of law clauses as cavalierly as you might believe. Even in a "Contract of Adhesion" (basically, your standard take-it-or-leave-it, pre-printed contract) courts generally will not set aside the clause as long as the chosen state bears some reasonable relationship to the transaction.

Posted: Thu Aug 03, 2006 7:40 pm Subject:

I am confused. Isn't this Texas pdl law?

Posted: Thu Aug 03, 2006 8:19 pm Subject:

In contrast, Massachussetts sent out 91 C&D's and there only enforcement has been to complain to the media that few lenders responded, let alone obeyed them.

Which means if Massachusetts sent out 91 C&D's....then
I guess it would be safe to say it's illegal for PDL's
to operate in that state. Online or otherwise!

Posted: Thu Aug 03, 2006 9:09 pm Subject:

Marcia Brady's Lovechile · Posted: Thu Aug 03, 2006 9:30 pm Subject:

I based my use of Texas as an example on the failure of H.B. 846, which would have authorized a license for payday lending and set forth restrictions, to pass in 2005. But after reading the statute Roadwarrior cites, I can now see that even though Texas never authorized direct lending, it did pass a law regulating storefront agents for bank-model loans. I don't think that affects my basic point, since there remain plenty of other states that one can substitute for "Texas," but I do stand corrected.

As for Roadwarrior's comments on Massachussetts, I agree that payday lenders cannot legally operate in Massachussets. But I not believe the fact that a borrower lives in Massachussetts automatically means an out-of-state lender is "operating" there as the relevant case law now reads. I'm looking forward to what the federal district court in Wichita rules on this question. It may well rule that the views expressed by Roadwarrior and others is correct. It may be a major victory for the lenders, though. Or it may find some other grounds on which to make a decision that avoids the greater question. We shall see.

I do not agree, though, that an AG sending out C&D's means "it's safe to say" something is or is not illegally. An AG is an advocate for the state, not a court. All he is saying is he believes they are acting illegally, but governments overstep their legal boundaries all the time and are kept in check by the courts. In these cases, Massachussets didn't even try to enforce the AG's letters. I suspect this was because they were unsure they would win and didn't want to risk the consequences of losing, i.e., open season on its citizens by out-of-state lenders. If the outcome in Kansas is favorable, they might become confident. But for now, it's safe to say they haven't "put their money where their mouth is" or so to speak.

For an analogous scenario, look up the Stroman case from the Southern District of Texas. In that case, both the California and Florida authorities sent C&D's to an online real estate broker claiming they needed their licenses and to follow their laws when soliciting customers from their states. In the end, it was anything but "safe to say" Stroman was doing anything illegal in those states, even though he conceded that he actively solicited their residents.
Judge Hughes down in Houston practically laughed the two states out of the courthouse for what she considered a violation of Texas' authority over a Texas business and furthermore a violation of the Due Process and Interstate Commerce clauses. I've read the pleadings and briefs in the Quik Payday suit, and that company is asking the court to adopt the same rationale for payday lending.

Now, don't get me wrong. I'm not saying that the lenders are right, either. As my grandmother used to say, there are three sides to any story - mine, yours and the truth.

In this debate both sides have too much to lose to even consider the possibility the other might have a valid argument. If the borrowers and their advocates are right, the lenders will lose millions of dollars in uncollectable loans and other penalties. But if the lenders are correct, it will be a sad day for borrowers. They will have to pay according to the loan contracts, assuming the lender is compliant with his/her home state laws. Otherwise they will face much more aggressive collections (difficult to imagine, I know), judgments and garnishments if lenders can safely assert their home state's laws.

Again, we shall see . . .

Marcia Brady's Lovechile · Posted: Thu Aug 03, 2006 9:55 pm Subject:

Polly, Money-in-a-Flash was a storefront lender. The internet service it "provided" was a loan disguised as a rebate. People would agree to pay $900 or more over a period of time for the right to use the company's computers (at the storefront) and receive an immediate rebate of $300.00 Beebe was right to treat it as fraud, since the whole point was to give a customer $300 and collect the principal plus 200% interest if the "membership" extended to its full term. From the news articles I read, none of the "members" even saw the computers they were supposed to use.

Many other states have taken similar action against storefronts operating fraudulent rebate programs, including New York, Pennsylvania and Texas. (Internet access is a relatively new twist. Phone cards used to be the product of choice.)

What I was addressing was the more complicated issue of when a lender licensed and operating in one state makes a loan to a resident of another where that loan would be illegal. (The key is licensed. Otherwise the loan is generally illegal regardless of which state's laws apply.) Which state regulates the transaction, the lender's or the borrower's? I don't believe the answer is as simple as the lenders on the one hand, and the borrowers on the other, would like to believe.

There are myriad constitutional principals (Due Process; Dormant Commerce Clause) and conflicts of law analyses that attach to the question, and no court has ever ruled on it. Similar issues have been decided in other industries, but until and unless the District of Kansas rules in the Quik Payday suit, we won't have a definitive answer for payday loans.

BTW - Someone is bound to ask if I am taking the Zippo decision into account. (The whole interactive web site thing.) Zippo wasn't a contract case; it was a trademark infringement suit. There was no "transaction" and therefore no reason to even get into where it would have taken place. There was no choice of law agreement to consider, either. While the decision suggested that Pennsylvania's trademark laws probably applied to the defendant's actions, it said so in dicta rather than as part of the ruling. The ultimate decision was simply that a Pennsylvania court could hear the case and make those types of decisions for itself.

Posted: Thu Aug 03, 2006 10:01 pm Subject:

I think we are in agreement that the multitude of company's who are not licensed in their home state, nor following any other laws in their home state are scams, are we not? ie Ameriloan/Rio/United Cash in Oklahoma/Nevada or where ever they are today.

Do you know where I can read up on Quik Payday vs. Kansas?

And why haven't you joined the site yet?

Marcia Brady's Lovechile · Posted: Thu Aug 03, 2006 10:14 pm Subject:

We are in agreement on that. And the issues I raised, assuming I'm right, only apply to companies that are actually licensed and regulated somewhere. Logically, the loan has to be legal SOMEWHERE for the lender to even try to argue it's legal EVERYWHERE. (Not shouting, but I can't italicize on Quick Reply.)

I pulled the lawsuit off of PACER, which electronically stores almost all filings in the federal courts. But it's pricy - 87 cents a page. I heard about it from an attorney involved in the case, but to my surprise I haven't seen any press coverage.

I don't sign up as a member for a number of reasons. Nothing against membership, but I have reasons to prefer anonymity.