Federal Regulator Takes Payday Loan Fraud Head On

In an effort to further protect consumers against fraudulent payday loan advance businesses, the Federal Trade Commission has started to crack down on dishonest operations.

These business are allegedly charging undisclosed and inflated fees to consumers who use their products. In addition, in certain cases some lenders have also been using illegal business practices by threatening borrowers with arrest and lawsuits if they fail or refuse to pay these unexpected fees.

FTC Cracking Down

In one specific case, the FTC brought up charges against a payday lender affiliated with a Native American tribe that felt it was immune from legal action. While this is true on a state level, the FTC operates on a federal level and was able to bring the lender up on federal charges. This is the second time in less than a year that a payday lender has been busted for trying to utilize a similar loophole.

While these lawsuits are still being pushed down the legal pipeline, the FTC has had past success in meeting fraudulent payday loan activity head on. In a separate case, the agency charged racing driver and investor Scott Tucker for allegedly charging similar inflated fees.

It’s believed that Tucker’s company illegally dipped into borrowers’ bank accounts multiple times after completing their payday transaction. Each time this occurred, not only did they take cash straight out of accounts, they also charged a new, and inflated, financing fee every time, without disclosing the true cost of the loan to borrowers. According to the FTC, the defendant would then threaten borrowers with legal action and imprisonment for failing to pay and that they would be sued. It’s believed this scheme affected more than 7,500 individuals.

Important to Review All Documents

These examples of fraudulent payday lending schemes are a prime example of why it’s important to examine all documents you are required to sign before taking out a cash loan. While a majority of payday lenders run legitimate operation intended to help you get out of a financial pinch, like any industry there are a few bad eggs. If you have read through the clauses enclosed in you payday loan request and still have some questions about the process, you can contact a loan professional at MoneyNowUSA for more information.…

True or False: Payday Loans are Reported on Your Credit Report ?

Many may wonder, while some may never have asked the question, “Will payday loans show up on my credit report?” Do you know the truth? If you look at your credit report, you’ll notice a list of your debts and payment history. A typical credit report would have your credit card accounts and car or home loans if you have them. If you borrow a payday loan, will it also show up?

The Truth About Payday Loans and Your Credit Report

The purpose of payday loans is to help consumers who are in a financial emergency and need assistance to cover an expense until their next paycheck. Most consumers who apply for payday loans use them to cover rent, high utility bills or an unexpected expense.

In general, a payday loan will not automatically show up on your credit report. As long as you use the payday loan as intended and repay it in full, it will not appear on your credit report.

However, if you fail to repay your payday loan, the lender will either turn it over to a debt collector report the bad debt to one or more of the credit bureaus. Under these circumstances, the payday loan will appear as an unpaid debt on your credit report, which will lower your credit score.

Industry reports indicate that as many as 44% of payday loans result in loan default. Consumers who fall behind on their payday loan can expect to face additional rollover fees and more interest payments.
Under Lender Discretion

For the most part, it’s up to the lender whether or not they will report the bad debt. Smaller lenders may not choose to bother because of the processing time it would take, while other larger nationwide lenders are more likely to report payday loan delinquency.

If you take out a payday loan and pay it back by the time it’s due, the lender won’t report the transaction to the credit bureaus. The reason for this is because these types of loans are not granted based solely on the borrower’s credit history. Also, there is nothing to report if the loan is paid off.…