Can someone explain the purpose of an arbitration clause?

I was just thinking the same thing yesterday. I think they put that in there for appearance purposes only, because I really doubt an illegal company would want to show their faces anywhere.

I do know of someone who has been called to arbitration. So it's not totally for appearance purposes.

And you have to remember, in quite a few state's the ipdl's "legality" is pretty gray.

It's true Goudah. Like NY for instance... :sob:

Jen, It helps me to sleep better if I keep believing that PDLS are not legal here (new York). Every time i peek at the laws it clearly says prohibited. It says it, I read it, i believe it.

I always thought before that NY was one of the solidest states as far as pdl laws . . . . . It was news to me when I heard that some people say otherwise.

But I'm of kashzan's mind. Fight them like they are illegal. As far as NY goes the gray is very light to me. Hardly even a gray. More an off white.

Good way to look at it, I am going to jump on that positive mindframe bandwagon! 8)

The arbitration clause in the ipdl is a moot point unless that ipld is actually licensed in the state that you live in. However an arbitration clause in a Store Front Pay Day Loan company is binding in whatever state they are licensed to do business in. Most store fronts are usually licensed to conduct business in the state they have offices located in. Most IPDLs are not licensed in any state, including the state that they are physically located in. As for the class action waiver, that is pretty much null and void. You cannot waive your right to join a class action especially if the IPDL is not licensed in your state. Just for your information, there are law firms out there that are seriously looking into filing class action suits against these IPDLs, especially MTE subsidiaries as they seem to be the most abusive when it comes to collection practices, etc.

You go! Way to explain it! :D

Thanks Cannr. These IPDL companies and their arrogant mannerisms in dealing with individuals needs to cease. Most IPDLs, but not all, are operating illegally in the US and they are using psychological warefare on consumers who are not well informed. They are using the " letter of the law" as they see fit and in almost all cases, their perception is wrong!!! It is merely a scare tactic. Trust me on that one. But all readers must be sure that the IPDL company they are dealing with is truly not licensed in their state. I know that Cash Net USA is licensed in pretty much every state as is Payday One.

Arbitration is a area in contract law that allows two parties to decide their differences without involving the court system.The dangers to a consumer are they tend to be a rubber stamp for a creditor to get a judgement against you. The most important thing to remember is I contest arbitration as an abuse of process and demand a court hearing in front of a judge. Like the previous poster said,if they are unlicensed there is no legal debt to arbitrate period!

A number came up on my caller ID at home and I called it and it said "arbitration" they didnt leave a message. Why dont they I wonder?

Good question, Tweety. But I would think that since they don't want to leave a number that they can't be up to any good.
And when it comes to arbitration, an IPDL actually did serve papers on me earlier this summer. I was able to work out a settlement with Langhorne and paid them off. But looking at the papers, it seems that it took 6 months from the time they filed to when they actually served me with paperwork so it's a long process, indeed.

I thought if the IPDL werent licensed they couldnt serve papers on you?

Tweety, I thought the same thing...Please clarify KS! :)

You would think so--and this one wasn't licensed in my state--but it did!!!!!! And thankfully, Langhorne was right on it and worked it out ASAP.

Were they licensed in their state?

Now I'm worried that I'm going to be served for the pdl's I'm still fighting to get cleared up :(

Guest,
I think it would depend on how late your loan was and how much you borrowed, imho. I think this one place did this to scare me. Realistically, what outfit is going to pursue this for a $300 IPDL?? And let's not talk about the offshore places, like Sonic and Cashtoday...What are they going to do, come over from Malta to get $300?? The plane fare's more than that, LOL!!
This doesn't mean that this frees you from your obligation to at least payback what you borrowed, however.

Ks, the place that served you probably was legally licensed in their state...I haven't noticed too many people on these forums mentioning being called to arbitration.

I have 2 outstanding with MTE (that the AG is dealing with), and since they illegal and not licensed anywhere, I'm not going to worry too much about them me..

I think they probably were--and isn't MTE offshore? If true, then the chances of them doing that are probably slim and next to none. But definately keep us posted, OK?

Great. Now I'm worried :(

No MTE is located here, but they are not licensed, which essentially makes the whole "contract" null and void.

As jen states, MTE Financial and they're 20 thousand d/b/a's are located in the United States. However, they are not licensed to do business ANYWHERE. Not in our state, their state, or joe blow's state. Let them send something stating "arbitration". I would be there in a heartbeat. "Oh, hello MTE. Isn't it nice that your illegal presence is here to meet with me to collect on your illegal loan." Hell, I'd be all over that one! I did get a letter from another pdl through USPS (which surprised me!) stating they were prepared to go to arbitration. Ummm.... okay. At first it scared the crap out of me. Then I started investigating. Not licensed. Even though internet pdl's are illegal in my state, I was worried. So, then I found out they are not licensed. Okay. So I fired off an email basically telling them to bring it on. Hmmm.... I haven't heard another word from them.

Arbitrators work outside of the court system until an award is made. A firm letter to a mediator verifying they are not licensed in your state should stop any of their silliness.Of course you would be cc a copy to your state attorney general.

Thanks, cajun! You're always so reassuring! :D

Technically, anyone can sue anyone. So an unlicensed pdl could sue you. They would just lose, and get their butts slapped for doing business illegally. The reason we all say you won't get sued by an unlicensed ipdl is because no unlicensed company is going to want to set foot into a courtroom.

:cry:

tweety, do not cry! Do not worry! Like goudah said, they're not going to fly across the world and come to your state and take you to court for a $300 loan! Come on! They're too busy making those harrassing phone calls to take the time to do that! LOL!

I know its this purpose loan that I'm worried about for my friend.

ks - who was the company that served you papers if you don't mind me asking?