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Posts Tagged ‘Payday Loans’

Swish Marketing Fined $4.8 Million Over Unwanted Debit Cards

Per the request of the Federal Trade Commission, a federal court has ordered Swish Marketing, Inc. to pay more than $4.8 million for tricking hundreds of thousands of payday loan applicants into paying for an unrelated debit card. The FTC is closely monitoring payday lending and other financial services to protect financially distressed consumers.

Read the final judgement and order

According to the FTC’s complaint, Swish Marketing, Matthew Patterson, Mark Benning, and Jason Strober operated websites advertising short-term, or “payday,” loan matching services that purportedly matched loan applicants with lenders. The websites included an online loan application form that tricked online loan applicants into unknowingly ordering a debit card. On many sites, clicking the button for submitting loan applications led to four product offers unrelated to the loan, each with tiny “Yes” and “No” buttons. “No” was pre-clicked for three of them; “Yes” was pre-clicked for a debit card, with fine-print disclosures asserting consumers’ consent to have their bank account debited. Consumers who clicked a prominent “Finish matching me with a payday loan provider!” button were charged for the debit card. Other websites touted the card as a “bonus” and disclosed the fee only in fine print below the submit button. As a result, consumers were improperly charged up to $54.95 each.

In August 2009, the FTC charged Swish Marketing and VirtualWorks LLC, the seller of the debit card, and their principals with deceptive business practices. In April 2010, the FTC filed an amended complaint against the Swish Marketing defendants, adding allegations that they sold consumers’ bank account information to VirtualWorks without the consumers’ consent, and that Patterson, Benning, and Strober were aware of consumer complaints about the unauthorized debits. Strober, Patterson, Benning, and the VirtualWorks defendants settled the charges against them.

The court order announced today requires Swish Marketing to pay more than $4.8 million and bans it from marketing any product with a “negative-option” program, in which a consumer’s silence or failure to reject a product is treated as an agreement to make a purchase. The order also requires the company to obtain consumers’ informed consent before it can use their personal information collected for a particular purpose for any other purpose or by a different entity, and bars the company from:

misrepresenting material facts about any product or service, such as the cost or the method for charging consumers;
misrepresenting that a product or service is free or a “bonus” without disclosing all material terms and conditions;
charging consumers without first disclosing what billing information will be used, the amount to be paid, how and on whose account the payment will be assessed, and all material terms and conditions; and
failing to monitor their marketing affiliates to ensure that they are in compliance with the order.

Read the rest of the FTC’s news release

Beware Of The PayDay Loan Collection Scam

Author: The Money Coach

Some consumers that have recently applied for a payday loan online have become the targets of a scam according to KRDO 13 in Colorado Springs.

One Colorado couple received a call from a man posing as a law enforcement officer, who accused the couple of owing more than $7000 on an overdue payday loan.

Read more about this payday loan scam and how to avoid it: Payday Loan Scam Hitting Consumers – News Story – KRDO Colorado Springs.

How Can I Get Rid of My PayDay Loans

Author: The Money Coach

Q: What advice do you give to tackle payday loans? I Have Two at the Moment and I Can Not Afford to Pay Them Both at the Same Time. What Do You Suggest?

A: Unfortunately, millions of people get caught up in the cycle of payday loans each year — not realizing that many of these loans, when rolled over, carry annual interest rates of about 400%, making them nearly impossible to pay off. I’ve written extensively about the dangers of getting payday loans and alternatives to them. Read this post for some of my tips for raising cash when you’re in a financial pinch.

I also recommend taking a look at an excellent five-part series on payday loans, written in 2010 by a terrific financial reporter, Pallavi Gogoi, for DailyFinance.com, an Aol Money and Finance site. Gogoi examines the growth of payday loans, she explains why even federal regulators haven’t been able to protect the public from payday lenders, and offers some good advice for help and alternatives for people with payday loans. Read that series on payday loans, and it’s sure to be an eye-opener, as well as helpful to your specific predicament.

What are the Dangers of Getting Payday Loans?

Author: The Money Coach

For a single loan, payday lenders routinely charge interest rates of about 400% on an annualized basis. That’s a ridiculously high price to pay for “credit.” So why would someone willingly go to a payday lender when they’re short on cash, when they could just use a credit card to pay for something, or even take a cash advance from a credit card?

There are numerous causes, not the least of which is a lack of basic banking services in many communities where payday lenders thrive. Also, many payday loan clients had previous credit problems, or couldn’t qualify for a regular credit card. But there is another, more basic issue at play too: Many of these consumers out of the credit mainstream either do not want to or do not have the financial skills to play by the credit card industry’s rules.

Payday Loans Often Turn Into a Vicious, Expensive Cycle

Needless to say, one of the obvious rules is: you must repay what you owe – or at least repay a minimum payment – by your due date. But guess what? The payday lenders actually don’t have that rule, at least not as a hard and fast requirement. They’ll let you slide by allowing you to “roll over” your payday loan. This way, you can put off paying back what you initially owed. Can you guess why they have such “flexible” rules? If you think they’re doing it out of the kindness of their hearts, think again. It’s because “roll over” loans impose hefty fees, making them enormously profitable for payday lenders. The average payday loan customer that uses “roll overs” winds up paying over 1,000% in interest, according to a study by Georgetown University researchers. Unfortunately, the average person who gets a payday loan typically rolls them over, getting an average of 1 payday loan per month, or 12 in a year. So if you ask me: a payday loan is one super-expensive form of “credit” you should never accept.

Payday Lenders Get Creative To Evade The Law

By the way, payday lenders are getting sneakier than ever. In the wake of tough laws clamping down on them, many payday lenders are starting to offer what they call “installment” loans. These are still essentially payday loans. But the loans are merely stretched out over longer periods of time, in order to help payday lenders bypass various state regulations governing short-term loans. For example, in December 2005, the state of Illinois adopted the Payday Loan Reform Act (PRLA), a law that regulates loans of 120 days or less. So what did payday lenders do after that law was passed? To get around a host of loan restrictions and consumer protections offered by the PRLA, many Illinois payday lenders began offering look-alike “installment” loans of 121 days or more. Needless to say, the net effect of these so-called “installment” loans is the same as with traditional payday loans: the consumer ends up in an expensive, long term cycle of debt. In fact, according to the Woodstock Institute, which conducted a comprehensive analysis of two of the largest payday lenders in Illinois, these high-cost installment loans are even more expensive to consumers than traditional payday loans.

Ask The Money Coach

Posts Tagged ‘Payday Loans’

Swish Marketing Fined $4.8 Million Over Unwanted Debit Cards

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Beware Of The PayDay Loan Collection Scam

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How Can I Get Rid of My PayDay Loans

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What are the Dangers of Getting Payday Loans?

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