Payday Lending

IT IS VERY EXPENSIVE TO BE POOR IN AMERICA

“Cash” this. “Check” that. The names are so similar that hey confuse you. You pass by them everyday. They are almost invisible. Unfortunately to millions of the working poor they are not. They have proliferated like cancer cells and you can now find them in almost every urban neighborhood and even in our suburbs. It is hard to trace the ownership of these companies because the trail is intentionally made so complicated and convoluted.Only a few years ago this type of lending violated the usury laws of many states and was unlawful. Now, only with intense lobbying in many state legislatures and generous contributions to politicians, more and more states have accepted this type of lending and have enacted laws which regulate but permit payday loans.

The owners of these operations will typically pose as or hold themselves out as the “Pillars” of our society or communities. In reality, they are white collar criminals or gangsters who, when consumers are unable to repay their high interest loans, engage in common criminal activities in order to collect their funds.Threats, intimidation and fear are the principal tools of these people in collecting their money. Usually, this takes the form of threatening criminal prosecution for the supposed writing of “bad checks”. If you remember just one thing you will not be afraid or intimidated.

RESIST THE PAYDAY LOAN CARTEL

For Ohio pay day loans, the Annual Percentage Rate may be 120% or higher, in spite of Ohio’s general APR limit of 25%. During 2008 Ohio enacted a 28% APR for short term lenders to restrict pay day lenders. Their lobby launched a voter initiative to repeal the 28% limit. The initiative failed; 60% of Ohio voters wanted the 28% limit. No pay day lenders registered under that law.

During 2008, the pay day lenders created schemes to evade the 28% limit. One scheme has been successful. In 2008 the pay lenders register as CSO’s (credit service organization). A CSO has no limit on the fees it can charge for services, such as, providing a credit report and preparing loan documents for the third party lender. The borrower thinks the CSO is the lender. There is only one third party that serves as the actual registered lender (APR limited to 25%) for pay day lenders-CSO’s. The CSO without a limit may charge between 75% and 90%. By having two companies involved, the APR exceeds 110%. The payday-loan scheme involves several outlets: Ace Cash Express, Check N Go, Cash America, $Advance America, Check Smart and Cash Max, and the third party lender NCP Holdings.

This setup has been growing for 7 years. The CSO’s and lender’s agreements have prohibitions against class actions, limit damages and require arbitration. But there is a lawsuit that will successfully end this scheme.

We work in all payday lending matters with attorney John A. Rebel, McKinney & Namei Co. LPA, 15 E. 8th St, Cincinnati, OH 45202 (513) 721-0200. You may contact him directly with any questions.

REMEMBER: YOU CANNOT COMMIT A CRIME BY DEFAULTING ON A PAYDAY LOAN. YOU CANNOT WRITE A BAD CHECK WHERE THE LENDER KNOWS IN ADVANCE THAT YOU DON’T HAVE THE FUNDS IN YOUR CHECKING ACCOUNT TO COVER THE CHECK. THIS CAN NEVER CONSTITUTE THE CRIME OF WRITING A BAD CHECK UNDER THE LAWS OF ANY STATE.