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Online Payday lenders seeking Less Oversight

  Apparently this week, I am talking about payday loans in my blog. Each month I see more and more potential clients in my bankruptcy office drowning in payday loans. Including an increase in online payday loans. Online payday loans now account for approximately 35% of payday loans. By 2016, it is predicted that online payday loans will make up 62% of the total payday loan market. However, last month a Bloomberg story reported that online payday lenders are dramatically increasing their lobbing effects in DC to undermine current state regulations placed on them. As we talk about online payday lenders and fairness that they are requesting, keep two things in mind:

  • Online payday lenders can accrue interest at twice the rate of normal storefront payday loans. According to the disclaimers the State of Texas requires payday lenders may charge between 450% to 700% interest.
  • Payday loans are designed to automatically draft money out of your bank account in a manner to ensure you never repay the principal.

However, online payday lenders don't want to be called "payday lenders" anymore according to their lobbing organizations. Instead they are short-term, small-dollar lenders. I guess that changing the name is supposed to stop the abuses that short-term, small-dollar lenders conduct on a regular basis. Currently payday lenders (online and storefront) are monitored by state regulations. Online payday lenders are asking Congress to transfer oversight from states to the U.S. Office of the Comptroller of the Currency under the Dobb-Frank legislation. They hope to loosen the rules for how short-term lenders disclose the total costs of the loans to consumers. Why? Lobbyists state that the reason for lighting the disclosure rules is to allow online payday lenders to more fairly compete with Native American tribes and oversea lenders who also offer loans online. Offering online loans is apparently an extremely competitive market and state regulations (including disclosure laws meant to protect consumers) hinder online payday lenders from being as competitive as they otherwise could be. Break the cycle of payday loans. Call 254-633-2876 or email us at info@thekehllawfirm.com today for a FREE, no-obligation consultation to explore your options. Let my family help yours!

 

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