THE BLOG

30
Jan

Car Title Loan Lenders Settle with Federal Trade Commission

Whatever your car title loan, payday loan, installment loan business… practices are, DISCLOSE THEM fully and simply. Do not deceive your customers or your employees.

Car Title Loan Stores  Settle Charges They Deceptively Advertised the Cost of Their Loans.  Businesses Failed to Disclose Qualifications for “Zero Percent” Loan Offers.

The Federal Trade Commission has taken action for the first time against two car title lenders, reaching settlements that will require them to stop their use of deceptive advertising to market title loans.

In administrative complaints issued against two title lenders, First American Title Lending of Georgia, LLC, and Finance Select, Inc., the FTC charged that “the companies advertised, both online and in print, zero percent interest rates for a 30-day car title loan without disclosing important loan conditions or the increased finance charge imposed after the introductory period ended.”

“This type of loan is risky for consumers because if they fail to pay, they could lose their car – an asset many of them can’t live without,” said Jessica Rich, director, FTC’s Bureau of Consumer Protection. “Without proper disclosures, consumers can’t know what they’re getting, so when we see deceptive marketing of these loans we’re going to take action to stop it.”

Car title loans are high cost installment loans with payments due over several months. The annual percentage rate of a car title loans easily exceed 300 percent. Fees add up fast and failure to pay on a timely basis results in a “repo;” forfeiting the vehicle.

The FTC charged that First American Title Lending, operating 30+ locations in Georgia, advertised a zero percent offer (in English and Spanish) and failed to disclose that the borrower had to meet specific conditions to receive that rate.

  • The borrower had to be a new customer
  • Repay the loan within 30 days
  • And pay with a money order or certified funds, not cash or a personal check.
  • If a borrower failed to meet those conditions, the offer did not apply, and he or she would be required to pay a finance charge from the start of the loan.
  • The company’s advertisements also failed to disclose the amount of the finance charge after the introductory period ended.

The FTC alleged Finance Select, doing business as Fast Cash Title Pawn, failed to disclose that:

  • Unless a loan was paid in full in 30 days
  • The zero percent offer did not apply
  • And that a borrower would have to pay a finance charge for the initial 30 days of the loan in addition to any finance charges incurred going forward.

Fast Cash, which has five locations across Georgia and two in Alabama, also failed to disclose how much the finance charge would cost a borrower after the 30-day introductory period was over.

As part of the proposed settlements with First American Title Lending and Fast Cash Title Pawn, the respondents are prohibited from:

  • Failing to disclose all the qualifying terms associated with obtaining a loan at its advertised rate;
  • Failing to disclose what the finance charge would be after an introductory period ends;
  • And misrepresenting any material terms of any loan agreements.

In addition, First American Title Lending is also prohibited from stating the amount of any down payment, number of payments or periods of repayment, or the amount of any payment or finance charge without clearly and conspicuously stating all the terms required by the Truth in Lending Act and Regulation Z.

28
Jan

Bank Accounts for Payday Loan, Check Cashers and MSB Lenders

Great news today for consumers and small dollar lenders regarding bank accounts:

Financial Institution Letter
FIL-5-2015
January 28, 2015

Statement on Providing Banking Services

The FDIC encourages insured depository institutions to serve their communities and recognizes the importance of the services they provide. Individual customers within broader customer categories present varying degrees of risk. Accordingly, the FDIC encourages institutions to take a risk-based approach in assessing individual customer relationships rather than declining to provide banking services to entire categories of customers, without regard to the risks presented by an individual customer or the financial institution’s ability to manage the risk. Financial institutions that can properly manage customer relationships and effectively mitigate risks are neither prohibited nor discouraged from providing services to any category of customer accounts or individual customer operating in compliance with applicable state and federal law.

The FDIC is aware that some institutions may be hesitant to provide certain types of banking services due to concerns that they will be unable to comply with the associated requirements of the Bank Secrecy Act (BSA). The FDIC and the other federal banking agencies recognize that as a practical matter, it is not possible for a financial institution to detect and report all potentially illicit transactions that flow through an institution.1 Isolated or technical violations, which are limited instances of noncompliance with the BSA that occur within an otherwise adequate system of policies, procedures, and processes, generally do not prompt serious regulatory concern or reflect negatively on management’s supervision or commitment to BSA compliance. When an institution follows existing guidance and establishes and maintains an appropriate risk- based program, the institution will be well-positioned to appropriately manage customer accounts, while generally detecting and deterring illicit financial transactions.

Any FDIC-supervised institution concerned that FDIC personnel are not following the policies laid out in this statement may contact the FDIC’s Office of the Ombudsman (OO) at the following dedicated toll-free number, 1-800-756-8854, or dedicated email address, bankingservicesOO@fdic.gov. Communications with the OO are confidential. The FDIC also has an independent Office of Inspector General (OIG) that is charged with addressing allegations of waste, fraud, and abuse related to the programs and operations of the FDIC. Individuals or institutions may contact the FDIC OIG through its Web site at www.fdicoig.gov by using the “Hotline” button, by phone at 1-800-864-3342, or by email at ighotline@fdic.gov.

Doreen R. Eberley
Director
Division of Risk Management Supervision

Here’s a link to the FIL and the “Letter:” https://www.fdic.gov/news/news/financial/2015/fil15005.html

 

27
Jan

PDL and Car Title Lenders: Tired, Outdated and Destined for the Junk-Heap

Man, there’s always something. Guess I could get a job at a nice Subway sandwich shop and get on O’Bama Care. Have a bunch of kids and qualify for an Earned Income Tax Credit of a few grand. Add some food stamps, Section 8 housing, a few cash deals selling cannabis on the side. Hell, I’m allowed 99 plants in Calif according to MyPotGuru.com.

Think I’ll sell some books! A lot easier. “How to Grow Cannabis in Your Closet Tax Free.” Better, “RENT-TO-OWN Cannabis Grow Pots!”

We just completed a 1 month survey of payday loan stores and car title lenders.

Total stores involved 767 in Calif., Nevada, Arizona, and Washington.

Total approved 1st time transactions: 97,409

Consumers who physically visited a store OR emailed/faxed/called and eventually were approved found the lenders via:

  • Signs 55% = 53,575 loans
  • Referred by friend/family: 14% = 13,637 loans
  • Referred by auto mechanic, tire shop, radiator repair…9% = 8,767 loans
  • Online search with an immediate call/text to the store: 19% = 18,508 loans
  • Direct mailer: 3% = 2,922 loans
  • Yellow pages: Ha Ha

So… does your loan management software reveal these stats to you? Are your employees trained to input this data accurately and consistently?

Do you review it and make adjustments monthly?

Do you check your Yelp ratings and respond to input?

Facebook?

You gotta a Twitter guru in your store?

What’s your sign look like? No, I don’t mean are you a Scorpio like me!

Gotta website? How’s it look on your phone? Got a click to call button? A Map button? Ah… you gotta at least have a text button?

Sponsors

 AutomobilePawn.com

 PaydayManual.com 

No? You’re screwed! You’re tired, outdated and destined for the junk-heap. Don’t waste your money on the CFSA convention. Take what meager cash you have left and get a Juicery Franchise. At least you won’t have CFPB headaches coming at you like a freight train!

Oh wait! Probably some kind of health dept. already looking for you. And the firemen inspectors will be paying your juice shop a visit real soon. Don’t want any expired fire extinguishers at $5000 per infraction on the premises.

Need a bank while we’re at it? Forget it. Guns, ammo, payday loan, gaming, porno, multi-lvel marketing are all OUT of banking thanks to operation “Choke Point.” Even the cannabis industry is trying to figure this out.

I got an idea? How about growing cannabis on tribe lands? The FED’s just stated they won’t bother the federally recognized tribes. They’re a sovereign nation! Grow it and deliver to the dispensaries via DRONES! That’s it!! Bet I know a few tribes that would create/pass a marijuana growers economic development board. Issue some licenses… I know a great Northern Calif. grower who would be happy to be their grower Guru: MyPotGuru

Oh, shit! We’re gonna need a bank! Wait! I gotta a tribe owned credit union. Would that work?

OK, where’s all the lawyers and compliance guys when I need them?

Gotta get an app made to hookup with my local budtender… A Hemp Exchange to bring growers and dispensaries together. Form a testing lab to guaranty consistency. Then I’ll need a packaging company to create adult compliant, kid safe, dog safe sealed packaging. Shucks, I’ll probably need the FDA to approve my packaging. And the Bureau of Indian Affairs may want a meeting.

Guess I’ll just eat an edible chocolate night train brownie, analyze my loan management software stats and relax knowing the CFPB is protecting me from myself.

Got an idea? Want to talk? Jer@TrihouseConsulting.com or I’m an advisor at MyPotGuru@MyPotGuru.com

26
Jan

Banks for Payday Loan Companies

Bank for payday loan businessPayday Loan Business Bank Accounts

Banking

Building and maintaining relationships with banks for MSB’s and payday loan companies is challenging to say the least! Banking reform for the payday loan industry is likely on the way. There are only a handful of financial institutions in the country that are openly working with payday loan companies, check cashers and MSB’s.

“There are very smart bankers that have looked at this in different states, and I think before long, the light bulb will come on,” said the head of the banking industry association. “Banks across this country are standing up.”

But until there’s more guidance from the federal government on banking practices and more of a guarantee that financial institutions won’t be subjected to extreme audits by policy setting examiners, many will still remain too cautious to allow payday loan companies to open accounts or get loans he said.

So for now, payday loan companies should seek out small- to medium-sized financial institutions with total assets of between $150 million and $1 billion, as they’re more likely to work with the industry than larger banks.

The head of the banking industry offered several suggestions that could help companies obtain bank services: document everything, and be prepared to alter some of your business practices to satisfy concerns from banks. Specify a company compliance officer. Develop a formal compliance program. Implement employee training and DOCUMENT they completed it. That kind of transparency and flexibility can go a long way toward reassuring bankers that working with payday loan companies is safe, he said.

Need help? Jer@TrihouseConsulting.com

 

19
Jan

Internet Car Title Loans: a Tribe

Alleged Facts

20. Ms. Bynon is the owner of a 2008 Ford F150 Lariat Supercrew worth over $20,000. Exhibit P-7.

21. The vehicle was titled, registered, and licensed in Pennsylvania.

22. Ms. Bynon keeps the vehicle at her personal residence in Pennsylvania.

23. In 2013, Sovereign operated a web site under the fictitious name Title Loan America, from which it made title loans to residents of Pennsylvania at triple digit interest rates. Exhibit P-6.

24. During the month of March, 2013, Sovereign purports to have lent Ms. Bynon $2,500 at or about an annual interest rate of 180%.

25. Ms. Bynon entered into the loan transaction from a her computer at her home within the Commonwealth of Pennsylvania.

26. The car title loan was supposedly memorialized by a written contract, but Sovereign did Continue Reading..