Correcting the Los Angeles Times

In an editorial today, the Los Angeles Times provided an article that started completely with a false statement. Their writer Nathaniel Popper, wrote the following:

People who pay high fees to borrow from so-called payday lenders generally don’t have bank accounts, but that doesn’t mean banks aren’t making money from them.

This statement is completely false and incorrect. All payday lenders check for following before they make any type of loans.

1. Employment & income: Employment verification letters could be fake, pay stubs could be fake, but checking bank accounts electronically or via phone with a banker cannot be faked. And almost all payday lenders contact banks, either via phone or electronically, to verify employment and income making sure the borrower is indeed employed and receives paychecks on consistent basis.

2. Checking Balance: Payday lenders look at the borrowers bank statement and often reject applicants with too many insufficient funds because those are the type of borrowers that will more likely to default.

3. Direct Deposit: Majority of lenders, in particular online lenders, require their borrowers to receive their paychecks via direct deposit so they can debit payments when it is due. Typically those with direct deposit are less likely to default on their loans.

4. Account Receivable & Collections: Payday lenders often debit payments for account receivable and collection purposes. So it is important for the borrower to have an account.

As you can see, there are many facts the Los Angeles Times writer failed to see before he made that false claim about payday loan borrowers don’t’ have an account. It is important not to confuse check cashing services and payday loan services. It is true that many check cashing stores offer payday loans too but they are complete different products and those customers who borrow payday loans must have a bank account.

As a follow up measure regarding an article on payday loan collections we submitted in July,  we would like to share some collection tips and tactics to assist Direct Lenders to increase their liquidation rate.

There are many advantages to keeping your accounts receivables “In-House”. Here are a few key points that are advantageous to our Industry.

1). Loss Prevention: As we all know, the older a debt becomes, the less chance you have to recover your loss. It is also beneficial not to outsource your accounts right away, due to the industry average contingency fees that are charged to payday loan companies by Third-Party Litigating Agencies/Collection Agencies.

2). The Fair Debt Collection Practices Act (FDCPA): Though the intricacies of this act are vast, this act governed by the Federal Trade Commission (FTC) does not generally apply to the original credit grantor. There is a “grey area” regarding creditors and the FDCPA. Under the FDCPA section 803(A) and (B), employees of the original creditor are exempt from its provisions unless they collect the debt under a different name. For example, if the original creditor is ABC, and ABC’s collection division uses the name XYZ when attempting to collect ABC’s debts, then XYZ must comply with the FDCPA.

3). In House Legal Department: In a recent interview with R.L. Armstrong, III, The Director of Collections of The Legal Department of Solomon Finance, Inc., he had this to add, “as your receivables continue to increase, consider forming a in house legal department. There are no special licensing requirements or governmental red tape matters to deal with. We educate our staff on legal industry terminology and definitions so they sound versed and informative. We provide complimentary consumer credit counseling while creating the urgency needed to have our customers make restitution. While diplomacy is virtually unheard of in the collections arena in the payday loan industry, we set ourselves apart from our competitors by implementing these strategies”.

4). Preserving your hard earned image: While the aforementioned tactics enhance your  chances of keeping your good name, there will most likely be a time when you need to outsource your receivables to a third party for collections/credit reporting. Perform a thorough due diligence in the selection process. Make sure any agency you are considering is a member of The American Collectors Association (ACA) and are licensed and bonded in the state(s) in which collections need to be performed. Make sure to take a close inspection of the “contract language” of the collection agreement prior to retaining an agency. In the payday loan industry, special addendum usually always must be made to limit the payday loan companies liability.

According to a direct lender of payday advance loans, following are the top five reasons their customers take these loans;

1. To Avoid Overdraft Fees: This is the number one reason why many people take payday loans. Banks on average charge $35 per overdraft and if there are a several transactions, that means that they are going to be several $35 fees that could create a great financial burden on consumer. Taking a payday loan with simple fee, could save consumers from that financial hassle.

2. To avoid late fees on rent\mortgage: Some States have no restrictions on late payments so landlords can charge high late fees, in some cases reported as high as 20% of the rent, if the tenant is late or short on rent. So it seems that many consumers refer to payday loans to avoid such late fees.

3. Auto Related Expenses: Many consumers take payday loans to pay for sudden auto repair or if their vehicle has been impounded. Payday loan customers rather pay a flat small fee than having to without a car.

4. Pay Medical Bills: More medical centers are denying patients without insurance or some sort of payments. So many Americans especially those without a reliable health insurance borrow money to see their doctors.

5. Buy Grocery: Larger middle class families who live paycheck to paycheck need rely on short term loans and payday loans to cover grocery costs when they are short on cash.

The above reasons are the top reasons reported by eadvancepayday.com, who is a direct online lender. This information could vary per lender and per location.

MADISON, Wisc. (Sept. 13^th, 2010)-   On July 21^st 2010 Obama signed the Dodd-Frank bill which proposed the creation of a new consumer financial protection agency which eventually was approved as the Bureau of Consumer Financial Protection (“BCFP”) to oversee and regulate virtually all forms of consumer credit including direct online payday lenders such as Cash USA.

Speculations on the actual effects of this new Bureau to the payday lending industry have been widely debated amongst many media outlets.  Despite any inconsistencies in theories, the vast majority of writers seem to agree that the BCFP will certainly deliver a strong blow to the payday lending industry, which has already seen an increase in regulations over the past decade.

Recently, attorney Hilary B. Miller released an article to the payday loan industry blog, a payday loan industry news source, discussing the more realistic implications of this new Bureau and any new regulations for payday lenders.

Surprisingly, despite the media’s early celebration of the demise of the payday lending industry, Mr. Hilary B. Miller projects quite a different future along with his professional opinion and speculation as to why the BCFP may not be quite the threat to payday advance lending that everyone else is predicting.

For example, Mr. Miller makes the observation that, of the 848 page bill there is not a substantive regulation of payday loan and cash advance lending business.  Although he does go on to mention “Title X” and the broad reaching power with regulates and enforces “covered persons”, which includes payday lenders.  It seems that the real power of the BCRP may lie not only in the specific regulations, but also in the “vague” and vast power of Title X of the Dodd-Frank Bill.

Mr. Miller also surmises that Staff members may in fact be an integral part of the new BCFP, stating that their primary motivation is to “get it right” and that staff members are the “unsung heroes of Washington” whom also “understand science” and “don’t care about getting votes”.  If Miller is correct, these objective staff members, who he predicts will make decisions based on science and unbiased research, as opposed to the popular Center for Responsible Lending reports that seemingly distort or leave out any facts that don not paint Lenders in a negative light.

If Mr. Miller is in fact correct, it would be a welcome change to payday lenders everywhere.  To date, the majority of regulatory changes overseeing maximum APR’s and fees have been run similar to a “smear” campaign, often times distorting facts and figures.  A common practice from opponents of payday lenders is to simply regurgitate the same arguments such as “payday lenders ‘target’ low income families” yet they never seem to acknowledge that like any other private business, or that by limiting APR’s to 36% lenders are only able to charge $1.38 for a $100 loan, thus making it impossible to stay in business.

Hopefully, for both the sake of consumer financial freedom of choice, and the freedom to operate small businesses within the reasonable regulations of the law, Mr. Miller’s predictions will hold true over the next year whilst the BCFP begins to grasp the reigns and oversee the vast financial landscape of America.

Last month, Montana’s Supreme Court said that it would not block the Initiative that would put a cap on payday loans.

But due to a language change that was different from the original petition, the proponents of payday loans are now asking the district judge to void the Initiative because the voters saw different version of the initiative when they signed it.

Montana Secretary of State claims that they have sent notices of the revision to 56 counties informing voters and clarifying the new language.

MADISON, Wisc. (Sept. 9th, 2010) – In response to a recent statement from the Better Business Bureau which warns potential payday loan borrowers of the possible dangers of procuring an online loan from un-licensed lenders, reputable and licensed online paydayloanjr.com has released the following guidelines to help assist potential borrowers in their search to find safe online payday loans. There are many trusted and safe cash advance sites on the internet today, but knowing what to look for when searching for an internet loan can prove to be the best method of avoiding possible encounters with unscrupulous lenders.

Some Considerations and Guidelines for Selecting a Trusted Online Lender:

Know where you found the lender from – Many of the customers who have complained against, or have had problems with online lenders, don’t really know where they had found the lender from. Always beware of how you got to a lender’s site. For example, if you have found them on the 1st page of a Google search of “online payday lender” chances are that they are a reputable and licensed lender.

Is the lender licensed? – If the online lender is a direct and licensed lender, meaning that they are directly lending you cash and are also officially licensed by the State, you should have leverage if you ever have a real problem with the lender. To be certain, you can always ask for the lender’s license number (usually listed on their site) and verify against the State’s database. This really doesn’t take long to do, and will ensure that you are in fact working with a safe and licensed lender.

Beware “Lead Generation” sites – Any websites claiming to “find you the cheapest loan available” through their “vast database of lenders” (or something similar) should be considered an immediate “red-flag”. Of course, not all of these lead generation sites (meaning they do not directly lend any money, they are only selling your information to a lender) will result in a problem with your loan, but since they are not directly lending you money, it can be difficult to find contact info for your actual lender. In our experience, it is best to stick with a direct lender.

Contact customer service – Make sure that customer service exists, and is there to service you if you ever have a question or issue. Sites that are attempting to “scam” you, will generally not have a customer service center that you can contact, and in place will have an email contact only. If you are taking out a payday loan and giving out personal info over the internet, you will want to have access to an actual customer service representative.

As a direct and trusted online direct lender, paydayloanjr.com strives to provide their customers with the information and knowledge to find a safe and secure loan when needed, and also to know when a short-term loan can actually help a financial situation and also situations in which a short-term loan solution should be avoided.

Looking for a short term payday advance loan online can be tedious. You may be concerned whether or not the website or lender you are getting a loan from is trustworthy or reputable. This is a topic that payday loan users should very well be concerned about.

The internet is vast. It can be confusing when looking for a payday loan from a trusted and reputable payday lender.

In an article we wrote previously on how to avoid untrustworthy payday lenders, we gave you several useful tips on how to find a payday lender you can trust. In this article, we would like to recap the highlights of that post. Below are the advantages of a trusted and reputable lender:

1. Direct Lender: The first step you can take is to find an online direct lender to borrow from. Direct lenders fund your loan directly without any middle man involved. This will help expedite the loan process. You also know who you are actually dealing with, unlike affiliate lenders who pass your loan application to several lenders.

2. Respect Your Privacy: A reputable payday lender is one that respects your privacy and will not pass your loan application and information to another lender. If they can’t help you, they may offer passing your information to an affiliate lender asking you to authorize the process. Also, reputable lenders are those who protect your privacy, do not sell your personal data, and never send you spam email. They may send you a promotional email from time to time, but only if you have opt-in. Reputable lenders will always allow you the option of removing yourself from their mailing list, if you do not wish to receive any more emails from them.

3. Reasonable Fees: Payday advance loans are short term loans that do not require a credit check, so they are considered high risk loans. This is why they are a bit more expensive that other types of loans. A reputable lender understands that good consumers should not pay the price for bad consumers who default. Lenders will try to find a balance, and offer reasonable fees that borrowers in good standing can afford.

4. Clear Terms and Conditions: Payday loan fees and terms can be different from state to state. If you are taking a payday loan online, you might get an unclear range of fees and terms. A good lender, however, goes the extra mile to make sure the terms and conditions are clear to the borrowers.

5. Live Professional Customer Service: A good lender is one that understands the value of good customer service and provides excellent customer service with live phone support. Their customer service representatives should clearly understand, assist, and answer all your questions regarding your loan.

If you need a payday loan, you have many options of choosing the right lender.
At About Payday Loan, we pride ourselves in being the ultimate resource of education for payday loan borrowers and promoters of responsible lending.

This post is a contributed post from another member of payday loan community. The author’s views are entirely his or her own and may not reflect the views of AboutPaydayLoan.com

Finally, a direct internet payday lender that is marked by tact and implements sensitivity when  dealing with others. Cash USA Payday Loans has set industry precedence, we pride ourselves in being the most reputable direct lender in the industry, clearly separating our organization from unscrupulous lenders. Here’s how!

During customer relations and all communications, we have a code of behavior that is far superior to the industry norm.

Contrary to our competitors, we apprise our entire customer base on matters that may assist them in safeguarding their identity and combating internet predators.

Cash USA Payday Loans has no “middleman” and there is no “broker” involved, hence ensuring your application information is protected.

With over 25 years of combined experience in the credit and collections arena, our company boasts “financial counselors” who understand when consumers experience a financial hardship and work patiently with them. A true industry first!

We clearly indicate our fees and terms showing our rates are more favorable than others.

With Cash USA Payday Loans we recommend on our homepage that consumers may want to seek counsel regarding their financial picture prior to applying for a loan.

We invite anyone to attempt to locate a online direct lender who can make these allegations! Once again, diplomacy has finally arrived in a tainted industry that helps those in need.

Today the website officially announced that it is looking for payday loan content contributors in order to bring more payday loan education to its users. The website has formed an alliance with other payday loan sites, such as Payday Loans Max, and payday loan blog, in order to advocate responsible payday lending.

AboutPaydayLoan.com is a payday loan industry resource blog backed by various reputable payday lenders. Its main purpose is to encourage responsible payday lending and to educate payday loan consumers about payday loans. It also exists to distinguish reputable and trusted American payday lenders from others.

Today the website officially announced that it is looking for payday loan content contributors in order to bring more payday loan education to its users. The website has formed an alliance with other payday loan sites, such as Payday Loans Max, Cash USA, and Payday Loan Blog, in order to advocate responsible payday lending.

“Payday lending has been getting a lot of negative publicity because of a few bad apples,” says one of the writers of a personal finance website who also contributes to AboutPaydayLoan.com. He also says, “One of our missions is to clear some of the bad reputation by educating our consumers and promoting responsible lending.”

This is indeed true. There have been a few payday lenders nation-wide that have participated in predatory lending. This malpractice, committed by those “few bad apples”, has given a bad reputation to the entire industry. To make matters worse, there exists many lead generation websites, which make empty promises to consumers, only to collect personal information. These tricky websites use phrases such as, “Get a payday loan instantly up to $3000,” when in fact payday loans on average are less than $1000 and often take up to 1 business day to receive.

Websites such as Aboutpaydayloan.com defend the payday loan industry and support payday lending to exist as a legitimate business. The industry is under attack by many state and federal politicians claiming that payday loans are too expensive. However, a short and detailed article on AboutPaydayLoan.com shows how payday loans are cheaper than overdraft fees and other types of fees.

The payday industry was not part of the problem that led to the financial meltdown of 2008. Many payday lenders are wary that they are being over regulated. To remedy this situation, they got together and launched these websites in order to both promote and defend responsible payday lending.