In recent years, Attorney General Herring and his team have focused on online lenders, which have been a growing percentage of the lending market but can still present the same risks as any payday or motor vehicle title lender. To date, the Predatory Lending Unit has recovered more than $45.9 million in restitution and forgiven debt from online lenders, including $20.1 million from Future Income Payments, $15.3 million from CashCall, $4 million from MoneyKey, $3.4 million from Opportunity Financial, and $2.7 million from MoneyLion.
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Online consumer finance companies are subject to the same interest and fee limitations, loan term, and loan amount limitations as those applicable to brick-and-mortar companies. Those limitations are as follows:
Most of us agree the economy has struggled but it doesn't mean you have to vote for a candidate with zero experience in governing, struggles to clarify his mostly empty platform (complains and promises but doesn't tells us HOW), a campaign promise 4 years ago to get rid our income tax without telling us how he would replace the lost revenue, won't release his own client list after reporting that he made $37.8 million during the pandemic, worked for a payday loan company, is no friend of unions ("Take 'em out at the knees" Stefanowski said when referring to State employees."), didn't vote for 16 years, hides behind a presumed NDA of a registerd LLC in Saudi Arabia as a consultant (a country with brutal & human rights abuses), and list goes on and on. This candidate hasn't a clue about government and how it works. His campaign has been a hot mess for months and got messier when he lost his top advisors a couple months ago. How someone runs their campaign can be a strong indicator of how they will govern. He may fool some voters but not all voters who will show up on Nov, 8th to re-elect Gov. Lamont and the Democratic ticket. Especially women.
Stefanowski had a long career in corporate finance, with stops at GE and UBS. But his last job was one that was an issue in 2018 and will be again: He was the CEO of a global payday loan company whose product line is illegal to offer in Connecticut.
Evasion. High-cost lenders operated using their choice of four statutes or without a state license. No regulation governed interest rates for installment loans above $2,500 or lines of credit. Unlicensed online lending operated freely via statutory loopholes and no regulation governed fees that could be charged for brokering loans.
All high-rate lenders must acquire a license under Virginia statutes (Chapters 15, 18, or 22). These licenses are available to all lenders, whether they operate through stores or online or issue secured or unsecured loans. Loans issued in violation of state law are deemed uncollectible, strengthening enforcement against evasion.
Research-based safeguards for affordable installment payments set flexible durations, typically of four months or more, and allow for a wide range of loan sizes. Lenders may not require balloon payments.
Loans secured with checks, electronic repayment plans, or a vehicle title must have affordable payments and lower prices and cannot employ harmful repossession and collection practices. Loan-servicing partnerships are subject to enhanced regulation, and high-cost loan brokering is prohibited.
The modernized statutes enable numerous business models for lending to customers with thin or damaged credit histories and require loans to have affordable payments, transparent terms, and fair prices, regardless of the collateral or whether they are made at a retail location or online. This set of standards creates a level playing field, enabling varied companies, including payday, title, installment, or financial technology firms, to compete in Virginia, expands consumer choice, and protects borrowers from harmful practices. (See Table 3.)
Replaces balloon-payment payday loans with short-term small installment loans for borrowers with thin or damaged credit histories. These loans feature affordable payments, reasonable time to repay, and lower prices that are still viable for responsible lenders. Allows widespread access to credit not only from payday lenders already operating in Virginia, but also from lower-cost companies that previously did not lend in the state.
Loan processing fee can be charged no more than twice a year; loans made without a license or using evasive practices are void and uncollectible; enhanced enforcement authority for state attorney general
Total costs capped at 50% of the loan amount or 60% for loans of more than $1,500; loans made without a license or using evasive practices are void and uncollectible; enhanced enforcement authority for state attorney general
Note: State lawmakers also chose to keep the existing vehicle title loan statute, applying almost identical reforms as the short-term loan statute with minor variances including a six-month minimum loan term (rather than four), a $15 maximum monthly fee (rather than $25), and protections against repossession. The law also amended the Credit Services Businesses Act to prevent the brokering of high-rate loans. For a more comprehensive summary of the Virginia Fairness in Lending Act, see here.
As a result of the Fairness in Lending Act, the small-dollar loans issued in Virginia will cost approximately three times less than before reform. The act builds on successful reforms from other states, and though various state laws differ, they share common fundamental elements including closing loopholes, prohibiting balloon payments, and modernizing statutes to enable widespread access to credit according to uniform rules that ensure affordable installment payments for borrowers and a level competitive playing field for lenders. By embracing fair lending reforms like those enacted in Virginia and Ohio, lawmakers in other states that allow high-cost loans can save consumers millions of dollars each year while ensuring widespread access to credit.
MCC Refugee Services in Mankato recently agreed to partner with an initiative of the Minneapolis Synod ELCA working to combat predatory payday lending in Minnesota communities. Payday loans are small loans, usually less than $500, that charge a high interest rate and must be repaid in full by the next paycheck. Families without financial margins can become easily entrapped in a devastating cycle of payday loans. 2ff7e9595c
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