CSO Laws Virginia - Question

So, I replied back and asked him specifically about cashnetusa.

I know a lot have said this place is legal, but they charge 299% interest rate which is way above the legal limit for VA.

This is what he said:
The web site for this entity indicates it is a payday lender.

http://www.cashnetusa.com/



It does not hold a pay day lender license in Virginia.

Nor does it hold a consumer finance license.



There is no licensure requirement to offer open-end credit lines.



Only the following provision of law applies and thus the terms of the loan contract dictate the interest rate on the loan.



6.2-312. Open-end credit plans.



A. Notwithstanding any provision of this chapter other than ?? 6.2-327, and except as provided in subsection C, a seller or lender engaged in extending credit under an open-end credit plan may impose, on credit extended under the plan, finance charges and other charges and fees at such rates and in such amounts and manner as may be agreed upon by the creditor and the obligor, if under the plan a finance charge is imposed upon the obligor if payment in full of the unpaid balance is not received at the place designated by the creditor prior to the next billing date, which shall be at least 25 days later than the prior billing date.



B. Notwithstanding the provisions of ?? 6.2-327 and subject to the provisions of ?? 8.9A-204.1, any loan made under this section may be secured in whole or in part by a subordinate mortgage or deed of trust on residential real estate improved by the construction thereon of housing consisting of one- to four-family dwelling units.



C. (i) A licensee, as defined in ?? 6.2-1800, shall not engage in the extension of credit under an open-end credit plan described in this section and, (ii) a third party shall not engage in the extension of credit under an open-end credit plan described in this section at any office, suite, room, or place of business where a licensee conducts the business of making payday loans. In addition to any other remedies or penalties provided for a violation of this section, any such extension of credit made by a licensee or third party in violation of this subsection shall be unenforceable against the borrower.



D. No person shall make a loan or otherwise extend credit under an open-end credit plan or any other lending arrangement that is secured by a non-purchase money security interest in a motor vehicle, as such term is defined in ?? 6.2-2200, unless such loan or extension of credit is made in accordance with, or is exempt from, the provisions of Chapter 22 (?? 6.2-2200 et seq.).



E. If a licensee, as defined in ?? 6.2-1800, surrenders its license under Chapter 18 (?? 6.2-1800 et seq.) or has its license revoked, and if following such surrender or revocation of its license the former licensee engages in the extension of credit under an open-end credit plan as described in this section, then the Commission shall not issue to such former licensee, or to any affiliate of the former licensee, a license under Chapter 18 (?? 6.2-1800 et seq.) for a period of 10 years from the date such license is surrendered or revoked. As used in this subsection, "affiliate of the former licensee" means a business entity that owns or controls, is owned or controlled by, or is under common ownership or control with, the former licensee.







Kenneth J. Schrad

Director, Division of Information Resources

State Corporation Commission (SCC)

PO Box 1197

Richmond, VA 23218

Office: (804) 371-9141 or (804)371-9858

Cell: (804) 334-6454

E-mail: [email]ken.schrad@scc.virginia.gov[/email]



So if I am reading this correctly, cashnetusa is NOT a licensed lender in VA, correct?

Just sent this to cashnetusa, 3 VA sources have told me they are NOT legal and I am following through with it. Will keep everyone posted esp those in VA.

Whom it may concern,

I have recently been advised by the Virginia Bureau of Financial Institutions that you are not an licensed lender in the state of Virginia. I was advised not to pay anymore on this line of credit and to cancel any EFT/ACH transactions I have authorized. I, (my name) , am hereby revoking cashnetusa's ACH/EFT authorization as well as any voluntary wage garnishments I may have signed. You are no longer authorized to contact me or any references by phone. I will only answer to email communication for my written records. They also advised me that I am not responsible for any money owed, however I wanted to be sure I had paid what I owed on principle. I calculated all my payments and withdrawals on this line of credit, herein, I found that I have actually paid substantially more than what I have borrowed. I was told to request a refund for any over payment.

To date I have borrowed $1318.00 and have paid $2167.00, I am due a refund of $849.89 according to my states law.

I was advised that EVEN IF you were a licensed lender in VA, that would be null and void due to this clause in our laws.

He specifically stated in his email to me this clause:

C. (i) A licensee, as defined in ?? 6.2-1800, shall not engage in the extension of credit under an open-end credit plan described in this section and, (ii) a third party shall not engage in the extension of credit under an open-end credit plan described in this section at any office, suite, room, or place of business where a licensee conducts the business of making payday loans. In addition to any other remedies or penalties provided for a violation of this section, any such extension of credit made by a licensee or third party in violation of this subsection shall be unenforceable against the borrower.

Since you operate your LOC business under the same name that operates a payday loan business, you could not even obtain a license in our state. Just to be clear, I had him investigate your company individually, so he is aware your offering loans illegally in our state without any type of license and this is a Class 6 felony.

He has formally asked me to file a complaint, I have not done this, if I do not hear from you concerning this illegal loan, I will be forced to file the complaint as recommended by Virginia Bureau of Financial Institutions.

Awaiting your reply,

Please keep us informed. I would like to know what this company has to say as I too have a "line of credit" with them and I saw that they were registered as a CSO in Virginia. I've been contemplating filing for bankruptcy because the monthly amounts change and continue to grow! I don't know what else to do at this point.

I'd suggest visiting VaPerl and talk to someone from this organization. They are very
knowledgeable about illegal lenders.

When I questioned their legality in the state of Virginia - I was told the following:
Please be advised that pursuant to Virginia law CashNetUSA is able to provide financial services to residents of Virginia under our Kansas license, pursuant to Kansas Uniform Consumer Credit Code, Chapter 16A. Our Kansas License number is SL.0000293.
Not sure what that means but I am looking it up to see if that is true.
Thanks for your information as I am having the same problem. I would love to know what you find out.