Unregulated Online Lenders Can Mean Stress, Frustration

Arizona Daily Star
March 14, 2010
Sorenson, Dan

The story of an Arizona woman highlights the dangers of taking out a payday loan from online lenders, which often operate in several states or on Indian reservations in order to skirt state and federal laws. Sherry Hinojosa accepted a $300 loan from an online lender and, after a few months of payment, learned that the charges to her account were only interest -- not principal. The lender was difficult to reach, refused to tell her what the payoff amount was, and then encouraged her to roll the loan over. When she finally blocked the lender from making withdrawals from her checking account, the lender returned under another name and began making larger withdrawals. Hinojosa closed her bank account but then had an "abuse of account" filed against her and began receiving threatening calls from bill collectors. She said she still does not know how much the company claims she owes or the total amount of money she has paid. The Better Business Bureau of Southern Arizona says Hinojosa's case is a good example of the dangers in using online lenders, which require the borrower's bank account number and leave the borrower at their mercy while operating virtually unregulated.
Web Link