How to Screw Your Payday Loan Lender

How to get out of your payday loan.

The Department of Justice (DOJ) attacked lending practices by the online payday lenders for the following:

  • Loan contracts included single-payment disclosures under the Truth in Lending Act (TILA) even though they allegedly “hid in small print and in confusing language” steps required to pay off the loans. The legality of this practice under TILA is the subject of ongoing litigation in a lawsuit brought by the FTC.
  • Some loan agreements required consumers to authorize recurring ACH payments, an alleged violation of the Electronic Funds Transfer Act (EFTA). While the CFPB is aware that many lenders require ACH payments on installment loans where the borrower fails to pay by other methods, it has not yet declared that these arrangements violate the EFTA.
  • Some loan agreements violated the FTC rule limiting wage garnishments.
  • Some loan agreements of tribal, offshore and other so-called “choice-of-law” lenders provided for interest at rates prohibited by the law of the states where borrowers resided.

If you’re a payday loan borrower whose lender committed any of these acts, you may not have to payback the lender. “Google” your state department of financial institutions to determine if this is the case.

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