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MAINE BUREAU OF CONSUMER CREDIT PROTECTION

35 SHS, Augusta, Maine 04333

 
Phone: 207-624-8527
Fax: 207-582-7699
Consumers-only toll-free: 1-800-DEBT-LAW (1-800-332-8529)

Bureau of Consumer Credit Protection Issues Warning about Internet Payday Lenders

 

January 9, 2009

 

 

Maine consumers obtained expensive payday loans from more than 60 unlicensed internet-based lenders in 2008, according to state regulators.

Some of these lenders charged rates higher than 1000% APR, and when Mainers were unable to repay the loans they received harassing calls at home and at work illegally threatening criminal prosecution and wage garnishment.

Payday loans are short-term loans with high-interest rates. Although in years past the activity consisted of giving advances “until pay day,” the modern equivalent involves out of state lenders electronically depositing funds into a Mainer’s checking account, then deducting interest payments a week or two later, according to Will Lund, Superintendent of the Bureau of Consumer Credit Protection.

In most cases, state regulators have been able to assist consumers by obtaining refunds or erasing internet debt, according to Lund. Payday lenders are considered “supervised lenders” under Maine law, and must obtain a license. In the case of payday lenders, state law requires a license even if the company is located out of state.

“The Maine Legislature properly asserted jurisdiction over such lenders several years ago,” said Lund, “based on the fact that the consumers were located in this state, the consumer agrees to the loan in this state, and funds are deposited into, and deducted from, bank accounts in this state.”

In addition to obtaining refunds of excess interest, state regulators have also successfully stopped the collection calls that have plagued many consumers. “These lenders threaten prejudgment wage garnishment, but that simply can’t happen in Maine without a court’s order,” said Eric Wright, staff attorney for the bureau. “They also threaten criminal prosecution, which is outrageous and untrue since no prosecutor is going to side with an out-of-state, internet lender’s attempts to collect on an illegal loan.”

Several consumers have waited to contact the state until they were deeply indebted to multiple lenders. “One poor lady owed $16,000 to six different lenders,” said Wright. “She was using the proceeds from one loan to pay the interest on the others.”

Payday lending itself is not illegal in Maine. However, any company making such loans to residents of this state must be licensed and must post a $50,000 consumer protection bond. In addition, they are limited to charging $15 on loans up to $250. Many out-of-state companies assess interest of up to $30 on a one week loan of $100, for an annual percentage rate (APR) of 1500%.

Ten companies currently hold Maine licenses as payday lenders, including companies with offices in Bangor, Brunswick, Portland, Rockland, Biddeford, Windham and Lewiston. Lund’s office conducts on-site compliance examinations of these companies to ensure that they are making all proper disclosures to consumers, not overcharging them and not using abusive collection tactics if the consumers default.

Lund expects that the complaints will continue into 2009. “I estimate that at the present time, hundreds of Maine consumers are indebted to unlicensed, internet-based payday lenders for hundreds of thousands of dollars,” he said.

Consumers seeking help with internet payday loans from unlicensed companies can contact the Bureau of Consumer Credit Protection by filling out an electronic complaint form on the web at www.Credit.Maine.gov, or by telephone, toll-free, 1-800-332-8529 (1-800-DEBT-LAW).

“Consumers must learn to protect themselves,” said Lund. “Check our website to see if a company is licensed as a supervised lender. In the alternative, seek assistance from a licensed credit counseling agency. Once the interest starts building up on these payday loans, it’s almost impossible to break the cycle of debt. If you have no other option, work with your bank or credit union to close your checking account, and notify our office for assistance.”

See Below for Consumer Quotes and Listing of Unlicensed Lenders

Excerpts from actual complaints of Maine consumers in 2008:

From North Berwick: “A person identified as the company’s attorney told me I needed to pay $500 by 2 p.m. with a credit card or by money transmitter, or he would send someone to deal with me at my home or place of business to the fullest extent of the laws in my county, which implied to me that they would send someone to arrest me.”

From Turner, Maine: “I owe about $1,700 to five payday lenders. I’ve been paying about $800 a month in interest. I paid them back three times what I borrowed and have no more money to give.”

From Saco: “The company has been debiting my account every other week for a year. It turns out my contract says if I don’t tell them three days before the end of each period, then they automatically roll the loan over and debit my account for the next period.”

Also from Saco: “I got a payday loan of $200 with a fee of $74. I’ve had it for six months, with means I have paid them $1,036 so far.”

From Brunswick: “I took out 2 loans in 2007 from a Nevada military loan company for $3,000 each. Now I find out that I paid an APR of 86% and that the company has been ordered to cease and desist all lending by regulators in the company’s home state of Nevada.”

From Brewer: “When I lost my job and couldn’t pay, the Nevada payday lender started calling my former employer and my references. I paid $360 for the $300 loan, and they say I owe another $593.84.”

Also from Brewer: “We paid $240 in fees on a $200 loan. Then the company put a paper check through our account in an additional amount of $320, causing our account to be overdrawn, then frozen.”

From Gardiner: “They have been harassing me, calling me at work. I have asked them to stop calling me at work, but they won’t stop.”

From Randolph: “The amount of the loans was $200. Because of interest it has skyrocketed to almost $600. The woman on the phone said that they had everything in progress to garnish my paycheck.”

From Bradley, Maine: “I don’t ever remember taking out a loan with these payday lenders, but they’ve been debiting my account for some time. I can’t pay rent or any other bills as these companies are taking the whole of my pay check each week.”

Names of unlicensed payday loan companies that have been directed to cease and desist offering loans to Maine consumers:

1000 Cash Overnight: Internet (Location unknown)

3B Payday Loans: Virginia

500 Fast Cash: Oklahoma

ACHLOAN.com: Internet (Location unknown)

American Consumer Credit LLC: Delaware

Ameriloan: Oklahoma

Arrowhead Investments: Internet (Location unknown)

B&L Marketing: North Carolina

BMG Group: Kansas

Brookwood Loans: South Dakota

Cash Advance Service Net a/k/a Sign My Loan: Delaware

Cash Direct Express: Utah

Cash Transfer Centers: Country of Malta

CLK Management: Kansas

Colossus Credit Lending: Internet (Location unknown)

EDollars Direct: Nevada

Eside Lenders: Delaware

Fast Cash Loans: Delaware

First Cash Advance: Indiana

First Integral: Texas

GECC: Delaware

Geneva-Roth Capital a/k/a Loanpoint USA: Missouri/Kansas

GFSIL: Nevada

Integrity Advance: Kansas

Landmark Express: Nevada

Legal Mediation Practice: Florida

Little Loan Shoppe America: Utah

Military Funding USA d/b/a Worldwide Military Funding, Inc: Nevada

MTE Financial: Oklahoma

National Money Store: Internet (Location unknown)

Nevis Marketing a/k/a Timberhole: Kansas

One Click Cash: Nevada

Outback Bucks: Internet (Location unknown)

Pay Check Today: Oklahoma

Paycheck Now: Delaware

Payday Cash Link: Kansas

Payday Services: Utah

Payday-Loan-Yes: Internet (Location unknown)

Paydaymax Loan: Country of Grenada

Pay-Loan-Yes.com: Delaware

PDS Financial Services: Utah

Shamrock Marketing Group, LLC: Nevada

Short Term Loan Overnight: Internet (Location unknown)

SSM Group: Kansas

TJF Corp. a/k/a Bahamas Marketing Group: West Indies

United Cash Loans: Nevada/Oklahoma

United Financials: Minnesota

Up Front Cash: Nevada

US Fast Cash: Internet (Location unknown)

USA Payday Loan: Delaware

VC Funding: California

We Offer Cash: Internet (Location unknown)

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The Maine Bureau of Consumer Credit Protection was established in 1975 to enforce a variety of credit-related consumer laws. The Office licenses lenders, creditors and collectors; conducts periodic examinations of creditors to determine compliance with state laws; and responds to consumer complaints and inquiries. The Office also conducts educational seminars and provides speakers to advise consumers and creditors of their legal rights and responsibilities.

Last Updated: February 3, 2014 2:27 PM