Bank Regulator Urged to Stop Community Choice Financial Inc., Going Public May 8, From Using Prepaid Card Payday Loans to Evade State Law

May 3, 2012
U.S. Politics Today  
credit card news

The National Consumer Law Center (NCLC) has issued a press release that sounds the alarm on an emerging predatory financial practice: providing payday loans on prepaid cards. Specifically, when Arizona imposed a 36 percent interest rate limit on payday loans in 2010, payday lender CheckSmart dodged the regulation by offering cash advances on prepaid cards issued through Florida-based Urban Trust Bank. It also has started to provide the loans, which bear annual percentage rates of 390 percent and greater, in Ohio -- which in 2008 limited payday interest to no more than 28 percent. NCLC and more than two dozen other consumer groups have responded with a letter to the Office of the Comptroller of the Currency, in which they press the regulator to stop Urban Trust Bank from issuing prepaid cards sold by CheckSmart in Arizona, Ohio, and other states where CheckSmart cannot legally make direct loans. "Prepaid cards and payday loans just don't mix," according to NCLC's Lauren Saunders. "Prepaid cards should be safe alternatives to bank accounts, not vehicles for evading state law with predatory loans that trap people, often those with the least means, in a spiral of debt."
Web Link

Abstract News © Copyright 2008-2013 INFORMATION, INC.
Powered by Information, Inc.

Stay Updated

Join the fight against predatory lending. Enter your e-mail to sign up for breaking news, action alerts, and CRL's original research.

   Please leave this field empty

Help Us End Predatory Lending

Predatory lending destroys family wealth, and preys on our most vulnerable communities. You can help us end abusive lending practices by donating to CRL, or by sharing our work with others.