Online Payday Loan Scams

Center for Responsible Lending and the Pew Charitable Trusts have been avid in fighting against abusive and illegal activities done by payday loan stores across various counties. Payday lenders in California who have been charging high-cost loans at storefronts for years are now going to be subject to new laws from the state’s financial regulators.

According to the financial regulators of California, they found out though online complaints that several of the payday lenders did not have legal rights or license to be operative in the area. Furthermore, these stores and lenders do not follow consumer-protection laws and other regulations.

Through a website, the California Department of Corporations has discovered that many short-term lenders that are operative online do not show their annual percentage rate figures. This APR, the standard for measuring the true cost of loans is made mandatory by both federal and state law.

In payday loans, borrowers tend to pay their debts through their paycheck or if that would not suffice the whole debt then they has to take out another payday loan from a different lender. This is what consumers would often call a payday loan trap because once they get a payday loan debt it is not very easy to get rid of it.

California’s law has placed a limit of a payday loan in a day. The largest amount that can be borrowed is $300 with a 15% interest. It operates in an annual percent rage that is 13 times more expensive than credit cards. Online payday lenders would ask their borrowers to share personal data that include their bank account information. There are some lenders who would deposit money on the accounts before the customers get a loan and then they take off money from the bank for refund. This has led some customers to close their bank accounts and even take legal actions through court.

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