Internet Payday Loan

I live in Massachusetts, and got a internet payday loan from a company called St. Armands Group in June 1012. The amount of the loan was for $200. I have since had 4 payments debited from my bank account for $60 each for a total of $240 that has been paid back so far. I have since revoked ACH authorization and closed my account. Today I sent them an email stating the above, and that all internet payday loans are illegal in the state of Mass. and asking for a response stating that my account was paid in full and satisfied. I received an email response from them telling me that because this loan was made over the world wide web I am governed by the laws in the state of the PDL company and not Mass. They stated they would "settle" my account for another $200( the original loan amt.). If I chose to revoke ACH withdrawal, they would sell off my account to a collection agency. I have not responded to their email yet, dont know if I should? Are they correct in stating I go by their laws and not Mass? Any guidance would be appreciated.