New Federal Rules for Payday Loans.

28 Saturday Mar 2015

Posted by Celia C. Elwell, RP in Consumer Financial Protection Bureau, Consumer Law, Credit Repair, PayDay Loans

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Consumer Financial Protection Bureau, Consumer Law, High Cost Loans, Paul Kiel, PayDay Loans, ProPublica

Let The Game of Whack-A-Mole Begin: Feds Put Forward New Payday Rules, by Paul Kiel, ProPublica

http://www.propublica.org/article/let-the-game-of-whack-a-mole-begin-feds-put-forward-new-payday-rules

New rules put forward by the Consumer Financial Protection Bureau would have a major impact on the high-cost loan industry. But if history is any guide, lenders will quickly find some loopholes.

If there’s any industry that has mastered the art of the loophole, it’s high-cost lending. When faced with unwanted regulation, lenders are well-practiced at finding an opening that will allow them to charge triple-digit interest to their customers. As we have reported, they’ve been playing a giant, ongoing game of whack-a-mole with regulators and lawmakers in states across the country over the past decade or so.

Here’s only a partial list of dodges that have been employed over the years by payday and other high-cost lenders: posing as a credit-repair organization, posing as a mortgage lender, using a bank as a front, using a Native American tribe as a front, offering cash for free to hook borrowers, lengthening loan terms when rules targeted short-term loans, larding loans with useless insurance.

But after fights in cities and states across the country, the industry now faces its most powerful foe yet. The Consumer Financial Protection Bureau (CFPB), created by the 2010 financial reform bill, has the authority to regulate high-cost loans on the federal level for the first time. And on Thursday morning, the agency unveiled a first draft of new rules that would sharply reduce the number of payday loans made in the country. You can expect lenders to respond by opening up their playbook. . . .

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Click On Your State For Legal Status of Payday Loans.

05 Monday Jan 2015

Posted by Celia C. Elwell, RP in Consumer Law, PayDay Loans

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Consumer Law, Loans, PayDay Loans, PayDay Loans Consumer Information, State Regulators

Legal Status of Payday Loans by State, PayDay Loans Consumer Information

http://www.paydayloaninfo.org/state-information

Click on your state to learn if payday loans are legal or prohibited and the state law that applies.

States where payday lending is allowed

The page for each state where payday lending is legal gives the key cost of loan terms under state law. Look for the cost of a payday loan in dollars and annual interest rate for a 14-day $100 loan. Each page lists the maximum number of loans a consumer can have, any limits on loan renewals and requirements for extended repayment plans. Collection limits spell out the fees lenders can charge if the loan is not repaid and whether the lender can use or threaten criminal action if a borrower is unable to make good on the check used to get a loan.

States where payday lending is prohibited

In states that still have small loan rate caps or usury laws, the state page gives the citation for the law that limits rates, and the small loan rate cap.

Contact Information for State Regulators

All state pages list the state payday loan or small loan regulator, contact information and web site. Links to state complaint forms, instructions for filing complaints, and information about payday loans are provided if available. . . .

“Lost In Fine Print” – Documentary on Forced Arbitration.

20 Monday Oct 2014

Posted by Celia C. Elwell, RP in Arbitration, Consumer Law, Contract Law

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Arbitration, Consumer Law, Contract Law, ContractsProf Blog, Lost In Fine Print, Nancy Kim

Documentary on Forced Arbitration, by Nancy Kim, ContractsProf Blog

http://tinyurl.com/kulpycd

The Alliance for Justice has released a documentary on forced arbitration called Lost in the Fine Print. It’s very well-done, highly watchable (meaning your students will stay awake and off Facebook during a viewing), and educational. I recently screened the film during a special session for my Contracts and Advanced Contracts students. It’s only about 20 or so minutes and afterward, we had a lively discussion about the pros and cons of arbitration. We discussed the different purposes of arbitration and the pros and cons of arbitration where the parties are both businesses and where one party is a business and the other a consumer. Many of the students had not heard about arbitration and didn’t know what it was. Many of those who did know about arbitration didn’t know about mandatory arbitration or how the process worked. Several were concerned about the due process aspects. They understood the benefits of arbitration for businesses, but also the problems created by lack of transparency in the process. I thought it was a very nice way to kick start a lively discussion about unconscionability, public policy concerns, economics and the effect of legislation on contract law/case law.

I think it’s important for law students to know what arbitration is and it doesn’t fit in easily into a typical contracts or civil procedure class so I’m afraid it often goes untaught. The website also has pointers and ideas on how to organize a screening and discussion questions.