chaging law agains payday loans

Payday lenders face legal challenge in moves to tackle astronomical interest rates

The Tooth Fairy used to deliver the occasional pocket money windfall, expecting nothing in return but an unwanted molar or two.

But times have changed and Toothfairy Finance – charging an astronomical 2,689 per cent interest – is just one of the ‘legal loan shark’ firms that will be circling cash-strapped adults this Christmas.

Now Toothfairy Finance and other payday lenders such as wonga.com are under attack from MPs and pressure groups who are calling for the industry to be regulated and are questioning whether these businesses meet proper legal standards.

The Office of Fair Trading has been sent a letter by Scottish MSP Margo MacDonald demanding clarity on the law. She has asked whether the firms – which typically advertise that loans can be made in just minutes – are covered by laws that allow borrowers a 14 day cooling-off period, during which they can cancel their loan.

MacDonald also points to a Scottish law that requires a witness to be present for the signing of certain contracts. If such a rule were to be applied to the payday loan market it could render all such loan contracts in Scotland null and void, she says.

Her team is now trawling for websites which it thinks may be breaking the rules ahead of further talks with the OFT.

‘My concern, on behalf of my constituents, particularly those of modest means, is that the companies may be operating on the very borderline of legality,’ the letter says.

Meanwhile, Stella Creasy, Labour MP for Walthamstow, East London, is due to meet OFT chairman Philip Collins this week to discuss the payday loan companies.

Creasy believes that an advertising campaign by Wonga may have broken the rules.

Houston Payday Loans: New Regulations Enacted | Articles 4 Net ...

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If you live in the great state of Texas then you may be interested in knowing that your state is known for more than just big sky, and great barbecue. It’s also known for having some of the loosest payday lending laws of all the states in the entire US. Coincidentally it’s also unique in another way. That is that it also has the highest number of payday loan borrowers of any state in the entire US.

So it should come as no surprise that lawmakers have recently been focused on instituting a number of changes in the way these businesses operate within their borders. Changes in laws that may affect you the next time you go to secure loan from a payday lending franchise. Now it’s important keep in mind here that these new laws that were enacted effect not just community-based lenders but also those that operate over the Internet as well.

For instance one of the recently enacted laws stipulates you may not borrow any more than 35% of your monthly income at any one time. Now keep in mind that this is your income after taxes and deductions have been taken out of your check. Now this might not seem like a big change until you do the math and realize that in order for you to borrow $1000 from a payday lender in Texas you’ll have to be bringing home roughly $750 after wage deductions.

Then one more new change in Texas laws makes it a crime for a payday lender to threaten you with criminal prosecution if you default a loan. Now make no mistake here though. If you have committed a crime such as submitting falsified documents during the application process you can, and most likely will still be prosecuted. The new law simply prevents you from being threatened with impending prosecution.

The new laws passed also put a cap on the interest that can be charged by a paycheck cash advance lender. You see, all along these types of loan franchises were pretty much unregulated. And all it took was a $100 license fee for someone the open one in there. These new laws however, now put these lending franchise operators under the same regulatory umbrella that covers banks and credit unions.

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