New York Scrutinizes Online Lenders

August 6, 2013
Wall Street Journal 
payday lending news

Benjamin Lawsky, superintendent of the New York Department of Financial Services, has issued 35 cease-and-desist orders to online firms that he believes might be dodging state laws prohibiting lenders from charging egregious interest rates. "The department has uncovered dozens of out-of-state lenders who have used the Internet to solicit and provide illegal payday loans to consumers in New York," one of the letters reported. "Typically these lenders charge fees that, when annualized, result in interest rates far in excess of the legal limit." Lawsky's agency also dispatched letters to more than 100 banks, including Bank of America and JPMorgan Chase, warning them they could be aiding the activities by letting the lenders withdraw payments directly from a consumer's bank account through a system called the automated clearing house network.
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