Adherence to Fair Debt Collection Practices are another area that we must be aware of and adhere to.

So, along comes a few payday loan internet fools who fail to comply with these rules causing harm to our Industry when we don’t need it! These people, if guilty, simply blatantly ignored the rules and safeguards put in place for consumers at a time when we don’t need any additional heat!

Here’s the Press Release from the Nevada Office of the Attorney General:

ATTORNEY GENERAL ANNOUNCES CHARGES AGAINST INTERNET PAYDAY LENDER CASH TODAY, LTD.

Company is Also Known as Leads Global Inc. and Rovinge International, Inc.

Carson City, NV— Nevada Attorney General Catherine Cortez Masto announced today the State of Nevada and the Federal Trade Commission (FTC) have charged 10 related Internet payday lenders and their principals, based mainly in the United Kingdom, with violating federal and state law by not disclosing key loan terms to U.S. consumers and using abusive and deceptive collection tactics.
Leads Global, Inc. and Rovinge International, Inc. are Nevada corporations which maintain mail drops in Reno, Nevada to conceal the fact the real operation was located in the United Kingdom.
“Internet payday lenders must know that Nevada will not allow deceptive lending practices to exist in this State,” said Attorney General Catherine Cortez Masto. “These lenders will be charged and prosecuted.”

According to the complaint filed by the State of Nevada and the FTC, through websites such as www.cash2today4u.com, the defendants offered consumers loans of $500 or less within 24 hours without requiring a credit check, proof of income, or documentation. Consumers who applied for a loan on their website were required to submit an online application that asked for their bank account and Social Security numbers.

The complaint said Cash Today, Ltd. representatives called consumers who applied for loans through the website told them that they qualified for a loan which had to be
repaid by their next payday. Typically, the loan was in the amount of $200. Consumers were charged a loan fee ranging from $35 to $80. During the phone call, the Cash Today representative said the loan was not fully repaid by the required date, it would be extended automatically for an extra fee that would be debited from the consumer’s bank account “until the loan is repaid.” Consumers were required to provide the payday lender access to their bank accounts for payment of the fees.

The payday lenders did not disclose key loan terms in writing, such as annual percentage rate, the payment schedule, the amount financed, the total of payments,
and any late payment fees. The complaint states consumers who asked for written disclosures were told that the transaction was verbal only. Some consumers were told written disclosures would be sent to them after the phone call, but were never received.

After repaying the original loan amount, and sometimes hundreds of dollars in excess of the loan, many consumers terminated the lenders’ access to their bank accounts, often by closing the accounts. Once access to accounts was denied, consumers received abusive and deceptive collection calls by the payday lender aimed at regaining access to consumers’ bank accounts.

According to the complaint, Cash Today, Ltd. falsely claimed that consumers were legally obligated to repay the loans, even though the loans did not comply with payday lending laws in many consumers’ states and the defendants were not licensed to make consumer loans in those states. The defendants falsely threatened consumers with arrest, lawsuits, property seizure, or wage garnishment, and repeatedly called consumers, coworkers, and employers at their workplace, using abusive language and disclosing consumers’ purported debts.

The corporate defendants are: Cash Today, Ltd.; The Heathmill Village, Ltd.; Leads Global, Inc.; Waterfront Investments, Inc.; ACH Cash, Inc.; HBS Services, Inc.; Lotus Leads, Inc.; First4Leads, Inc.; Rovinge International, Inc.; and The Harris Holdings, Ltd.; each also doing business as Cash Today; Route 66 Funding; Global Financial Services International, Ltd.; Interim Cash, Ltd.; and BIG-INT, Ltd. The individual defendants are Aaron Gershfield, Ivor Gershfield, and Jim Harris.

The defendants are charged with violating the FTC Act by using unfair and deceptive collection tactics, including falsely threatening consumers with arrest or imprisonment, falsely claiming consumers are legally obligated to pay the debts, making false threats to take legal action that they cannot take, repeatedly calling consumers at work, using abusive and profane language, and disclosing consumers’ purported debts to coworkers, employers, and other third parties.

Cash Today, Ltd. has been charged with violating the Truth in Lending Act and Regulation Z by failing to make required written disclosures, clearly and conspicuously, before consummating a consumer credit transaction, including the amount financed, itemization of the amount financed, the finance charge, the annual percentage rate, the payment schedule, the total of payments, and any late payment fees. In addition, it is charged with violating Nevada’s Deceptive Trade Act by not disclosing loan terms, making false representations in collecting debts, and selling loans to consumers without licenses.

Again, these guys are fools (if guilty). The majority of their transgressions are basic ignorance of the minimum disclosure and collection procedures demanded of business today!

If you want to make certain you’re doing things correctly, learn here:
Payday Loan Industry.com

It’s interesting to note that after the defeat of the Ohio payday loan initiative banks continue to offer a payday loan type of product legally.

A customer can get an advance for up to 50 percent of their regular monthly direct deposits up to $500 for a fee of 10 percent – a maximum of $50. The APR on this type of loan could easily exceed 400% depending on the number of the days the loan is outstanding!

Julia Tunis Bernard, a Wells Fargo spokeswoman, said the bank has offered its product since 1994.

“Direct Deposit Advance service is available to customers with established Wells Fargo checking relationships and recurring direct deposits,” she said. “It is designed to help customers get through an emergency situation – medical emergencies, a car repair, emergency travel expenses, etc. – by providing short-term credit quickly. It’s not intended to solve longer-term financial needs.”

I wonder if she copied that verbiage off a payday loan web site?

While Wells Fargo, U.S. Bank and Fifth Third all offer their advances for periods up to slightly more than a month, their policy is to automatically pay themselves back upon the first direct deposit of $100 or more.

So if you borrow $200 three days before payday because of an unforeseen emergency, the bank would take $220 upon direct deposit.

Actually, this 10% rate is the same as the payday loan legislated rate mandated in Florida!

I guess payday loan companies simply need to beg for help from Washington D.C., join the ranks of the banks, and join the pig trough for TARP $$$.

Data on 400 payday loan consumers collected before and after the imposition of an interest-rate cap in Oregon indicates that the payday loan rate cap resulted in a severe downgrade in the financial condition of the Oregon households. These survey results indicate that restricting access to expensive credit harms, rather than helps, consumers.

The study was conducted by Prof. Jonathan Zinman in an effort to evaluate the effects of interest-rate and loan-term restrictions imposed by the State of Oregon in 2007.

Prior to 2007, payday loan companies in Oregon typically charged payday loan borrowers $15 per $100. Effective July 1, 2007, the maximum finance charge that can be imposed on Oregon borrowers is $10 per $100, with a minimum loan term of 31 days. The effective APR earned by lenders was reduced substantially as a result of the new payday loan regulation.

As a result of this new legislation the majority of Oregon payday loan operators left the state. Of course, payday loan lending volume fell dramatically as a result.

The Dartmouth Study revealed payday loan consumers were forced to find alternative sources for temporary financial help that is more expensive than payday loans; overdrafts and late bill payments.

The Dartmouth Study focused on the effects of the Oregon cap rate by comparing changes in key financial components of Oregon household finances before and after the effective date of the cap, using equivalent households in Washington state as a “control.” The study covers changes from June 2007 to December 2007.

The Dartmouth Study revealed that, “relative to their Washington counterparts, the Oregon households were far more likely to experience a change for the worse in the key financial outcomes measured by the survey: job status and respondents’ assessments of their recent and future financial situation”.

The conclusions of the payday loan Dartmouth Study reveal that restricting access to payday loans harmed Oregon respondents over the term of the study.

“These results suggest that access to credit, even if expensive, can help some people make productive investments and help others manage their cash flows through emergencies,” Prof. Zinman said. “There’s more work to do to reconcile these results with findings from other studies that suggest access to expensive credit can exacerbate financial distress.”

The data collection for the study was funded by a grant from Consumer Credit Research Foundation, which did not participate in the analysis of the data or the drafting of the study.

The actual payday loan dartmouth study is available:
Study.

CNG Financial said it will close 36 of its 71 stores in the state, eliminating up to 75 jobs. The company didn’t specify which sites would be shut down, but a spokesman said closures would be based on lending volume.

The Cincinnati-based company has seven Central Ohio payday lending shops.

Sixty four percent of Ohio voters cast their ballots in favor of Issue 5, which supported a law capping interest rates for payday lenders at 28 percent a year. The payday lending industry fought a $13,000,000 battle to repeal portions of the law, House Bill 545, saying the interest rate cap and other limitations would drive many of them out of the state. Payday lenders tried in vain for a rate that allowed them to charge a 391 percent APR.

Texas-based Cash America (NYSE:CSH) announced that it would shut down 43 of its 140 shops in Ohio.

Remaining Check N Go stores will offer loans permitted under the Ohio Small Loan statute, as well as check-cashing services. CNG operates more than 1,300 Check ’n Go locations in 31 states.

Concerned about access to small consumer loans and fear that government will continue to encroach on their freedom of financial choice, Arizona voters urge everyone to vote yes on 200.

Even if you have never used a payday loan and have zero plans in the future to do so, Arizona consumers urge all voters to allow the individual to make the choice; not government!

A Yes Vote on 200 will allow the payday loan product to exist in Arizona. A No Vote on 200 will force Arizona payday loan consumers to use Internet payday loan web sites.

Payday loan Internet web sites typically charge $20 - $40 per $100 borrowed. Arizona payday loan stores charge $15 per $100 for a two week period.

Recently the Prescott Courier endorsed Proposition 200! Read more here:
Arizonans for Financial Reform

Ohio payday loan ballot measure Issue 5, if passed will reduce allowed fees from $15 per $100 to $1.50 per $100. Should this occur, it’s estimated 6000 Ohio jobs will be lost, hundreds of thousands of Ohio payday loan consumers will be forced to use payday loan Internet web sites, the state of Ohio will lose tens of thousands of dollars in payday loan licensing and auditing fees, and commercial property owners who lease stores to payday loan companies.

One customer in a store in Heartland, Ohio on Friday said payday lending was there when he needed it.

On Aug. 19, Jim Hurley suffered a heart attack. While he was recovering, his bank account was overdrawn $21.

According to Hurley, his bank would have charged fees higher than a payday lending loan to cover the shortfall if the overdraft was not resolved quickly.

“I had to find a way to clear up my account fast,” he said.

Hurley went to a payday lender and was able to get his account back on positive footing.

“Places like these help when times are bad,” he said.

The Ohio ChillicoThe Gazette has several anecdotal payday loan consumer stories.

Here’s an example and we recommend you head over there for more pros and cons on payday loans and big brother…

Casey had an interesting insight:
“Payday loans are faulty product deserving of some common sense regulation.” (1) PD loan are already regulated in Ohio. This new “law” limits PD lenders from operating and extending loans by SIGNIFICANTLY cutting their profits per loan. (more on that later)

“The free market works best when there is freedom and choice.” 2) ABSOLUTELY 100% agree with this statement! Financial Freedom of Choice is a BASIC FUNDAMENTAL RIGHT!

“The payday industry may shroud itself in the mantra of choice, but in reality the people trapped by payday loans have few choices. If they did, they’d probably looking for an alternative to a 391% interest loan. ” (3) Do you know why the typical PD customer makes the CHOICE to use our services? B/c we are cheaper than bouncing a check (released yesterday from BankRate.com– ” A bounced check costs an average of $28.95, up 2.5 percent from a year ago, according to the survey. (AP) WHAT?? How crazy is that??!)
Customers choose to borrow from a PD lender b/c we offer a better rate/fee. $15 per $100 borrowed. So if I have a $100 check that I know will bounce— do I decide to suck it up and pay my bank’s charge of $28.95 OR do I look at my options and decide to get a PD loan for almost exactly half my bounced check fee…. Hmmmm…. this is a tough one…. gee>>> I think I’ll GO WITH THE PD LOAN!!!!!

Banks are notorious for their EXPENSIVE hidden charges, late fees, bounced check fees, daily fees, minimum balance fees, etc. And the average profit margin for the top 10 banks in the US are 18.5% compared to the top 5 payday lending companies in the country who are at 6.6%!! (PDF- source) And oh IHOP is at 12.6%. They are sure making a killing off our eggs and pancakes!! So really now, who exactly is profiting more?

But why haven’t banks and credit unions stepped up to write a similiar PD loan product?? Let’s look at why….
Consider the difficulties payday lenders face to stay in business under a law that limits their interest rates to 1.08% for a two-week loan. That is, if you take the new 28% yearly interest rate and divide it by 26, you get 1.08%, which is what lenders will be allowed to charge per every $100 they loan. Under the old Ohio law, they could charge up to $15 per $100 borrowed, or 15%.
So….. in case you are missing the point….
28% on a SHORT TERM LOAN IS NOT PROFITABLE!!!! For any business!

And oh yeah it’s not 391%. PD loans are 2 week loans, not 52+ week loans. Equating them with an annual loan product is absurd. If you rent a car at Hertz for 3 days, you pay $29.99/day…. Yet NO ONE computes what that cost would be annually b/c it’s only intended to be for a SHORT TERM!!

VOTE NO on ISSUE 5 in OHIO!!

In an effort to not only increase profits but additionally to offer consumers a variety of services that will appeal to them payday loan companies are beginning to buy and sell scrap jewelry consisting of gold, silver and platinum.

Some payday loan operators are reporting $5000 to $10,000 and more in increased monthly net profits as a result of this service.

With the economy presenting severe challenges for consumers in the U.S.A, Canada, Mexico and more this new service makes a great deal of sense. Startup costs are very minimal. Training consists of a 30 minute Webinar and marketing materials in both English and Spanish are available at no cost.

For example, Cashland Financial Services began their new program, paying cash for people’s gold.
The program is a first for a company that typically deals with payday loans and check cashing services.

Cashland Supervisor Jill Cvetanovich said their Wapakoneta location was among the first Cashland stores to start the program; just in time for the holiday season.
“If a person brings us an old necklace they’ve had and it’s broken and you want extra cash for Christmas, bring it in,” Cvetanovich said.

Cvetanovich said the gold will be tested to determine its karat weight.
She said Cashland will purchase the gold based on the daily market value for the karat weight.

Since the program began last week in select stores, Cvetanovich said the company has already bought $13,000 in gold. The Wapakoneta branch has made several sales, but Cvetanovich said anticipates more as word of the program spreads.

“There’s been quite a bit of inquiries made and we’ve had a few pieces sold in the store,” Cvetanovich said. “Obviously we’d like to have a lot more business, but we’ve done pretty well so far.”
Cvetanovich said nearly all of the 140 Cashlands across Ohio, Indiana, Michigan and Kentucky are to offer the program by the end of the month.

Interestingly, the buying and selling of gold, silver and platinum can be added to virtually any business seeking new revenue streams and new services for their clients.

For additional information go to Gold into Loot.com

Headquartered in Arlington, Texas, First Cash Financial (NASDAQ: FCFS), which operates pawn, loan and check-cashing stores, has increased its 2008 earnings per share guidance to an estimated range of $1.24 to $1.26 per share from its previous range of $1.17 to $1.20 per share. The company ramped up its guidance by 35 percent. The majority of this revenue growth and projected profitability will occur in its pawn shop operations.

Obviously the current economy and 2009 projections are creating an increased demand for payday advances and pawn “instant cash” needs of customer of First Cash.

Year-to-date same-store revenue jumped 15 percent!

(See our last Payday Loan Newsletter at Payday Loan Industry.com for our expectations for 2009 payday advance and auto title lending increased expectations.)

Revenue from pawn shop operations alone made up 78 percent of the company’s total quarterly revenue, First Cash said. (Further inquiry should reveal scrap gold buying and selling profits were a good portion of this. See Gold into Loot.com for how to offer this revenue stream yourself.)

During the third quarter, First Cash posted a profit of $46 million, or $1.54 per diluted share, down from a profit of $10 million, or 32 cents per diluted share, during the same period last year. The company’s loss comes as it continues to holds its discontinued Auto Master automotive business unit, which it has offered for sale for several months.

A one-time charge of $52.6 million related to the discontinuation of the company’s auto loan business also was recorded in the most recent quarter, having an impact on the company’s final net earnings.

Once again payday loan fans, 2009 is going to be a year in which we will have significant opportunity to help the consumer deal with the screw ups on Wall Street!

Additionally, Arizona Proposition 200 will protect thousands of Arizona jobs and provide relief for commercial real estate owners who envision a very difficult 2009.

The last thing any state needs in these difficult times is higher unemployment, higher commercial vacancy rates, and a restriction on consumer access to funds!

For the facts, visit at: Arizonans for Financial Reforms