Internet PDL - Illinois

I spoke to a representative at the Illinois Division of Financial Institutions: IL law required all PDL lenders conducting business in IL to be licensed in IL. This applies to internet PDL's as well.
When I explained my situation with the PDL's he stated that the Dept is very interested in these scenarios and would investigate the PDL if I could furnish them with all information.
Not licensed = not legal debt here in our state.

Oh! He also gave me the Dept email addy is anyone is interested.

Illinois recently passed some decent laws regarding pdl's . . . . This was part of them. They are also pretty good about taking action against unlicensed companies . . .

Goudah - you are very knowledgeable - give me your opinion on this scenario: "SAM" discovers internet PDL's are illegal in his state; in over his head "SAM" decides to seek the service of a company that somehow obtained his email addy. They emailed him 'Settle your payday loans for pennies on the dollar'. He retained their service; paid a % of his PDL debt and they start to negiotate for "SAM".
Company has in house lawyer; does it make sense that the CO would try to negotiate with PDL's on debt that is illegal to begin with?

can you please send me that email adress?

heaven and hockeyqueen, since this question is directed to goudah (who is very knowledgeable), I am leaving it to her to give the opinion requested. However, let me please state that anyone who offers this kind of service, please check on them before doing any business with them. Check them with the BBB. Google everything you can find out about them. That's just my 2 cents thrown in here. goudah will give you her opinion as to the situation.

Yes, it does make sense to me. This is a post from a lawyer that used to post here, and I'm pretty sure it is the same "company" that sent the email to settle your payday loans.

[quote]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. [/quote:5f14cd34b0]

So while some state's now have very clear laws on internet based companies, it still hasn't had a court decision. This is why there are so many internet based companies that "break the law". It's because they know that they will get away with it, or at most have to pay back some refunds.

So even though they are illegal loans, and can be backed up by law, the ipdl's also have laws to back up their case. It's not the most black and white area yet. There is mostly grays.

So yes, it would make sense to me that they are trying to settle your debts, even though they may be illegal. As long as the company is licensed somwhere and has legal authority to lend somewhere, the issue of the loan being 100% illegal is still "up in the air".

But - If the loan company is not licensed anywhere, then the loan is 100% illegal. In that case, I think it would all depend on the individual situation. What they've paid, etc. If they've paid way over the amount borrowed, then I would not want to pay them anymore. This is what the same poster as above said about settling illegal loans:

[quote:5f14cd34b0]First, I never offer settlement at 50 cents on the dollar to an internet pdl. Closer to 20 cents, regardless of the circumstances.

In a case like what you describe, though, the goal is to make the debt go away entirely, at least, if not get a refund. Forcing a refund might require litigation, which is expensive and usually requires outside counsel (unless I happen to be licensed in the consumer's state). So my immediate goal is to end any effort to collect the debt . . . by any means necessary.

Not as good as a refund, I admit. But my focus is debt negotiation rather than litigation and I would still consider getting the lender to write off the debt as paid in full an honorable resolution. It alleviates any immediate problems the consumer is experiencing with that lender and prevents any negative impact on the person's credit report.
[/quote]

Goudah - you are the best! Thanks so much. Ive spent countless hours on the forum & the Internet trying to track down my PDL companies. It is no exaggeration when I tell you that regardless of the dba or the actual company - I can not find them licensed in my state or the various states they how listed. The entire internet PDL concept is mind blowing & I feel like such a fool for falling into it.
Once, again - thanks for the post.

Anytime! And don't say you are a fool. Things happen. We all make mistakes, and when we look back would've done things differently. That just makes us human.