N.Y.'s Lawsky Urges Crackdown on Payday Lenders' ACH Access

January 15, 2014
American Banker 
payday lending news
New York Financial Services Superintendent Benjamin Lawsky has written an open letter to NACHA -- the electronic payments group that banks use to process debits from customer accounts -- pressing for greater reforms to keep online payday lenders from abusing the automated clearing house (ACH) system.

Some payday operations have skirted the law in New York and other states where they are banned by hawking high-cost loans over the Internet and then using the ACH to withdraw payment from borrowers' bank accounts. Lawsky wrote that new rules proposed by NACHA late last year are insufficient and warned that, unless the organization takes a harder line, "banks will continue to serve as a pipeline for the illegal activity by payday lenders who prey on consumers."

He recommended that NACHA clarify that ACH debit authorizations for payday loans are not enforceable in states where payday lending is outlawed; require banks to act immediately when account-holders make stop-payment requests; and increase banks' due diligence obligations.









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.



`