State Payday Loan Laws Made Simple

What a great idea! I like the idea of format- it keeps it simple and all in one place!This will be an easy way to refer people to what the laws mean in terms they can understand-and in one place!! Thanks..Karen :D

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.

Emails to and from the WY Banking Dept

From:
Sent: Tuesday, August 14, 2007 1:24 PM
To: Marlene Aitchison
Subject: Internet Payday Loan Question


Hello,

I'm trying to find out if an internet bases payday loan company with no physical presence in Wyoming needs to be licensed to lend by Wyoming. If they don't need to be licensed by Wyoming, would they still need to follow Wyoming's payday loan laws, or would they need to follow the laws of the state in which they are licensed?

Thanks!

Response:

Hi -

Wyoming statutes do not exempt internet-based payday loan companies with no physical presence in Wyoming from licensing; therefore, if the company lends to Wyoming consumers, a license is needed.

License application forms can be found on our Internet website (audit.state.wy.us/banking/uccc/ucccapplicationforms.htm)

Please let me know if you have additional questions.

Marlene


Marlene Aitchison
Projects Coordinator
Wyoming Division of Banking
[email]maitchison@wyaudit.state.wy.us[/email]
307.777.7792 direct line
307.777.3555 fax

What does this mean?

Loan terms must be for at least a month.

They can charge you 20% or $30, which ever is more.

Loans cannot be rolled over.

Internet companies must be licensed by WY in order to lend legally.

Emails to and from the NH Banking Dept:

Hello,

I was wondering if you could tell me if internet based payday loan businesses need to be licensed in NH to lend to NH consumers? Would they need to follow the laws of NH regarding rollovers and such, or would they need to follow the laws of the state they are licensed in?

Thanks!

Response:

From: Shepard, James
Sent: Tuesday, August 07, 2007 8:36 AM
To:
Subject: FW: Payday loan question

Yes. All small loan lending with consumers located in NH requires licensure. In addition, payday and title lenders must maintain an office in the state of NH which is accessible to consumers.

Reply:

From:
Sent: Tuesday, August 07, 2007 11:38 AM
To: Shepard, James
Subject: RE: Payday loan question

So if they must have an office in NH, does that mean that internet payday loan companies that don't have any physical location in NH are operating illegally?

Response:

From: Shepard, James
Sent: Tuesday, August 07, 2007 8:43 AM
To:
Subject: RE: Payday loan question

Your question presumes that what they are offering is a payday loan which is very tightly defined. However, the more salient question is are they licensed at all? We regularly take action against internet lenders who are not licensed in NH. You can check the list of licensed lenders at: nh.gov/banking/consumer.html Scroll down to "Licensee Listings" The penalty for not being licensed is an absolute bar to collecting any of the money leant.

James Shepard
Staff Attorney -- Banking Department

What does this mean?

They can charge any interest they want, but once you default they can only charge you 6% interest.

There are no rollovers.

Internet lenders must be licensed.

Great idea! This stuff is so confusing, this would really help. You are awesome!

Email to and from TN Banking Dept

Hello,

I'm trying to make sense of the payday loan laws in Tennesse. How would I go about calculating the allowable interest?

Thanks!

Response

From: Steve Henley
Sent: Friday, March 02, 2007 1:08 PM
To:
Subject: Re: calculating pdl interest

Dear Ms , technically it is not an interest rate but service fee and this is how it works. The fee cannot exceed the lesser of 15% of the check amount or $30. So if you have a check amount for $100, the service fee would not exceed $15 (15% x 100). Keep in mind the fee is on the check amount, not cash amount. If the consumer requests $100 in cash, the check amount would be $117.65. The check amount of $117.65 x 15% equals $17.65, and cash is $100 ($117.65 - $17.65 = $100). If the customer asks ... "how much should I write the check for if I want $50?"

You can back into the check amount by taking $50 and dividing it by 85% or .85. In other words $50 divided by .85 = $58.82. You can verify by multiplying $58.82 x 15% = $8.82 service fee. $58.82 - $8.82 = $50.

Remember the service fee is limited to $30 on all checks exceeding $200.

I hope this helps but please let me know if you have other questions.

615-532-6993 Steve Henley

Reply:

Hello,

Can you tell me if internet based payday lenders with no physical location in TN need to be licensed by TN to lend legally? Or would they only need to be licensed by another state? And which state's laws would they need to follow?

Thanks!

Response:

From: Steve Henley
Sent: Monday, August 27, 2007 8:12 AM
To:
Subject: Re: Internet Payday loans

Dear Ms , our statute does not address internet activity, but to obtain a license from Tennessee the entity must first have a physical location in this state.

Please let me know if you have other questions.

615-532-6993 Steve Henley

What does this mean?

They can charge 15% of the face value of the check in fees.

Rollovers are not allowed.

Internet companies do not need to be licensed by TN. As long as they are licensed in another state they can lend legally. They must follow the laws of the state they are licensed in.

Emails to and from the MN Banking Dept:

From:
Sent: Monday, March 26, 2007 3:44 PM
To: Financial.Commerce(at)state.mn.us
Subject: Payday loan questions

Hello,

I have a question about internet payday loans. Do these need to be licensed in MN to be legal? Also, how do I calculate the legal amount of interest they can charge me according to MN laws? I see the laws state:

Maximum Finance Rate and Fees: $5.50: $0-$50; 10%+$5: $51-$100; 7% (min. $10) + $5: $101-$250; 6% (min. $17.50) + $5: $251-$350 (After default: 2.75% per month)
Finance Charge for 14-day $100 loan: $15
APR for 14-day $100 loan: 390%

So for a $300 loan how would I calculate the interest? And since no rollovers are allowed and the companies I have loans with have rolled them over countless times, would I be correct in saying that they are breaking the law? I've been told by several of them that they don't have to follow MN laws, even though they solicited me, because they are licensed in the state that they are located in. Is that correct?

I really appreciate any help or direction you could give me!

Thanks!

Response:

From: Terry Meyer
Sent: Tuesday, March 27, 2007 6:40 AM
To:
Subject: FW: Payday loan questions

First we don????????t license lenders that are domiciled in other states. Minnesota law does not have a long arm statute and allows residents to seek loans wherever they want. Solicitations via the internet or ads do not place the lender in Minnesota, only a physical location would [the exception being residential mortgage lenders].

The way to calculate the APR for a 14 day loan is either using a T-I calculator. A fast check using the example for a $100 14 day loan is;
$15 finance charge divided by the $100 loan [proceeds of the loan, or amount financed] = .15, or 15%
.15 divided by the number of days in the loan, or 14, gives you the daily rate of .0004109589
Multiply that number by 365 [days in the year] = 3.91071428415, or 391.07% APR

Does that help ???????? and in Minnesota rollovers or refinancing is not permitted. Name the MN lender and file a complaint.

Reply:

From:
Sent: Tuesday, March 27, 2007 8:45 AM
To: Terry Meyer
Subject: FW: Payday loan questions

Terry,

So to make sure I understand this, a payday loan company located in another state doesn't have to be licensed to lend to MN consumers. But do they have to follow MN laws about rollovers and interest? Or can they follow the laws of the state in which they are located in?

Thanks for you help!

Response:

From: Terry Meyer
Sent: Tuesday, March 27, 2007 6:58 AM
To:
Subject: RE: FW: Payday loan questions

It is similar to credit cards ???????? I would bet, assuming you are a MN resident, that none of your credit cards are from banks located in MN. The Supreme Court ruled in both 1978 that rates, and 1996 that fees could be imported for credit cards issued by out of state lenders to other states borrowers. Its agency law. The use of the laws of the state in which the lender is licensed is required.

Please explain your interest and the firm you represent.

Reply:

From:
Sent: Tuesday, March 27, 2007 9:04 AM
To: Terry Meyer
Subject: RE: FW: Payday loan questions

Terry,

I don't represent any firm. I was just trying to get some more information about the laws governing these kind of loans. The reason I was curious about the specific point of if state law governs out of state pdl's is because where I live, Oregon, they do have a law saying that out of state pdl's much be licensed in OR and follow the laws of OR. I was hoping the same thing applied to MN, because in that case all his pdl's were grossly overcharging him.

Thanks!

Response:

From: Terry Meyer [
Sent: Tuesday, March 27, 2007 7:30 AM
To:
Subject: RE: RE: FW: Payday loan questions

Good luck ???????? we recently received a complaint on a Payday loan from Malta. Since MN doesn????????t have a law like OR each state would have to be contacted for their payday loan law to determine if a violation occurred.

What does this mean?

There are very specific rates they can charge you depending on the amount loaned.

Rollovers are not allowed.

Internet companies can lend legally as long as they are licensed in another state. They must follow the laws of that state.

Emails to and from OR Banking Dept:

Hello,

Can you give me a summary of the new payday loan laws that went in to effect on July 1, 2007? And can you clarify if internet based companies must now be licensed by Oregon to lend to Oregon consumers?

Thanks

Response:

The following is a summary of changes made to consumer finance, payday, and title lending by
the 2006 Special Session and the 2007 Legislature. This letter provides information on some of
the most frequently asked questions on the new consumer finance lending laws that take effect
July 1, 2007.

* Limits interest rates on payday or title loans to 36% per annum.
* In addition to the interest, allows a payday or title lender to charge a one-time 10% loan
origination fee on a new loan ($10 per $100) up to a maximum of $30 (regardless of the
amount of the loan).
* Sets a minimum term of 31 days for both payday and title loans.
* Limits payday and title loans to two rollovers/renewals.
* Prohibits a lender from making a new payday or title loan to a consumer within 7 days on
either side of the date on which a payday or title loan expires.
* Allows a lender to charge only one fee for NSF and dishonored checks, regardless of the
number of checks written by the customer; the fee is limited to $20.
* Allows payday or title lenders to pass through to the borrower any NSF or dishonored
check fees an unaffiliated financial institution charges the lender.
* Includes ???????sale-leaseback??????? arrangements in the definition of title loans, thus prohibiting
such arrangements unless the lender-buyer is properly licensed.
* Prohibits lenders from charging any fees other than those that are specifically allowed in
the payday and title lending laws.
* Starting July 1, 2007, you are limited to charging a maximum 10% loan origination fee
(based on amount loaned and subject to a maximum of $30) and a maximum 36% per
annum interest rate on all new loans. You must calculate interest on a 365-day year.
(Lenders have the option of using a 366-day calculation for leap years.)
* On July 1, 2007, interest rates and fee limits become effective. You can collect the fee
(finance charge) that you stated in the agreement that the borrower signed before July 1,
2007. However, you must use the minimum 31-day term and the maximum 36% interest
on any renewal of a payday or title loan on or after July 1. You must also comply with the
$20 maximum NSF fee limit on any returned checks you deposit on or after July 1.

What do I do if I decide to change my business model to make short-term loans only
through the Internet, mail or telephone?

You must provide information to our office describing changes in your business model. If
you are making loans to Oregon residents, licensing and complying with the new laws are
still required.

What does it mean?

They can only charge you 10% origination fee, and 36% interest. The origination fee can only be charged at the start of the loan.

The loan can be rolled over twice.

There is a 7 day waiting period between loans.

Loan terms must be at least 31 days.

Internet lenders must be licensed by OR to lend legally.

Emails to and from the Dept of Banking:

From:
Sent: Wednesday, September 12, 2007 1:38 PM
To: Goodwin, Annie; O'Sullivan, Kelly
Subject: Payday Loan Question


Hello,

Do internet based payday lenders that don't have a physical location in MT need to be licensed by MT to lend legally? Or is it enough that they have a license in another state?

Thanks!

Response:

From: O'Sullivan, Kelly [mailto:kosullivan@mt.gov]
Sent: Wednesday, September 12, 2007 1:20 PM
To: ; Goodwin, Annie
Subject: RE: Payday Loan Question


Ms. ,

If the internet payday lenders are offering loans to Montana residents or engaging in business in this state, they must be licensed by this state. They may need to be licensed as a deferred deposit lender or consumer lender depending on the products they offer. They need to contact the Banking and Financial Institutions Division for licensure. See banking.mt.gov/

Let me know if you need any further information.

Sincerely,


Kelly O'Sullivan
Legal Counsel
Montana Banking and Financial Institutions Division
Telephone: (406) 841-2935
Fax: (406) 841-2930

What does this mean?

They can charge you 25% of the amount loaned in fees.

Rollovers are not allowed.

Internet companies must be licensed by MT to lend legally.

Emails to and from the banking dept:

To Whom It May Concern:

I have a question regarding internet payday lenders. I have visited the Department of Financial Institutions site and found some information. However, I am still a little confused.

I understand that storefront payday lenders are legal in the state of Kentucky and have printed out the laws applying to them. However, there is nothing regarding internet payday lenders.

I did a search on the site to see if some internet payday lenders were licensed in Kentucky. No results came up for any of them. If the case is that an internet payday lender is not licensed in the state of Kentucky, what then?

Internet payday lenders are claiming they do not have to comply with Kentucky state law. They claim they comply with the law in which they are located.

If they are not licensed in the state of Kentucky to fund loans, are they not in violation of some sort of law?

Any help in this matter would be greatly appreciated. At the very least, it might clear up my confusion.

Thank you so much for your attention in this.

Response:

Internet payday lending is illegal in Kentucky.

Chris Thompson
Compliance Branch Manager

Reply:

I have emailed before regarding internet payday lending and received the reply that internet payday lending is illegal in Kentucky. Thank you for that information.

I now have another question. If an agency is attempting to collect on an internet loan - which was illegally funded - does the collection agency need to be licensed in the state of Kentucky? Is this even a legal debt to collect on?

Thank you for any information you can give.

Response:

I am not sure who if anyone licenses collection agencies. This Office does not consider it a legal debt as the entity was not licensed to do business in Kentucky.

Chris Thompson
Compliance Branch Manager

Reply:

I have viewed our state pay day law and understand that a store front pay day loan company can collect one NSF fee if your check is returned by your financial institution.

However, I have a question. How many times can a pay day loan company run the check through to your financial institution?

I have a pay day loan company that I am working on setting up a repayment plan; however, they keep running the check through my financial institution every week.

I was under the assumption that pay day loan companies may run the check through only once; however, I could be misunderstanding.

Could you please clairfy for me how many times a store front pay day loan company can run your check through your financial institution? I would like to be sure this company is following the law.

Thank you in advance for any answers/advice.

Response:

There is nothing in the check casher statute that prohibits the number of times a pay day loan company can run the check through; however, it is my understanding that banking law on allows a bank to do it only twice.

Chris Thompson
Compliance Branch Manager

I've looked more into this, to see exactly why internet lending is "illegal" in KY

Ms. :

We have an Administrative Regulation in Kentucky 808 KAR 9:040 Limitation on electronic fund transfer from customers accounts that states: ???????In connection with a deferred deposit transaction, a license shall deposit or present for payment a customer????????s actual check to the customer????????s bank or other financial institution unless that check is redeemed or bought back by the customer.???????

This prevents Internet payday loans in Kentucky and any company that may be offering loans in Kentucky is doing so illegally. If you have any additional questions feel free to contact me.

Sincerely,

Rodney Gabbard

What does this mean?

A legal lender must hold a check from the customer.

Storefronts can charge you 15% of the face value of the check.

Rollovers are not allowed.

A big Thank You! to Cannr for providing this information! :D

Goudah the information that you have provided is priceless 8) . Keep up the good work. :lol:

ladybug

Emails to and from the banking dept:

Hello,

Can you tell me if internet based companies that don't have a physical location in NM need to be licensed by NM to lend legally? Would they need to follow NM laws? Any information you can give me about payday lending would be much appreciated.

Thanks!

Response:

Dear ,

A consumer can only have payday loans totaling 25% of their gross income at one time. There is currently no cap on interest rates or rollovers.

Any person engaged in the business of lending in amounts of two thousand five hundred dollars or less
must obtain a license from the Director of the Financial Institutions Division. This includes Internet lenders.

If you have any other questions let me know.


Henry A. Vigil
Consumer Industry

What does this mean?

There are no interest rate caps. They can charge what they want.

There are no limits on rollovers.

Internet based companies must be licensed by NM to lend legally.

New Mexico Updated Laws


What does this mean?


Specific rates can be charged.

No rollovers are allowed.

Internet based companies must be licensed by NM to lend legally.

You must wait 10 days in between loans.

Nothing for Florida yet?

I'm working on it . . . . Can't post anything until I get the responses I need.

Emails to and from the banking dept:


From:
Sent: Wednesday, September 19, 2007 10:04 AM
To: Coffman Dawn M (BCO)
Subject: Payday Loan Question

Hello,

Do internet based companies need to be licensed by DE to lend legally in DE? Or can they be licensed in their home state? I have several payday loans and they are all licensed in other states. They say they don't need a DE license. Is that correct?

Thanks!

Response:

From: Hoffecker Carole (BCO)
Sent: Friday, September 21, 2007 4:55 AM
To:
Subject: RE: Payday Loan Question

Dear,

In response to your e-mail, Delaware has a safe harbor of 5 loans in a twelve month period and which is viewed as not conducting business. Therefore, a license would not be required. However, should a lender do more than the five loans a license would be required even if they are an internet based.

I trust this is responsive to your concerns. However, if you have any questions, please feel free to contact me.

Sincerely,

Carole


What does this mean?

If the company does more then 5 loans a year to DE residents, they must be licensed by DE, even if they are internet based.

They can charge whatever they want.

There can only be 4 rollovers.

Wow! this is great - how about Illinois (in this format)?

If possible; would you list the info on PDL's for the state of South Dakota? Thanks!

Do you have anything on the state of ALabama?

Emails to and from the banking dept:

From:
Sent: Tuesday, October 02, 2007 12:02 PM
To: DRR - Special Taxes
-subject: Internet Payday Loan Question

Hello,

I was told that this division may be able to answer my question about internet based payday loan companies. Do internet based payday loan companies need to be licensed by SD to lend legally in SD? Or can they be licensed in their home state as long as they don't have a physical location in SD? I have several payday loans and they are all licensed in other states. They say they don't need a SD license. Is that correct?

Thanks!

Response:

From: Cassie.Branaugh @state.sd.us
Sent: Thursday, October 04, 2007 6:30 AM
To:
Subject: RE: Internet Payday Loan Question

Hello,

I am an examiner with SD Division of Banking. We license and regulate payday loan companies, including those that are internet based. It is the determination of the Division that any company lending to South Dakota residents are subject to our lending laws and must hold a license from the Division.

We would appreciate very much if you would provide us with copies of your loan contracts with any internet lenders as well as any contact information that you have for the lenders (i.e. company name, address, website, telephone, fax, email). We will then determine if they are licensed with us. If not we will contact them and take the steps necessary to get them in compliance with South Dakota Law.

The information can be either emailed, faxed to 605-773-5367 or mailed to the address below. Please feel free to contact me if you have any questions.

Thanks,

Cassie Branaugh
SD Division of Banking
217 1/2 W Missouri Avenue
Pierre, SD 57501
605-773-8454

What does this mean?

Internet based companies must be licensed by South Dakota.

They can charge whatever they want.

They can only rollover the loan 4 times.

Other state's will be posted as replies from the DFI's are recieved.

No Emails, but this is posted on the DFI's website:

WHO IS REQUIRED TO OBTAIN A LICENSE TO ENGAGE IN THE BUSINESS OF DEFERRED DEPOSIT TRANSACTIONS?

Any person that offers, originates or makes a deferred deposit transaction, arranges a deferred deposit for a deferred deposit originator, acts as an agent for a deferred deposit originator, or assists a deferred deposit originator in the origination of a deferred deposit is required to obtain a license from the Department of Corporations

I AM LOCATED IN CALIFORNIA PLANNING TO ENGAGE IN THE BUSINESS OF MAKING DEFERRED DEPOSIT TRANSACTIONS OVER THE INTERNET ONLY TO RESIDENTS IN OTHER STATES. AM I REQUIRED TO OBTAIN A LICENSE FROM THE DEPARTMENT.OF CORPORATIONS UNDER THE CALIFORNIA DEFERRED DEPOSIT TRANSACTION LAW?

Yes.

I AM NOT LOCATED IN CALIFORNIA PLANNING TO ENGAGE IN THE BUSINESS OF MAKING DEFERRED DEPOSIT TRANSACTIONS OVER THE INTERNET TO RESIDENTS IN CALIFORNIA AND TO RESIDENTS IN OTHER STATES. AM I REQUIRED TO OBTAIN A LICENSE FROM THE DEPARTMENT OF CORPORATIONS UNDER THE CALIFORNIA DEFERRED DEPOSIT TRANSACTION LAW.

Yes.

ARE THERE LIMITATIONS ON A DEFERRED DEPOSIT TRANSACTION?

Yes. The face amount of the customer's personal check or the electronic equivalent of the customer's personal check may not exceed $300 and the fee charged may not be more than 15% of the face amount of the check.

ARE THERE LIMITATIONS ON THE FEES THAT MAY BE CHARGED IN RELATION TO A DEFERRED DEPOSIT TRANSACTION?

Yes. The fee may not exceed 15% of the face amount of the check. A single fee not to exceed $15 may be charged for a returned check. No additional fees may be added for late payments or returned checks.

ARE THERE LIMITATIONS ON THE NUMBER OF DEFERRED DEPOIST TRANSACTIONS A LICENSEE MAY MAKE TO A CUSTOMER IN A 12-MONTH PERIOD?

No. There are no limits on the number of deferred deposit transactions a licensee may make to a customer in a 12-month period. A licensee cannot make a new deferred deposit transaction during the period an earlier deferred deposit transaction is in effect for the same customer and the proceeds of a new deferred deposit transaction may not be used to pay off an existing deferred deposit transaction from the same licensee.

IS A LICENSEE ALLOWED TO MAKE A NEW DEFERRED DEPOSIT TRANSACTION TO A CUSTOMER THAT HAS AN EARLIER DEFERRED DEPOSIT TRANSACTION THAT IS IN EFFECT FROM ANOTHER LOCATION OF THE SAME LICENSEE.

No. Licensees with multiple locations cannot enter into a deferred deposit transaction with a customer during the period an earlier deferred deposit transaction is in effect for the same customer at any of the licensee's locations.

CAN A LICENSEE USE A CUSTOMER'S PERSONAL CHECK OR THE CUSTOMER'S ELECTRONIC EQUIVALENT OF A PERSONAL CHECK RECEIVED FROM A PREVIOUS DEFERRED DEPOSIT TRANSACTION FOR A NEW DEFERRED DEPOSIT TRANSACTION?

No. A licensee is not permitted to accept or use a customer's personal check or a customer's electronic equivalent of a personal check received from a previous deferred deposit transaction for a new deferred deposit transaction.

CAN A LICENSEE ACCEPT COLLATERAL IN CONJUNCTION WITH A DEFERRED DEPOSIT TRANSACTION?

No.

IS A LICENSEE ALLOWED TO MAKE THE DEFERRED DEPOSIT TRANSACTION CONTINGENT ON THE PURCHASE OF OTHER SERVICES OR PRODUCTS?

No.

ARE THERE ANY SPECIAL REQUIREMENTS FOR A LICENSEE THAT MAKES A DEFERRED DEPOSIT TRANSACTION TO A NON-ENGLISH SPEAKING PERSON?

Yes. The written agreement must be written in the same language principally used in the oral discussions or negotiations leading to the execution of the deferred deposit agreement and must be in at least 10-point bold type.

IS A LICENSEE ALLOWED TO EXTEND THE DUE DATE OF AN OUTSTANDING DEFERRED DEPOSIT TRANSACTION OR ALLOW THE CUSTOMER TO MAKE PAYMENTS ON AN OUTSTANDING DEFERRED DEPOSIT TRANSACTION?

Yes, though the licensee is not required to extend the due date or enter into an agreement to allow the customer to make payments on an outstanding deferred deposit transaction.

WHAT ARE THE FEES A LICENSEE MAY CHARGE IN CONNECTION WITH EXTENSIONS AND PAYMENT PLANS GRANTED FOR REPAYMENT OF OUTSTANDING DEFERRED DEPOSIT TRANSACTIONS?

A licensee may allow an extension of time to repay an outstanding deferred deposit transaction or a payment plan, but may not charge any additional fees or charges of any kind in conjunction with the extension or payment plan.

IS A LICENSEE PERMITTED TO DEBIT A BORROWER'S BANK ACCOUNT ELECTRONICALLY USING ACH TRANSFERS ON MULTIPLE DAYS FOR VARYING AMOUNTS TO COLLECT A DELINQUENT ACCOUNT WITHOUT THE BORROWER'S AUTHORIZATION?

No. The agreement or an addendum to the agreement must specify the days and amounts the licensee is authorized to debit the borrower's bank account electronically using ACH transfers to collect delinquent accounts. Any addendums to the agreement authorizing the licensee to debit the borrower's bank account electronically to collect overdue accounts must be in writing signed by the borrower, by fax with the borrower's signature or electronically authorized by the borrower over the Internet. The written agreement should cover the manner in which a customer's check will be deposited and the specific date of deposit. For example, when the licensee elects to deposit a personal chck by electronic means, the written agreement should specify that the licensee electronically deposits the customer's check and the specific date. If the licensee wishes to deposit the check either manually or electronically when there are insufficient funds in the customer's account, the written agreement should also specify the method and date of depositing the check under those circumstances. The written agreement should cover the manner in which a customer's check will be deposited and the specific date of deposit. For example, when the licensee elects to deposit a personal check by electronic means, the written agreement should specify that the licensee electronically deposits the customer's check and the specific date. If the licensee wishes to deposit the check either manually or electronically when there are insufficient funds in the customer's account, the written agreement should also specify the method and date of depositing the check under those circumstances.

CAN A CUSTOMER BE CRIMINALLY PROSECUTED FOR FAILING TO REPAY A DEFERRED DEPOSIT TRANSACTION?

No. A customer cannot be criminally prosecuted or threatened with criminal prosecution to collect a delinquent deferred deposit transaction.

What Does this mean?

Internet based companies must be licensed by CA to lend legally.

Fees may not exceed 15% of the face value of the check.

No Rollovers are allowed.

Emails to and from the DFI:

Hello,

Do internet based companies need to be licensed by DC to lend legally in DC? Or can they be licensed in their home state? I have several payday loans and they are all licensed in other states. They say they don't need a DC license. Is that correct?

Thanks!


Reply:

Hello Ms,

The old law required any deferred deposit lender to be physically located in DC. However, these laws were implemented before the internet became an issue. The department has taken the stance in the past that all deferred deposit lenders must be licensed by DC.

New laws have recently been passed specifically addressing the issue of internet lenders. Now, all lenders, regardless of location, must be licensed under the Money Lender Act. This law has just recently taken effect.

Sincerly,

Brian Rouse
Licensing Supervisor, Banking Bureau
Department of Insurance, Securities and Banking
810 First St. NE, suite 701
Washington DC 20002
202-442-7821


What does this mean?

Internet lenders, before and after the new law, must be licensed by DC.

No limits to Rollovers.

Specific amounts can be charged.

Emails to and from the DFI:


Hello,

Do internet based payday loan lenders with no physical location in FL need to be licensed by FL to lend legally to FL consumers? I am trying to help a friend with a huge mess. She has several internet payday loans, and they are saying that they only have to be licensed in their state, and that they can follow the laws of their state, not FL's laws. What is correct? Any information would be very much appreciated!

Thanks!

Reply:

She can file a complaint through our website at flofr.com and under 'helpful information' click on file a complaint. Then click on
finance related and you can download the form. Or click on money transmitters and call the 1-800 number. The Office will review her complaint when received. All lenders must be licensed by Florida, regardless of location, however, the current payday loan laws in place do not address internet businesses. The department is currently looking at other laws to apply to them.

She may also wish to contact Legal Aid in her area, to determine what recourse she may have.

If you have further questions, please contact this Office.

Office of Financial Regulation
Pam Henley
Financial Speci alist
(850) 410-9805

What does this mean?

Internet based companies must be licensed by FL.

No Rollovers are allowed.

Thanks Goudah. Glad to see they finally got back to you.

Emails to and from the DFI:

Hello,

Do internet based companies need to be licensed by GA to lend legally in GA? Or can they be licensed in their home state? I have several payday loans and they are all licensed in other states. They say they don't need a GA license. Is that correct? I see that payday loans are prohibited in GA.

Thanks!

Reply:

Goudah,

Internet lending is illegal in Georgia. The pertinent statute is Title 16, Chapter 17.

The Attorney General????????s Office is charged with its authority and the contact person is Amy Burns at 404-656-4103.

Terry Battle
(404) 656-2078

What does this mean?

All payday loans, internet or storefront, are illegal in Georgia.

Emails to and from the DFI:

Sent: Friday, October 19, 2007 4:15 PM
To: Crider, Joe
Subject: Payday Loan Question

Hi Joe,

I'm trying to find an answer to a question regarding internet based payday loan companies. Do internet based payday loan companies need to be licensed by MO to lend legally in MO? Or can they be licensed in their home state as long as they don't have a physical location in MO? I have several payday loans and they are all licensed in other states. They say they don't need a MO license, or to follow the laws of MO. Is that correct?

Thank you!

Reply:

From: Crider, Joe
Sent: Tuesday, October 30, 2007 9:35 AM
To:
Subject: RE: Payday Loan Question

Ms ,

Our interpretation of the law is that these lenders do need to follow the laws of our state. We are introducing legislation in the upcoming session that would be more specific about this requirement. To that end, we have dozens of internet lenders from other states licensed at this point in time.
If you would provide me with the web sites or contact information for these lenders I will advise them of our position in a letter.

Joe Crider
Supervisor of Consumer Credit
State of Missouri

What does this mean?

Internet based companies do need an MO license.

New laws may be coming soon.

Fees and interest can not be more then 75% of total loan amount.

6 rollovers are allowed.

No criminal prosecution for closing your bank account.

Email from the DFI and Whitenan:

I emailed John Braud, Deputy Chief Examiner of LA Office of Financial Institutions and asked him, if internet payday lenders(not residing in Louisiana) who lend money to residents of Louisiana, have to be license in Louisiana or do they just have to have a license in any state.

Response:

You probably had difficulty finding information on this issue because activity commonly referred to as "payday lending" is subject to the Louisiana Deferred Presentment and Small Loan Act, LSA R.S. 9:3578.1 et seq. These loans are consumer loans subject to the Louisiana Consumer Credit Law, LSA-R.S 9:3510 et seq.

C. Except, as otherwise provided herein, that following agreements by a consumer are invalid with respect to consumer credit transaction, or modifications thereof, to which this chapter applies;
1. by which the consumer consents to the jurisdiciton of another state.
2. the fix venue

Therefore, the above provisions require that all consumer loans made to Louisiana residents should comply with Louisina laws, but lending licenses are issued to persons with business locations in LA.

John Braud
Cheif Examinor
Office of Financial Institution

Other emails from me to DFI:

Hello,

Do internet based payday loan companies need to be licensed by Louisiana to lend legally in Louisiana? Or can they be licensed in their home state as long as they don't have a physical location in Louisiana?
I have several payday loans and they are all licensed in other states.
They say they don't need a Louisiana license, and looking through the list of licensees I don't see any that are not located in Louisiana. Is that correct?

Thanks!

Response:

Ms. :

Lenders who do not have a physical locations in LA do not qualify for licensure. Those who have licenses are listed on our web site at ofi.louisiana.gov if you would like to do business with one of them.

John J. Braud
Deputy Chief Examiner
LA Office of Financial Institutions
(225) 925-7762
(225) 925-4524 FAX

What does this mean?

Internet companies must comply with LA law.

Internet based lenders with no physical location can't have a license from LA. If they are licensed in another state, and are following LA laws, they are legal.

Specific amounts may be charged.

No rollovers are allowed, however, they can allow you to pay 25% of your principle, and the fee, and then do a new loan.

Some of the emails courtesy of Whitenan. Thanks!

Emails to and from the Banking Dept:

From:
Sent: Wednesday, January 30, 2008 10:13 AM
To: Weigold, Mark W (DLEG)
Subject: Payday loan question

Hello,

Do internet based payday loan lenders with no physical location in Michigan need to be licensed by Michigan to lend legally to Michigan consumers? I am trying to help a friend with a huge mess. She has several internet payday loans, and they are saying that they only have to be licensed in their state, and that they can follow the laws of their state, not Michigan's laws. What is correct?

Thanks!

Response:

From: Weigold, Mark W (DLEG)
Sent: Wednesday, January 30, 2008 8:19 AM
To:
Subject: RE: Payday loan question

In response to your inquiry:

Being internet-based is not an exemption of Michigan statute. The location of the entity providing the payday loan (deferred presentment transaction in Michigan) does not create an exemption either. Based on your representation, a license is required to provide deferred presentment transactions in Michigan. Severe penalties may be incurred if an entity operates in Michigan without the requisite license.

Sincerely,

Mark W. Weigold, Manager
Consumer Finance Section
Office of Financial and Insurance Services
611 W. Ottawa Street
3rd Floor
Lansing, MI 48933
Business: 517/335-2073
Fax: 517/335-1501


What does this mean?

Internet lenders must be licensed by Michigan

Specific rates can be charged

No rollovers are allowed

Thank you to pirho451 for supplying me with this info. I then sent an email to the same place and got the exact same answer, word for word!

Emails to and from the DFI:

From: James Rogersen [mailto:james.rogersen@yahoo.com]
Sent: Saturday, April 26, 2008 5:08 PM
To: Bortner, Deb (DFI)
Subject: Payday Loan Information



Good Afternoon,

My name is James Rogersen. I have extensive knowledge about some of the internet lenders preying on Washington consumers. I write extensively about them at usapaydayloan.net. My main question, however, is whether or not it is legal for an out of state licensed payday lender to lend to Washington residents without having a Washington license. A response would be greatly appreciated.

Thank You,
James Rogersen

Reply:

Subject: RE: Payday Loan Information
Date: Mon, 28 Apr 2008 08:54:38 -0700
From: "Leslie, Berri L (DFI)" Add Mobile Alert
To: "James Rogersen"

Good morning,

Thank you for your question. Yes, to lend money to Washington residents an entity, even out of state, must be licensed.

Berri Leslie, Program Manager

Administration and Licensing

Department of Financial Institutions

Division of Consumer Services

(360) 725-7839

(360) 664-2258 (Fax)

What does this mean?

Internet companies must be licensed by WA and follow WA law.

Specific rates may be charged.

No rollovers are allowed.

Unlicensed lenders cannot collect on the loans.

Thanks to James for providing this info

My Inquiry:

Hello,

I'm trying to find out if an internet based payday loan company with no physical presence in Virginia needs to be licensed to lend by Virginia. If they don't need to be licensed by Virginia, would they still need to follow Virginia's payday loan laws, or would they need to follow the laws of the state in which they are licensed? Also I have found out several payday lenders I have investigated are completely unlicensed and out of country lenders how shall I proceed?

Thanks!

Their Reply:

Virginia code specifically states the following regarding licensure and Virginia's laws governing payday lenders apply to any entity making a payday loan to a Virginia resident.

???? 6.1-445. License requirement.
A. No person shall engage in the business of making payday loans to any consumer residing in the Commonwealth, whether or not the person has a location in the Commonwealth, except in accordance with the provisions of this chapter and without having first obtained a license under this chapter from the Commission.
B. No person shall engage in the business of arranging or brokering payday loans for any consumer residing in the Commonwealth, whether or not the person has a location in the Commonwealth.

Knowledge of or complaints about such can be filed with the Bureau. A complaint form can be found on the SCC web site at:
http://www.scc.virginia.gov/bfi/complain.aspx
Kenneth J. Schrad
Director, Division of Information Resources
State Corporation Commission
PO Box 1197
Richmond, VA 23218
(804) 371-9211 (fax)

What does this mean?

Internet based companies must be licensed in VA.

No rollovers are allowed.

Specific rates can be charged.

Thanks to Anyaroberts for this info!

Emails to and from the DFI:

Hello,

Can you tell me if internet based companies that don't have a physical location in OK need to be licensed by OK to lend legally? Would they need to follow OK laws? Any information you can give me about payday lending would be much appreciated.

Thanks!

Reply:

Unless otherwise excluded or exempted by 59 O.S. 3103, the Oklahoma Deferred Deposit Lending Act applies to transactions if the lender, wherever, located, enters into the transaction with the debtor by mail, brochure, telephone, print, radio, television, Internet, or any other means. See 59 O.S. 3103 (C).

I don't think a loan issued by a non-licensed company would be void. Normally, if the Legislature intends for transactions made in violation of licensing laws to be void, they will explicitly say so. However, the loan would have to meet the requirements of the Oklahoma DDL Act. The Administrator also has authority to order refunds of unlawful or excessive loan charges, impose civil penalties,issue cease and desist orders, and obtain injunctive relief against unlicensed lenders.


Roy John Martin
Assistant Attorney General
Oklahoma Department of Consumer Credit
4545 N. Lincoln Blvd., Suite 104
Oklahoma City, OK 73105
Telephone: 405-522-4665

What does this mean?

Internet lenders must be licensed by OK, and follow OK laws.

Specific rates can be charged.

No rollovers are allowed.

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