What does this mean..please help

Indiana targets payday loans
By Andrew Conte, Post staff reporter



After watching lawmakers in Ohio and other states take on the payday loan industry, Indiana officials are making their first moves toward chasing them out of the Hoosier state.

The industry amounts to little more than loan sharking because it violates the state's prohibition against exorbitant interest rates, the Indiana attorney general's office ruled in a recent non-binding opinion.

Payday lenders would effectively be banned from operating in Indiana if that opinion withstands a court challenge filed by the industry Tuesday.

All outstanding loans could be voided and fees collected by the lenders could be refunded.

Industry representatives, however, deny that they are engaging in anything illegal.

''The rules have changed,'' said Mark Tarpey, consumer credit director at the Indiana Department of Financial Institutions. ''We asked the attorney general for a ruling because of the considerable questions from the media, customers and small claims judges about what's going on.''

A four-part investigation of payday lenders by The Post last year has led to state legislative hearings in Ohio and the adoption of national standards by the industry itself. Those self-imposed regulations were released Monday and exceed most state laws.

Twenty-three states, including Ohio and Kentucky, have specific rules that permit payday lending under some type of regulation.

State Sen. Mark Mallory, D-9th District, and other lawmakers are now considering the creation of an oversight committee that would track lenders and ensure they are complying with the law.

Another 16 states explicitly prohibit the industry, and two states have legislation pending that would legalize the practice.

But Indiana and seven other states do not have any established rules for the industry at all.

Instead, the companies have been allowed to exist because of loopholes in lending laws, and the states have not opposed them.

Until now.

''We conclude, generally, that lenders violate Indiana law when they offer supervised loans having finance charges that exceed the annual percentage rates set out in Indiana's consumer credit code,'' Attorney General Jeffrey A. Modisett wrote in his opinion.

Indiana has two separate lending laws that could apply to the payday industry and that appear to conflict with each other.

One allows lenders to charge a $33 fee for each transaction, while the other limits the annual percentage rate to 36 percent for loans of less than $300.

Payday lenders have been charging fees of up to $33 for each loan they issue even though most are for two weeks or less.

Because the resulting interest rates far exceed 36 percent when annualized, the attorney general now argues they violate the law.

If they top two times the annual percentage rate - as most do - the lenders are considered ''loan sharks'' and may be charged with a felony offense.

Industry representatives have been blinking their eyes with disbelief over the opinion.

How can an industry with 550 retail outlets and $296 million in business suddenly be considered illegal, they argue.

The Department of Financial Institutions not only permitted the lenders but actually licensed and regulated them. Could they be charged with aiding and abetting loan sharks?

''We were somewhat baffled and at the same time it goes without saying that this is of major concern to our industry,'' said Michael Brown, director of the Indiana Defered Deposit Association, which represents payday lenders.

''This would not allow a level of fees that would allow the industry to remain in business.''

On a typical $100 loan, the consumer writes a postdated check to the lender for the loan amount and a fee of up to $33. After two weeks, the borrower must either pay off the debt, allow the company to cash the original check or renew the loan for another two-week period.

Because of the short terms of the loans, the fees amount to enormous annualized percentage rates of 300, 500 or even 1,000 percent.

Consumer groups have long argued that they permit nothing less than ''legalized loansharking.''

As was specifically stated in your loan agreement, the loan was provided in accordance with the Laws that govern licensed lenders in the Sate of Delaware

300 creek view road, suite 204
Newark, delaware 19811
Voice: 866.432.2562
Fax: 866.432.2736
E-mail:
Customerservice(at)cashdirectexpress.com

Loan agreement and promissory note
In consideration for the loan of the amount financed set forth below in the truth-in-lending disclosures, you promise to pay the total of payments (amount
Financed plus finance charge) as set forth in the disclosures, together with all other permitted charges as set forth in this agreement to government employees
Credit center, inc (hereinto referred to as gecc or gecc, inc.).
Truth-in-lending act information
Annual percentage
Rate
The cost of your credit
At a yearly rate
Finance charge
The dollar amount the
Credit will cost you
Amount financed
The amount of credit
Provided to you or on
Your behalf
Total of payments
The amount you will have
Paid after you have made
All payments as
Scheduled
730% $90.00 $300.00 $390.00
Breakdown of amount financed (above)
$300.00 sent directly to you
$0.00 paid on your account to settle any outstanding balance on previous loans
$90.00 fees paid to gecc, inc. For the transfer of the loan proceeds to you
Loan options - please complete the following
Loan delivery
Funds will be sent directly to your bank account via ach.
Loan payment
Your finance charge of $90.00 is due on 9/22/2006.
If you choose to pay your balance in full. You will have 1 payment of $390.00 due on 9/22/2006.
Loan amount option
You are qualified to borrow a maximum amount of $300.00, however you can borrow less than that and in doing so
Pay less interest on the loan. Please let us know if you would like to borrow any amount less than the maximum
Prior to electronically signing this document.
Further terms and conditions
Payments: if payment is not received via certified funds by 1pm eastern time on the business day prior to your payment date,
We will debit that payment from your direct deposit account in accordance with the electronic funds transfer
Authorization which you have signed and provided to us. In the event that ach debit is the method of payment, gecc, inc.
Reserves the right to divide your payment into several debits, at our discretion, so long as the total of all the debits is
Equal to the payment amount due. You will receive a disclosure statement outlining the exact payment dates and amounts
By electronic mail before your first payment is due. The amounts in the "payment option" section above are for reference
Only and the actual payment amounts may differ.
Prepayment: you may prepay this loan at any time prior to it being due, and you may be entitled to a refund of any prepaid
Finance charge.
Period: the term "period", when used in reference to interest calculations, is defined as the time period between your
Regularly scheduled pay periods, or any portion thereof, not to exceed 37 calendar days.
Interest: interest will be calculated on your account at the rate of %730 per 20 day period per $100.00 of outstanding
Principal in the event that your loan extends past the term described in this agreement, interest will continue to accrue
On the outstanding principal balance at the aforementioned rate until such time as the outstanding balance is paid in full.
Cancellation: you can return the amount financed listed above to us on or before 5:00pm eastern time of the business day
Following the day the funds are released to you without incursion of any fee or other charges.
Dishonored item fee: a fee of $30.00 (thirty dollars) will be charged to your loan if any payment is returned to us for any
Reason. This fee will be added to the balance of your loan.
Default: in the event you fail to repay the loan in accordance with the payment schedule above, finance charges will
Continue to accrue in accordance with the terms of the original agreement.
Renewals: unless borrower has repaid all obligations under this agreement in full, has been sent notice of lender's
Intention not to renew this agreement, or has defaulted under this agreement, lender shall automatically renew the due
Date of the amount financed until so terminated. If borrower does not choose to have this agreement automatically
Renewed, borrower must notify lender 2 business days before the loan is due. If this agreement is renewed, borrower's
Account will be debited in the amount of the finance charge due. Interest at the annual percentage rate shown above
Will continue to accrue on the unpaid balance during any renewal. If the amount financed is $500.00 or less, lender, as
Required by delaware law, will not extend a due date more than four times without entering into another agreement. If
Additional renewals are needed you must enter into a workout agreement with lender and reduce the original principal
Amount of the loan by $50 until the loan is paid in full.
Arbitration: all parties voluntarily agree to have all disputes that arise from or relate in any way to past, present or
Future business with gecc, inc., its affiliates, agents, or employees, decided by binding arbitration at the election of any
Involved party. Any arbitration will be conducted under the jams financial services arbitration rules and procedures, a
Copy of which is available by visiting jamsadr.com or by calling our office at 1-866-gecc-loan. Except as federal
Laws may apply, this note shall be governed by and construed in accordance with delaware law. This arbitration clause
Shall be governed in accordance with the federal arbitration act, 9 u.s.c. Sections 1-16. Judgment upon the award may be
Entered in any court having jurisdiction. If arbitration is chosen, neither party will have the right to go to court, to have
A jury trial, to participate as a representative or a member of any class of claimants, or to have your claims
Consolidated or joined with other claims. All parties will have very limited rights to pre-trial discovery and appeal. You
Fully understand and agree that the choice of law for resolving any disputes is delaware law, the choice of jurisdiction
Is the state of delaware, and the choice of venue is new castle county, delaware.
With my signature below i certify that i am aware regulation 5.2218/2231.003 of delaware state banking code (a copy of which
Can be obtained by visiting geccloan.com/law.html or by calling 1-866-gecc-loan which has been made available
To me as per delaware law. I further certify that i have read, understood, and agree to the terms set forth in this
Agreement. This note represents the final agreement governing the terms and conditions of this loan, there are no other
Agreements written or oral.
Signature:2520 date: 9/6/2006)

Ms. you applied to Cash Direct Express. Via the Internet you loan was opened in the state of Delaware. The funds for this loan were sent from a Bank In Delaware. We are licensed under Delaware Law. This is where we do business over the Internet. We continue to abide by the terms of the contract.
We provide alternative payment methods for your convenience if you would like to avoid the automatically scheduled debits from occurring. You are able to send money order payments via certified mail to:

300 Creek View Road Suite 204

Newark, DE 19711

This payment must be received by us at least 3 business days prior to your scheduled due date in order to prevent an attempted debit from the account we have on file.

You may also send your payments via Western Union Quick Collect. Our Western Union information is as follows:

Pay to: Government Employees Credit CTR Inc.

Code City: GECC

State: DE

Account no: Your social security number or current loan number

Once completed, please call and provide one of our representatives with the Money Transfer Control Number you receive so we can verify the transaction.

A Western Union payment must be received at least 1 full business day prior to your scheduled due date in order to prevent an attempted debit from the account we have on file.



In the event you choose not to take advantage of one of these alternate methods, please be advised that all standard payment collection procedures will be followed in accordance with your contract provisions.

If you should have any other additional questions please email us at customerservice(at)cashdirectexpress.com or contact us at 1 (866) 432-2562 Mon-Fri from 8:30am to 5:00pm ET.

Thank you,

Customer Relations
Cash Direct Express

--Original Message--
From:
Date: 11/29/2006 1:18:39 PM
To: customerservice(at)cashdirectexpress.com
Subject: RE: Cash Direct Express

To Whom It May Concern:
After reviewing your contract only laws of arbitration for the state of Delaware is what was agreed upon. Also, your company must be licensed in the in which the customer resides in order to "lend" money to a customer. Again, please see the information I have submitted below.)