THE BLOG

19
Sep

Payday Loan Leads: Ads Better Not Appear on Kids Websites

“The case started when an investigator noticed a payday loan ad on a website designed for children while browsing from a computer used in a payday loan investigation. The website’s advertiser apparently knew the user had visited payday loan websites before.

A 1998 federal law – Children’s Online Privacy Protection Act – prohibits unauthorized collection of children’s personal information on websites directed at users under 13.

The New York attorney general’s office discovered websites for Mattel’s Barbie, Hot Wheels and American Girl; Viacom’s Nick Jr. and Nickelodeon; JumpStart’s Neopets; and Hasbro’s My Little Pony, Littlest Pet Shop and Nerf had payday loan advertisements appearing on them.

“Operation Child Tracker,” a two-year, first-of-its-kind investigation by the New York Attorney General’s office, discovered that websites operated by these companies were home to tracking technology that illegally enabled third-party vendors, such as marketers and advertising companies, to track children’s online activity in violation of COPPA.

How to start a payday loan business“Federal law demands that children are off-limits to the prying eyes of advertisers,” said Attorney General Schneiderman. “Operation Child Tracker revealed that some of our nation’s biggest companies failed to protect kids’ privacy and shield them from illegal online tracking. My office remains committed to protecting children online and will continue our investigation to hold accountable those who violate the law by tracking children.”

The Children’s Online Privacy Protection Act (COPPA)

In 1998, Congress enacted COPPA to protect the safety and privacy of young children online.  COPPA prohibits operators of certain websites from collecting, using, or disclosing personal information (e.g., first and last name, e-mail address) of children under the age of 13 without first obtaining a parent’s consent. The operators of websites directed to children under the age of 13 (a “child-directed website”) and the operators of websites that have actual knowledge that they are collecting personal information from a child under the age of 13 (collectively, “covered operators”) are subject to COPPA.

Companies Agree To Pay Penalties Totaling $835,000, Adopt Comprehensive Reforms To Protect Children From Improper Tracking

According to The Los Angeles Times, “The case started when an investigator noticed a payday loan ad on a website designed for children while browsing from a computer used in a payday loan investigation. The website’s advertiser apparently knew the user had visited payday loan websites before.

07
Sep

CFPB Lost 12,308 Positive PDL Borrower Testimonials on Hillary’s Server

The Consumer Financial Protection Bureau is more dishonest than the lenders they claim they are trying to protect consumers from.

Payday Loan Industry: CFPB Lost 12,308 Positive Borrower Testimonials on Hillary’s Server.

Here’s just one of the 12,308 POSITIVE TESTIMONIALS the CFPB received that were Posted by REAL consumers on the CFPB’s “Tell Your Story” website portal. Note that the total number of testimonials received was 12,546:

January 21, 2016

I used a payday loan and it got me out of a jam. When I pulled out a payday loan, I had no idea what I was doing. After sitting down with someone at the store, they helped me every step of the way and made sure I felt comfortable with pulling out the loan. I’m so glad they were there to help. Rather than a traditional loan, I payday loan startup businessapplied for a pay day loan and the process could not have been better. Everything was explained to me the minute I walked in the store and I had the cash I needed in no time at all. A bank or credit union does not work when you only need a small loan amount to make ends meet. I already live paycheck to paycheck and have little leftover after my monthly bills are paid. When the holiday season comes around, I can’t afford to give my kid gifts. The pay day loan helped me so my child could open a present. In the end this payday loan helped me out of a tough situation.

The Community Financial Services Association of America said documents they received under a Freedom of Information Act request indicate that 12,308 of the 12,546 testimonials submitted to the CFPB’s “Tell Your Story” consumer portal “reflect positive impressions of the industry.”

Here’s another actual payday loan customer story Posted by a REAL payday loan borrower on the CFPB website portal:

January 21, 2016

I really enjoyed working with my local pay day lending store and I think my story is important. Being able to get a loan for a few hundred dollars was not only easy but it was a necessity. There are no other avenues out there that can lend money like that which are not tied to losing a valuable piece of property or giving up your car entirely. This was a great way to make it work for me. Over the holidays, budgets can be stretched fairly thin. I wasn’t even sure I could provide even the most modest presents for the members of my immediate family. Then I got a quick and easy payday loan, and it truly made a difference to the people closest to me. It was enormously helpful and easy to navigate. I didn’t have the money to fix my car after getting in an accident. Although at first hesitant, I found the entire staff to be extremely helpful and polite. In the end, I m glad I went through with the loan as it was quick and hassle-free. I found that using my pay day loan to cover some medical costs I had recently was a great way to not fall behind on my other bills. Medical bills can be very difficult to get under control and are very confusing. This loan was a great solution for me. I thank you for understanding my situation.

So, the CFPB must have misplaced 12,308 positive payday loan consumer testimonials? More than likely these were simply on Hillary Clinton’s private server.

Meanwhile, go here to read all 12,546 payday loan consumer testimonials. CFSA

And, if you want to learn how to make money lending money, visit PaydayLoanUniversity.com

22
Aug

Tax Prep Services for Payday, Title and Installment Lenders?

Just like you, the thousands of readers of this Newsletter are racking their heads for ideas and methods to increase their Financial Service Center Loan Business revenue AND survive the CFPB B.S.

One business that we’re exploring is Income Tax Preparation.

I’m speaking here from real experience with this.   I’ve offered tax preparation services in two of my payday loan stores.

Let me tell you the good, and the UGLY.

First, tax prep is a great complimentary business for financial service centers.

On paper, it’s a slam dunk.  You’re already paying the overhead. It’s the same demographic. There isn’t a huge requirement of space. And, the training is easier than you think.

Tax prep software does 98% of the work for you.

Mistake 1? 

My first year, I DIDN”T listen to my franchise training people, and I went after small business people.

WRONG!

You can’t make money on them and their returns are often too complicated.

When I shifted my focus to LOW-INCOME customers, I started making serious money.

Example? A single mom with a truckload of kids is going to get an $8000 refund from the IRS! These moms don’t cry about paying a few hundred bucks for their tax prep service. [They just want their government money FAST! And, you can expedite this for them. You’ll have the tools and the knowledge. You’ll even have a bank account that offres them $800+ in advance of their refund from the IRS!]

Mistake 2?   

I assumed that I would automatically get all of my current payday, car title and installment customers to file with me.  Didn’t happen.

You have to sell, sell, SELL!!

Drive around, give out pens, be friendly, advertise… Yes, even to the customer that you already have a relationship with! They see you as the Loan GUY (or Loan GIRL).

Here’s the opportunity:

You can typically earn $200-$250 per return.  It takes you 10-20 minutes to complete.  Not bad!

Get 250 customers through your door and you add $50,000+ to your numbers.  If you have several locations, that quickly adds up to a serious increase in cash flow for your financial services business. AND, this all happens from January 8th through the end of March!

It’s a well known fact our industry is very GOOD at customer service.  Every survey, every investigation reveals that we KNOW our customers and that we take great care of them.  [As you know, this fact really pisses off the banks, credit unions and so-called “consumer advocates.”]

Tax prep is a huge opportunity for us because the BIG names in the income tax prep business – H&R Block, Jackson Hewitt, Liberty – they hire crappy employees with a crappy attitude.

Get people in your door and you can turn them into permanent customers for ALL your financial services.

Miro, Jer and our Team are vetting different Franchise operations as you read this Alert.

We’ve interviewed a multitude of Franchisors and franchisees during the past several weeks.

We’ll present you with our tax prep recommendations in the coming week.

But right now, we have one recommendation for you:

Get an EFIN number.  

This is a special tax preparation ID number that is issued by the IRS.

It is FREE.

It doesn’t commit you to anything… BUT, it’s the government… they take 45 days (minimum) to process this application.

You CANNOT do a Tax Prep business without it.

It costs $0.00 to get it and you must have it.  But if you don’t have it, you can’t even explore this exciting opportunity.

Here’s the link to the IRS Website. EFIN

Just in case, here’s a shorter link via Google’s URL shortner: https://goo.gl/JymYjQ

Get your EFIN number and hold on to your hat.  We’re going to provide you with some real opportunities here.

Start now! Get this done! Take action today before you forget and before you get left behind.

Don’t take action today AND it’s gonna be PAINFUL!  

We’ll be back SOON! Want access to our research? Email Team@PaydayLoanUniversity.com with Tax Prep in the subject.

Best! Miro & Jer http://www.PaydayLoanUniversity.com

13
Jun

Payday & Title Loan Collection Strategies

Payday Loan Collection Strategies

The 4C’s to Qualify for a Payday or Title Loan

As a payday or title loan lender, you know how easy it is to loan your money to borrowers. The hard part is convincing your borrowers to pay you back; as promised

I stress in our “How to make Money Lending Money Manual” that collections BEGIN the moment a potential borower visits your small dollar loan store or applies for a loan via your website.

There are a multitude of sub-prime consumer data “scrubbers” that have the ability to verify your small dollar borrower’s IP address, email, cell phone number, name, address, employer, bank account, social media presence…,

But ultimately, we lenders know lending money is about:

  • Collateral
  • Character
  • Credit
  • Capacity

Now, in the case of a payday loan, the collateral is your borrower’s job. 3 weeks on the job as a bartender is NOT going to fail to make my stomach queasy. [No offense to my favorite Newport Beach bartender!]

For title loans, lending is about the borrower having a free and clear title to the RV, car, truck, trailer… you get the message.

In order to mitigate his risk as a lender, Jason takes 4 factors into account when analyzing a borrower for a potential loan: collateral, character, capacity, and credit.

1. Collateral

How long has the borrower been on the job? How “strong” is their employer? Are you sure the employer phone number listed on the borrower’s application isn’t the cell phone number of her live-in boyfriend?

The job is the first and most important factor that I look at when qualifying someone for a loan.

2. Character 

Solid job? Let’s evaluate their character. I talk with the borrower in order to learn more about them. Why do they need a loan from me? What’s Google tell me about them? Who answers their phone when I call the number they’ve given me?

3. Capacity

During this sit down, Jason also wants to understand the borrower’s capacity to perform on the deal. He needs to know if they can make the monthly payments, if they can afford the down payment, and whether or not they have a clear exit strategy.

4. Credit 

Finally, after analyzing the borrower’s collateral, character, and capacity, I review their checking account statement. Other payday loan lenders listed? One might be OK. 2 or more? Forget about it!

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Start Title Loan Business

Evidence og gambling? Probably not. Strip joints? maybe not. A negative bank balance 2 days after payday? Probably not. NSF’s ? No go!

Finally, I check them out with one of my sub-prime consumer reporting agencies before making a final decision.

This is not rocket science folks! It’s about PROFITS!

Get organized. Use the tools I discuss in our Payday and Title Loan Manuals and you WILL make money by lending money.

Questions? Jer@PaydayLoanUniversity.com

12
May

California Payday Loan Laws and Licensing

California Payday Loan Laws & Licensing

PAYDAY LOAN FREQUENTLY ASKED QUESTIONS

DO I NEED TO BE LICENSED TO OFFER DEFERRED DEPOSITS [PDL’s]?

Yes, if you are a person that offers, originates or makes a California payday loan called a deferred deposit transaction, arranges a deferred deposit for a deferred deposit originator, acts as an agent for a deferred deposit originator, or assists a deferred deposit originator in the origination of a deferred deposit is required to obtain a license from the Department of Business Oversight, person located in California, who plans to engage in the business of making Deferred Deposit transactions over the internet only to residents in other states, or person located outside of California who plans to engage in the business of making Deferred Deposit Transactions over the internet only to residents in California and to residents in other states.

HOW DO I APPLY FOR A CALIFORNIA DEFERRED DEPOSIT TRANSACTION LAW (CDDTL) LICENSE?

Persons that are licensed under the CDDTL California payday loan model may be an individual, corporation, a partnership, a limited liability company, a joint venture, an association, a joint stock company, a trust, an unincorporated organization, a government entity, or a political subdivision of a government entity. An application must be submitted for each location that the applicant intends to engage in the business of deferred deposit transactions. A licensee with one or more licensed locations may file a short form license application established by the Commissioner. Applications are processed in the order they are received.

The requirements for obtaining a California payday loan license are as follows:

For each California payday loan location, submit an application with the appropriate exhibits, an application fee of $200, and an investigation fee of $100. Fees are non-refundable. An application on a short form established by the Commissioner may be submitted for each additional location that the applicant intends to engage in the business of deferred deposit transactions. Short form applications for each additional location, including mobile units, must include an application fee of $200, and an investigation fee of $100.

Maintain a surety bond in the amount of $25,000 which must be in effect prior to the issuance of a license.

Submit financial statements prepared in accordance with Generally Accepted Accounting Principles that demonstrates that the applicant has a net worth of at least $25,000. After licensure, the licensee shall be required to maintain a net worth of at least $25,000 at all times.

The California payday loan application must include fingerprint information submitted by live scan and the cost of fingerprint processing for the following: The applicant; The general partners, officers, directors and persons owning or controlling, directly or indirectly, 10% or more of the outstanding equity interests of the applicant; and
Other key persons involved, such as managers/members, trustees, any other officers with direct responsibility for the conduct of applicant’s deferred deposit activity, and the persons who will be in charge of the place of business.
An application may be denied if any officer, director, general partner, or person owning or controlling, directly or indirectly, 10% or more of the outstanding interests or equity securities of the applicant has, within the last 10 years (A) been convicted of or pleaded nolo contendere to a crime, or (B) committed any act involving dishonesty, fraud, or deceit, if the crime or act is substantially related to the qualifications, functions, or duties of a person engaged in the business of deferred deposit transactions.

how to opene payday loan company

Start Payday Loan Business

[NOTE: for a complete, step-by-step Manual describing how to start and profit by lending money via payday loans and car title loans, go here: “How to Start a Payday Loan or Car Title Loan Company Successfully.”

California payday loan Application Forms and Notices

I AM PLANNING TO ENGAGE IN THE BUSINESS OF A DEFERED DEPOSIT ORIGINATOR. I CURRENTLY DO NOT HAVE ANY LICENSE OR PERMIT. WHERE DO I OBTAIN THE PERMITS OR LICENSES TO ENGAGE IN THE BUSINESS?

If you wish to engage in the business of deferred deposit California payday loan transactions you will need to have a license from the Department of Business Oversight.

WHAT ARE THE REQUIREMENTS TO OBTAIN A LICENSE TO ENGAGE IN THE BUSINESS OF DEFERRED DEPOSIT FROM THE DEPARTMENT OF BUSINESS OVERSIGHT?

You can view requirements and download forms here.

WHERE DO I OBTAIN AN APPLICATION FOR A LICENSE UNDER THE CALIFORNIA DEFERRED DEPOSIT TRANSACTION LAW? 

You may download the application forms through the Department’s website, visitng any of the Department’s office locations or by calling the Department’s Consumer Services Office at (866) 275-2677.

WHERE DO I OBTAIN FINGERPRINT LIVE SCAN FORMS?

The fingerprint live scan forms are available through the Department’s website at Request for Live Scan Service – Applicant Submission.

WHEN CAN THE CDDTL SHORT FORM APPLICATION FOR LICENSURE BE FILED?

A person applying for a license must first file the Department of Business Oversight’ “Application for A License Under the California Deferred Deposit Transaction Law.” Thereafter, the Short Form License Application may be filed by the same person seeking a license for additional locations.

WHERE DO I SEND THE COMPLETED LICENSE APPLICATION, INCLUDING FEES?

All application information should be submitted to the Department’s Los Angeles Office
Department of Corporation
320 West 4th Street, Suite 750
Los Angeles, CA 90013-2344

ARE THE LICENSEEES SUBJECT TO EXAMINATION BY THE DEPARTMENT OF BUSINESS OVERSIGHT?

Yes. The California Deferred Deposit Transaction Law provides that the Department may at any time, but not less than once every two years, investigate the business of deferred deposits, and examine the books, accounts, records and files of every licensee. The purpose of the regulatory examination is to determine compliance with the CDDTL and the rules and regulations established by the Commissioner. The licensee is required to allow the Department’s representatives to have free access to the offices and places of business, along with books, accounts, records, files, safes and vaults. Each licensee is required to pay for the costs of the regulatory examination.

ARE LICENSEEES ALLOWED TO STORE AND MAINTAIN THE BOOKS, RECORDS AND ACCOUNTS IN ELECTRONIC FORMAT?

Yes. The books, records and accounts may be retained and provided to the Commissioner in electronic format provided that the electronic records are maintained and provided in a format that allows the Commissioner complete access to all of the books, accounts and records. The electronic records must be maintained in a media that ensures reliable, credible, accurate and auditable records. The electronic records must be provided to the Commissioner in a software format that is acceptable to the Commissioner and allows Commissioner to download and print any or all of the records that are stored and maintained electronically. The licensee shall provide any and all records maintained in electronic format in printed form if the electronic records are not in a format that enables the Commissioner to determine if the licensee is complying with the CDDTL or rules there under.

DO I NEED TO NOTIFY THE DEPARTMENT OF BUSINESS OVERSIGHT IF I CHANGE THE ADDRESS OF A LICENSED LOCATION?

Yes. A licensee is required to notify the Department at least ten days prior to the change of an address for a licensed location. The Department will approve the change in location by issuing an amended license with the new address.

IS A LICENSEEE REQUIRED TO NOTIFY THE DEPARTMENT OF BUSINESS OVERSIGHT IF THERE ARE CHANGES IN THE APPLICATION AFTER THE LICENSE IS ISSUED?

Yes. The license issued under the CDDTL is not transferable or assignable. Generally, if there is a change in entity type, a new long form license application and new short form license applications for any additional locations would have to be filed for the new entity. A license issued to a partnership or limited partnership is not transferred or assigned by the death, withdrawal or admission of a partner, general partner or limited partner, unless the death, withdrawal, or admission dissolves the partnership to which the license was issued. If the change dissolves the partnership, a new long form license application and new short form license applications for any additional locations would have to be filed for the new partnership. A licensee is required to notify the Department of any change of its officers, directors or any persons named in the application within sixty days from the date of the change. The amendment to the original license application reflecting the change shall include the effective date of the change and the names of the persons involved in the change. The new persons are required, at a minimum, to submit Statement of Identity and Questionnaires and fingerprint information with the notification of the change.

HOW OFTEN DO I NEED TO RENEW THE LICENSE ISSUED BY THE DEPARTMENT OF BUSINESS OVERSIGHT FOR A DEFERRED DEPOSIT ORIGINATOR?
You do not need to renew the license issued to a Deferred Deposit Originator. The license shall remain in effect until surrendered, suspended or revoked.

HOW DO I SURRENDER MY LICENSE IF I AM PLANNING TO CEASE ENGAGING IN DEFERRED DEPOSIT TRANSACATION BUSINESS?

A licensee may apply to surrender a license by delivering to the Commissioner written notice of the intent to surrender the license. The application to surrender the license must be signed by an authorized representative of the licensee and include the original license.

WHAT IS THE AVERAGE TIME FOR PROCESSING A CDDTL LICENSE?

The average processing time for  CDDTL license applications is:   46 days for the first license applied for  (Long Form License Application) and 20 days to process applications for additional licensed  locations (short form license application).

Transacting Business as a Payday Lender
Yes. Each mobile unit conducting deferred deposit transactions must submit an application with the appropriate fees.

ARE THERE LIMITATIONS ON A DEFERRED DEPOSIT TRANSACTION?

Yes. The face amount of the customer’s personal check or the electronic equivalent of the customer’s personal check may not exceed $300 and the fee charged may not be more than 15% of the face amount of the check, except loans made to a military member (regular, reserve, member’s spouse and their dependents) should not exceed 36% APR.

ARE THERE LIMITATIONS ON THE FEES THAT MAY BE CHARGED IN RELATION TO A DEFERRED DEPOSIT TRANSACTION?

Yes. The fee may not exceed 15% of the face amount of the check. A single fee not to exceed $15 may be charged for a returned check. No additional fees may be added for late payments or returned checks, except loans made to a military member (regular, reserve, member’s spouse and their dependents) should not exceed 36% APR.

ARE THERE LIMITATIONS ON THE NUMBER OF DEFERRED DEPOSIT TRANSACTIONS A LICENSEE MAY MAKE TO A CUSTOMER IN A 12-MONTH PERIOD?

No. There are no limits on the number of deferred deposit transactions a licensee may make to a customer in a 12-month period. A licensee cannot make a new deferred deposit transaction during the period an earlier deferred deposit transaction is in effect for the same customer and the proceeds of a new deferred deposit transaction may not be used to pay off an existing deferred deposit transaction from the same licensee.

IS A LICENSEE ALLOWED TO MAKE A DEFERRED DEPOSIT TRANSACTION TO A CUSTOMER WITH AN EARLIER DEFFERED DEPOSIT TRANSACTION THAT IS IN EFFECT IF THE TOTAL OF THE EXISTING DEFERRED DEPOSIT TRANSACTION AND THE NEW DEFERRED DEPOSIT TRANSACTION IS LESS THAN THE MAXIMUM ALLOWED OF $300?

No. A licensee cannot enter into a deferred deposit transaction with a customer during the period an earlier deferred deposit transaction is in effect for the same customer, including transactions where the existing deferred deposit transaction and the new deferred deposit transaction does not exceed the maximum amount allowed of $300.

IS A LICENSEE ALLOWED TO MAKE A NEW DEFERRED DEPOSIT TRANSACTION TO A CUSTOMER THAT HAS AN EARLIER DEFERRED DEPOSIT TRANSACTION THAT IS IN EFFECT FROM ANOTHER LOCATION OF THE SAME LICENSEE?

No. licensees with multiple locations cannot enter into a deferred deposit transaction with a customer during the period an earlier deferred deposit transaction is in effect for the same customer at any of the licensee’s locations.

CAN A LICENSEE USE A CUSTOMER’S PERSONAL CHECK OR THE CUSTOMER’S ELECTRONIC EQUIVALENT OF A PERSONAL CHECK RECEIVED FROM A PREVIOUS DEFERRED DEPOSIT TRANSACTION FOR A NEW DEFERRED DEPOSIT TRANSACTION?

No. A licensee is not permitted to accept or use a customer’s personal check or a customer’s electronic equivalent of a personal check received from a previous deferred deposit transaction for a new deferred deposit transaction.

CAN A LICENSEE ACCEPT COLLATERAL IN CONJUNCTION WITH A DEFERRED DEPOSIT TRANSACTION?
No.
IS A LICENSEEE ALLOWED TO MAKE THE DEFERRED DEPOSIT TRANSACTION CONTINGENT ON THE PURCHASE OF OTHER SERVICES OR PRODUCTS?
No.

ARE THERE ANY SPECIAL REQUIREMENTS FOR A LICENSEEE THAT MAKES A DEFERRED DEPOSIT TRANSACTION TO A NON-ENGLISH SPEAKING PERSON?

Yes. The written agreement must be written in the same language principally used in the oral discussions or negotiations leading to the execution of the deferred deposit agreement and must be in at least 10-point bold type.

IS A LICENSEEE ALLOWED TO EXTEND THE DUE DATE OF AN OUTSTANDING DEFERRED DEPOSIT TRANSACTION OR ALLOW THE CUSTOMER TO MAKE PAYMENTS ON AN OUTSTANDING DEFERRED DEPOSIT TRANSACTION?

Yes, though the licensee is not required to extend the due date or enter into an agreement to allow the customer to make payments on an outstanding deferred deposit transaction.

WHAT ARE THE FEES A LICENSEEE MAY CHARGE IN CONNECTION WITH EXTENSIONS AND PAYMENT PLANS GRANTED FOR REPAYMENT OF OUTSTANDING DEFERRED DEPOSIT TRANSACTIONS?

A licensee may allow an extension of time to repay an outstanding deferred deposit transaction or a payment plan, but may not charge any additional fees or charges of any kind in conjunction with the extension or payment plan.

IS A LICENSEEE PERMITTED TO DEBIT A BORROWER’S BANK ACCOUNT ELECTRONICALLY USING ACH TRANSFERS ON MULTIPLE DAYS FOR VARYING AMOUNTS TO COLLECT A DELINQUENT ACCOUNT WITHOUT THE BORROWER’S AUTHORIZATION

No. The agreement or an addendum to the agreement must specify the days and amounts the licensee is authorized to debit the borrower’s bank account electronically using ACH transfers to collect delinquent accounts. Any addendums to the agreement authorizing the licensee to debit the borrower’s bank account electronically to collect overdue accounts must be in writing signed by the borrower, by fax with the borrower’s signature or electronically authorized by the borrower over the Internet. The written agreement should cover the manner in which a customer’s check will be deposited and the specific date of deposit. For example, when the licensee elects to deposit a personal check by electronic means, the written agreement should specify that the licensee electronically deposits the customer’s check and the specific date. If the licensee wishes to deposit the check either manually or electronically when there are insufficient funds in the customer’s account, the written agreement should also specify the method and date of depositing the check under those circumstances. The written agreement should cover the manner in which a customer’s check will be deposited and the specific date of deposit. For example, when the licensee elects to deposit a personal check by electronic means, the written agreement should specify that the licensee electronically deposits the customer’s check and the specific date. If the licensee wishes to deposit the check either manually or electronically when there are insufficient funds in the customer’s account, the written agreement should also specify the method and date of depositing the check under those circumstances.

CAN A CUSTOMER BE CRIMINALLY PROSECUTED FOR FAILING TO REPAY A DEFERRED DEPOSIT TRANSACTION?

No. A customer cannot be criminally prosecuted or threatened with criminal prosecution to collect a delinquent deferred deposit transaction.

CAN A CUSTOMER BE REQUIRED TO PAY TREBLE DAMAGES IF THE CHECK DOES NOT CLEAR?

No. A check that is being negotiated as part of a deferred deposit transaction is not subject to the provisions of Section 1719 of the Civil Code. No person shall be required to pay treble damages if the check does not clear.

IS A CUSTOMER REQUIRED TO PAY COURT COSTS AND FILING FEES FOR A SMALL CLAIMS COURT ACTION TAKEN BY A LICENSEEE TO COLLECT A DELINQUENT DEFERRED DEPOSIT TRANSACTION ACCOUNT?

The Small Claims Court Judge hearing the case will determine if court costs and filing fees will be awarded to the licensee. The Deferred Deposit Transaction Agreement may not contain any provisions that require the customer to pay court costs or filing fees in conjunction with an action taken by the licensee to collect a delinquent account.

WHO DO I CONTACT WITH QUESTIONS?
Questions are to be directed to the Department at 1-866-275-2677.

TO START A CALIFORNIA PAYDAY LOAN BUSINESS, CALL TRIHOUSE CONSULTING: 702-208-6736 jer@TrihouseConsulting.com

 

22
Apr

DOJ Attacks Tribal Payday Loan Lending Model

JDSupra-DOJ Takes On Tribal Lending: Inside The Indictments Law

DOJ Department of Justice Focuses on Tribe Sovereign Nation Lending Model

Between attacks by the CFPB and the Department of Justice, the tribe payday loan lending model is being heavily scrutinized. When set-up correctly, and when the tribe experiences a true beneficial interest in the lending enterprise, the “Sovereign Model” can still make sense.

Additionally, let’s not forget the latest disruption caused by Madden vs Midland and the old theme “rent-a-bank! I’ve written about this before so let’s get back on track with The DOJ.

[PS: My conclusion? Those of us having a “bricks-n-sticks” footprint will not only prevail BUT profit handsomely IF we “stick to our knitting.” Our small dollar loan borrowers are still hesitant to plug all their personal information into a lengthy website application and wait to hear back from a call center employee for loan approval.]

From JDSupra [Read original below]: “In recent months, the attention of the tribal lending industry has focused on the Consumer Financial Protection Bureau’s emerging role in regulating short term loans from sovereign tribal nations, but a new and even more powerful player has recently emerged that could play a role in shaping future discussions: the U.S. Department of Justice.”

“The DOJ’s entrance into this arena was led by none other than the famed “Sheriff of Wall Street,” Manhattan U.S. Attorney Preet Bharara.”

“On Feb. 10, 2016, Bharara announced charges against Scott Tucker and colleagues for allegedly operating an illegal $2 billion payday lending enterprise. The indictment in that matter alleges that Tucker recruited Native American tribes to provide the appearance that his companies were tribally owned, and thus protected by sovereign immunity from state lawsuits and regulators.”

“This indictment was followed on April 7, 2016, by an indictment in the Eastern District of Pennsylvania claiming that Charles Hallinan and colleagues allegedly used tribes in a similar manner to protect illegal lending operations.
This article examines the structure of loans in question, the relationships between lenders and tribes that have been alleged to be mere pretense, and the specific charges brought by the federal government.”

“Loan Structure”

“Several states prohibit payday loans, or have usury limits, that in effect, prohibit payday loans in their jurisdiction; these are known as “prohibited payday loan states.” There are also states that restrict payday lenders by placing licensing requirements on those lenders, and capping interest rates at particular levels, these are known as “restricted payday loan states.”

“The Tucker payday loan companies and the Hallinan payday loan companies did business in prohibited payday loan states, and failed to… Here’s the FULL ARTICLE from JDSUPRA:”

 

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Start Title Loan Business

07
Apr

Marketplace Lending Association Launched by Prosper, Lending Club and Funding Circle

Well, this is interesting! Another association in the lending industry. Let’s see how they “get along” with the CFPB, OLA, CFSA, FISCA…

Marketplace Lending Association Launched.

Leading online credit marketplaces Funding Circle, Lending Club (NYSE:LC) and Prosper Marketplace announced the launch of the Marketplace Lending Association (MLA), a U.S. non-profit membership organization created to promote responsible business practices and sound public policy to benefit borrowers and investors.

“The MLA represents the marketplace lending industry. Our goal is to promote a transparent, efficient, and customer-friendly financial system by supporting the responsible growth of marketplace lending, fostering innovation in financial technology, and encouraging sound public policy.”

Responsible products

  • Ensure, in cooperation with any originating bank if applicable, that all loans offered through the marketplace are made with high confidence that the borrower can repay their entire debt burden without defaulting or re‐borrowing.
  • Do not issue payday or high‐cost installment loans, as defined by CFPB, through the marketplace.
  • To prevent debt‐traps, extend new credit, in cooperation with any originating bank if applicable, to a borrower who is unable to make their payments due to the marketplace only if due diligence indicates that the borrower’s situation has changed, enabling them to repay their outstanding and new debts.
  • Report loan repayment information to major credit bureaus and ensure that the borrower’s credit data is consulted in the loan underwriting process.
15
Mar

Payday Loans: Financial Services Subcommittee Destroys CFPB Deputy Director

Make some time available and watch the Video below. There is particularly emotional testimony at 4:16:00 when a payday loan consumer, Mr. Sherill, describes how he started his own business via “these types of loans” and has 20 employees now! His employees rely on payday loans. At times he employs payday loans to access additional business capital.

Payday loan business, car title loans, small dollar lending… CFPB under attack.

This video is a must watch for payday loan consumers, employees, operators and anyone else who believes “big brother” does not know what’s good for Americans.

Want to see CFPB Deputy Director Silberman sweat while testifying during a Financial Services subcommittee hearing titled, “Short-term, Small Dollar Lending: The CFPB’s Assault on Access to Credit and Trampling of State and Tribal Sovereignty?.”

Fun! Fun! Fun! Ms. Love, Mr. Scott and Mr. Williams all sit on the Committee and SERIOUSLY nail CFPB Silberman.

“It would be great if you all would back-off and consider the consumer.” Mr. Williams

“I’m trying to understand why you’re trying to destroy small dollar loans. They are much needed. 75% of American people live paycheck to paycheck. They have emergencies!” Mr. Scott

“You and your CFPB cohorts are trying to destroy these loans! Why are you and other regulators trying to do this to the American people?” Mr. Scott

“You’re hurting the very people who need help the most.” Mr. Scott.

“This rule will reduce lender revenue by 70%.” Mr. Guinta.

“Americans rely on these payday loan, title loan and other products.” Mr. Guinta

“On what authority does the CFPB have to eliminate these small dollar loan products?” Congressman Guinta.

“The coziness between the Community for Responsible Lending (CRL) has been widely reported. Most people would define this as inappropriate.”Mr. Rothfus.

Do you know if The Center for Responsible Lending offers any products that would compete against payday loans?” Mr. Rothfus
“I understand the Center for Responsible Lending is affiliated with credit unions.” Mr. Silberman.

Mr. Mulvaney form South Carolina at 2:19:00. YOU MUST SEE THIS 🙂

The people of America want to lead their lives. They’re tired of elitists in Washington who think they know best. The people want to make choices.” Mr. Pittenger. 2:28:00

Executive Director of Community Financial Services Association CFSA Mr. Dennis Shaul begins at 2:36:00 “CFPB is out to destroy payday loan industry!

At 2:47:00 Mr. Sherill, a consumer, does a great job of explaining why the payday loan product MUST continue to be offered in the marketplace.


“The CFPB rule will eliminate the ability for banks and credit unions to offer short term loans.” Mr. Rothfus.

It starts up again at 4:13:00 Watch it!  The consumer describes life after prison and his inability to access credit. Banks turned him down. Credit unions turned him down. A payday loan lender saved his butt. The terms were very clear. They explained the payday loan product.

08
Mar

Tribe Payday Loans? Rodella Smith vs. Western Sky:

Another Western Sky Ruling

RODELLA SMITH, : CIVIL ACTION Plaintiff, : : No. 15-3639 v. : : WESTERN SKY FINANCIAL, LLC, et al., : Defendants. : MARCH 4, 2016

“This case presents an unusual and disconcerting collision between federal consumer protection laws and the sovereignty of Native American tribes and their courts.”

“Defendants here make “payday” loans across the United States through the Internet, and they seek to have their loan agreements governed by tribal law and challenged only in certain tribal courts or arbitral forums.”

How to start installment loan company

How to start installment loan company

“Given the historic injustices visited upon Native Americans, the Supreme Court has understandably admonished that federal courts should tread lightly when it comes to intruding upon their sovereignty. See Iowa Mutual Insurance Co. v. LaPlante, 480 U.S. 9 (1987).”

“Defendants here invoke these principles in moving to dismiss Plaintiff’s case. For the reasons set forth below, I have concluded that Native American sovereignty is not at stake in this case, and I agree with the Fourth Circuit (among others) that Defendants seek “to avoid federal law and game the system.” Hayes v. Delbert Servs. Corp., No. 15-1170, 2016 WL 386016, at 9 (4th Cir. Feb. 2, 2016).”

“Defendants’ Motion to Dismiss will be denied.”

“I. Facts of this Case Plaintiff Rodella Smith alleges that she is the victim of a high-cost payday lender who has cloaked himself in the protections of tribal sovereignty and a series of shell companies to Case 2:15-cv-03639-GAM Document 27 Filed 03/04/16 Page 1 of 12 2 avoid complying with state and federal laws.”

“On March 7, 2012, Plaintiff Rodella Smith took out a loan from Defendant Western Sky Financial, LLC in the amount of $5,000. First Amended Complaint (“FAC”) at ¶ 8; Western Sky Consumer Loan Agreement (“Loan Agreement”), Ex. A to Defs.’ Mot. Dismiss, at 1.”

“According to the terms of the Loan Agreement, which she viewed online and signed electronically, the loan was subject to an annual percentage rate of 116.73%, and the repayment term was set for a period of about seven years, resulting in a total payment of $41,172.61. Loan Agreement at 1.”

“Almost immediately, the loan was sold to Defendant CashCall, Inc. on March 10, 2012, and then subsequently sold to Defendant Delbert Services Corp. on September 30, 2013. Defs.’ Mot. Dismiss at 7. Plaintiff alleges that Western Sky is a limited liability company registered…” Link to Western Sky Decision.

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11
Feb

My Take? Tribe Payday Lender Scott Tucker Arrested-$2B Unlawful

Let’s consider what’s really going on here! Beyond the high-powered press release…

$2 Billion Payday Loan Internet Lender Charges Unleashed by New York Attorney

Scott Tucker Employing Tribe Sovereign Nation Payday Loan Licensing Model

Folks, as you read this, REMEMBER: “The charges contained in the Indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.”

“Defendants Scott Tucker & Timothy Muir exploited Over 4.5 Million Financially Struggling Americans Through Unlawful Scheme to Evade State Usury Laws.”

By: Jer Trihouse. While these assertions by the U.S. Attorneys Office and the FBI are “as serious as a heart attack,” it’s a certainty that the tribal lending model is alive and well. Organized and deployed PROPERLY, tribal owned internet lending enterprises are a legitmate path to serving the 65% of U.S. borrowers unable to scratch together $500 for an emergency car repair, prescription purchase, rent payment… and for building a revenue stream aiding federally recognized Native American Tribes an opportunity for economic survival. There are a plethora of stories and studies demonstrating the ability of these tribes to improve their ability to offer their members economic success, build schools and health care facilities, and create jobs therby reducing the rampant unemployment and alcoholism so pervasive among tribes.

The small dollar loan product, including single payment payday loans, signature loans, installment loans, line-of-credit loans, car title loans… continues to appeal to tens of millions of consumers throughout North America, China, Europe, South America…

Brave, creative entrepreneurs continue to enter the business of making loans available to the millions of consumers in need. Witness the 120+ Fintech startups launched from Silicon Valley and London during the past 12 months. And let’s not forget the multitude of AFS (Alternative Financial Service) providers who have offered value and service to borrowers since the 90’s! They continue to morph, pivot and evolve their products to better serve their clients and out fox their competition; of which there are MANY!

Jer Trihouse

Jer – Trihouse

[If YOU are in need of competent guidance regarding your existing or de novo online or brick-n-mortar lending operation, and would like to explore tapping into my network of highly experienced and significant service providers and capital sources, reach out to Jer@TrihouseConsulting.com 702-208-6736.]

Now, on with the show…

Regarding this RICO indictment announced with GREAT FANFARE against Scott Tucker and  Timothy Muir for “operating a nationwide internet payday lending enterprise that systematically evaded state laws in order to charge illegal interest rates as high as 700% on loans,” I THINK IT IS SIMPLY ANOTHER EXAMPLE OF THE FEDERAL GOVERNMENT ATTEMPTING TO SCARE THE LIVING DAYLIGHTS out of those of us who have identified a huge need – a tremendous consumer demand – for access to fast cash to meet their financial emergencies.

For those of us who have actually worked “in the trenches,” who have really been behind the counter serving consumers in genuine need of a short-term, immediate loan to solve a temporary financial emergency, we are in sympathy with our clients. We GET IT! Our customers for these financial products GET IT as well. It’s not as if the banks are handing out $200 – $1000+ to our demographic!

And enough from the crazies who say lenders want to make loans to folks who cannot pay us pack. RUBBISH! If my customer can’t pay me back, am I really stupid enough to reach into my pocket and loan her $300? How long will it be before I’m working at Starbucks with my PHD in social sciences?

So… Scott Tucker? Don’t be surprised to read – buried deep on page 26 of The Wall Street Journal – a concise, 30 word description of a settlement concluding our government’s attack on our financial services industry.

The Fed’s want to make a lot of NOISE! Yes, they’re front page Press Release suggests they are protecting American borrowers from “loan sharks” like the payday loan industry. Yes, they are attempting to cause fear among the remote sovereign tribes lacking gaming, energy and agricultural economic benefits.

BUT, the financial services industry, technology, and the entrepreneurial spirit continues to  thrive and prosper. Tribal government and their members continue to search for solutions to serving their community’s needs for schools, employment, day care, health services… And consumers by the millions still need $500 bucks to fix the car.

Operation Choke Point, so-called consumer activists, and “big brother” will continue to attempt to “scare the bejesus” out of us with their highly publicized investigative pronouncements against our industry. This is simply an excersise in misdirection; it’s theatre! “Look over here at our latest consumer protection PR while we reach into your pocket, take your money and lend it to the banks for <1%.

Bottom line for lenders? Stay informed. Get your house in order. Spend a few $bucks in the areas where you know you have vulnerabilities. Jer Trihouse

Link to Department of Justice Press Release

Link to Indictment

Link to Tucker & Muir NPA