PDL in Pennsylvania - Help

You will find the Payday loan laws for Pennsylvania here (just select your state),
http://www.debtconsolidationcare.com/paydayloan/explain-pdls-laws.html

Emails to and from PA Banking Dept

Hello,

I have a question about payday loans in Pennsylvania. Does the small loan rate cap of $9.50 per $100 per year discount or 24% per year apply to these loans? I took out a few on the internet and am trying to figure out how much I legally need to pay. For instance on a $200 loan would I be legally responsible for paying back only $248?

Thanks!

Response:

Dear Ms.:

The 9.5 discount and the 24 % simple interest refer to calculations that can be used by companies that are operating in Pennsylvania and are licensed under Pennsylvania????????s Consumer Discount Company Act. With a number of exceptions, a lender that is located inside of Pennsylvania and who does not have any special lending authority (i.e., a special license or charter) who is making smaller loans not secured by real estate can only charge interest at a rate of 6% simple.

A lender that does not have a physical presence in Pennsylvania but who has lending authority from some other state can generally charge the interest rate and finance charges allowed by that other state.

The Department may or may not be reviewing this policy and I would not count on this e-mail as an interpretive opinion before starting any lending or business operations.

James Keiser | Administrator Non-Depository Institutions

17 North Second Street, 13th Floor | Hbg PA 17101
Phone: 717.783.8242 | Fax: 717.787.8773
jkeiser(at)state.pa.us | www.banking.state.pa.us

What does this mean?

There are no storefronts in PA. They are illegal.

Internet lenders can lend legally to PA residents as long as they are licensed in another state. They would need to follow the laws of the state in which they are licensed.

Cash Net USA is legal and lending to PA residents under it's Nevada license. The terms of the loan would need to follow Nevada laws.

Payday One is legal and lending to PA residents under it's Deleware license. The terms of the loan would need to follow Deleware laws.

Cash Central is legal and lending to PA residents under it's Utah license. The terms of the loan would need to follow Utah law.

The rest of the companies you have borrowed from don't have any licensing in any US state. This makes the loan illegal. You would only need to pay back principle on them, minus any fees you've already paid.

Nevada law is pretty loose - There's no cap on interest. You would likely owe what Cash Net says you owe.

Deleware law is even worse - You will owe what Payday One says you owe.

Utah law is like Deleware law. You will owe what Cash Central says you owe.

I noticed you stated that you revoked some ACH's and will close your account in a few days. You should close your account ASAP. If payday loan company's know that you have or going to close your account they might go in and take more than their share. I saw that in the last part of the post. blueyes

It would depend . . . . Do they allow you to continually rollover, or after 4 times do they make you pay in full then reloan?

Well, technically, when you took out the increase, that would be considered a new loan.

Also, when did the loan change from Payday OK to Payday One? That could also be considered a new loan at that time . . . .

You'd have to speak with the Deleware Dept of Financials, but I've always read that to mean that the original loan term cannot be for more then 60 days . . . . But each time you rollover, that 60 days would reset. I could be wrong though.

If you reside in the state of Texas; can you be arrested; and or sued for default on a payday loan? I dfaulted in October 2007, and have since paid all except $640.00 back. I have a disability and have not bee n working fulltime. My deadline I was told is Apr.30, 2008. I don't have it. I also owe two more other loan stores, but have been able to pay the interest only. I'm sick of crying, what will happen to me? I can't get arrested nor afford an attorney HELP!

Internet lending, whether licensed or not, is NOT legal in PA. I'm aware of an email circulated within this forum for quite some time that is believed to confirm that PA acknowledges out of state licenses. The simple fact is that Federal law prohibits the exportation of rates to any non-chartered institution. This is why many PDLs had banking relationships in which banks would take a percentage of the loan to "fund" it. If you are having problems in PA, organize this forum into "class action" status and send a unified letter. I assure you that you will get much more attention that way. You would do well to post "Join Class Action" against "Specific Lender". Whether you do anything or not, forming a unified front and attacking the PDL will accomplish your goal of ending this.

all right nomorepdls,first if a pdl is licensed anywhere the PA resident must adhere to it.second,all you have done is try to argue with goudah.stop it now!!!!!!!!!show some proof of what you say or know if i see another one of these i will be there to debunk you.another thing,you seem lawsuit happy.pm jcemt for materials on that and quit clamoring for it and do it.

Just an FYI - The information I posted is also posted on the Pennsyvania Dept of Financial's website. You go to Laws and Regulations, Interpretive Letters, Consumer Discount Company Act, and the letter titled "Internet Lending Out of State Company". But hey, I must be confused or something . . . . Just becaues the state run website posts something under Laws and Regulations, doesn't mean that it has to do with their Laws and Regulations!

Also, my information is from the guy that is in charge of regulating these companies from PA. I don't just make it up, and I can back up what I say.

The internet is different - These companies are not going to another state to lend. You are going to the company. That is why the federal law doesn't come into play. They are not exporting their rates, you are going to them. That law does not cover internet activity, and was put in place before the internet became popular.

Can you tell me about these companies? Cash Advance Network and checksmart? I have loans with many others including these 2 and I am trying to get away from all of them. I talked to my bank and they said my account could be forced open for ACH debits and basically I would end up owing the bank more money than what I owe the loan companies. Any suggestions?
Thanks

Debra, we would be more than happy to help you with this. I see you have Cash Advance Network and Checksmart...I know Cash Advance Network is internet and part of MTE, they will not be licensed or legal anywhere...is Checksmart storefront or internet. Also, if you want to get out of the cycle, we will need you to list which companies your pdls are with, whether they are storefront or internet, how much you borrowed from each and the total of what you have paid back to each. We will also need to know which state you live in so we can guied you according to your state laws.

Also, when you post this information, go ahead and start your own thread, that way you will have all your information in one place, it will be easier for you to find you again and for us to find you again. If you have trouble with this just post and we can help you.

I have the following loans:
Payday okay, this one is almost paid in full as they are no longer doing business in PA and have switched to payday one. Principal balance in $100, fees paid over the last year $870.00, original loan was $500.00
Payday one $650 principal, loan fees paid over the last year $1681.50
CashadvanceNetwork Principal $600, I cant get into loan history with them to calculate exact fees, but I know it has been around $720 at least.
CashnetUSA $550 principal balance, I have paid them off in the past and had to reborrow to pay other loans, total fees over the last year $1775.
Checksmart $500 principal balance, fees paid $125 on this loan.
Cash Central $300 principal balance, fees paid $300. This loan will be paid this week.
My bank has told me they would have to re-open my account if the debits came in as they do have my authorization. Even if it is revoked. I cant open another checking account as I have something on checksmart as a result of an older payday loan with another bank. I have already been denied. My employer requires you have a checking account to get paid, they do not pay by check. I live in PA. Anything you can do to suggest getting away from this awful situation would be appreciated. I have nobody to borrow the money from, otherwise that would have been my way out a long time ago.

I was just advised by Cash Advance Network that they are licensed through the entire country and they are not required to provide a copy of the license. What do you suggest?

Goudah..First, I am not here to argue. I'm actually on the community's side. A much easier way to stop payday loans from unauthorized ACH is to make a formal complaint to their ACH processor, with contacts and notes included. Most PDL companies use either ACH Commerce, now owned by Moneygram Intl, or Intercept EFT. That is their lifeline. The biggest fear of a PDL is having their banking relationships jeopardized. I am not lawsuit happy as I actually do not have any payday loans to even warrant participation. I'm aware of your contact with James Kaiser and I'm aware of what the PA site claims. What I'm saying is that no internet lender has been able to substantiate legal claims of venue to supercede prevailing state law. PA is not equipped to handle an influx of PDL issues from a staffing standpoint and adheres loosely to that policy accordingly. In fact, you'll find contacts from individual departments stating that their licenses are only valid for in state residents. If you'd liek to verify this, contact David Gee with the NM Dep of Banking. With the individual licenses clearly marked as valid for their states of issuance, there is actually no argument. Regarding PA, a better way to go around that issue is to contact the PA Attorney General who would pursue an opportunity including multiple PA residents. What I am trying to explain to the community is that individual, fragmented posts about current problems can be solved on an individual basis with extensive aggravation. However, creating a unified front of residents of any state and giving the state an opportunity to show tangible results will lead to action.

I agree with you on the point that people uniting together have a better chance to win then fighting as an individual.

But as for the licensing issues, the companies that are actually licensed and lend to PA residents use certain state's licenses. They know which state's to use and which state's to not use.

PA has not had a case to challenge this. And I doubt any lender would not prevail when they have the Dept of Banking on their witness list. The companies did their due dilligence. They contacted the appropriate agency. They were told they did not need a PA license, and that as long as they have no physical location in PA, and a license from another state, they are okay to lend to PA residents over the internet, charging what their state of licensing allows. No court would ever find against them. They did what they should do. You can't fault a company that actually does get licensing in every state. When that company is told they don't need a license and to lend freely, who is to blame? The company shouldn't be punished. If anything, the laws should be changed.

My whole thing is that I want these companies to follow the law.

I know that PA has gone after several unlicensed companies . . . . But they can't do anything to companies that are licensed somewhere. Legally speaking, they can't. How can you punish a company for doing exactly what they should be doing? How is that fair or right?

Also, as far as the license only being valid for a certain state, there is also the question of where the transaction occured. If the person does a search, goes to that website, and applies for a loan, there is the argument that the person came to them, therefore since they are located in State X, the transaction took place in State X. Not all state's have laws that cover internet commerce, and not all state's have long arm statutes, so there is plenty of gray areas for these companies to argue.

If the lender was advertising in certain states, I'd agree with your argument. But the issue of where the transaction takes place can still be a gray area.