Payday Lender Regulations
The idea that there are companies out there who do not have to follow state regulations
in order to process payday loans is a scary thought for consumers.The states began regulating these short-term loans with the intention of trying to keep the consumers protected from predatory lending practices. It seems that with the online payday industry booming, that there are off-shore and Native American companies who do not have to follow the state guidelines for these laws. The off-shore businesses are not U.S. companies therefore do not have to follow the rules set up by the U.S. government. The Native American companies do not follow commerce rules due to sovereign immunity. This immunity allows the tribal governments to make decisions without having to answer to the court systems. In other words, if you take out a loan with one of these unregulated companies and feel that your rights as a consumer have been jeopardized, you may not go back and sue them in the American courts. Tribal matters are usually thrown out when the area of concern is protected by sovereign immunity.
There are thirty-eight states which set up individual regulations that cap the possible loan amounts and created ranges for fees and interest so the consumer is not taken advantage of. The idea behind this action was to take the ability of predatory and irresponsible lending practices out of the payday loan industry to give more power to the consumer. Some consumers who were not able to receive loans or the amount of money requested are now going to unregulated businesses and falling deeper into debt as their finances crumble further from high fees and over the top interest rates. Exceptions to online payday lender state regulations are causing problems for the payday loan industry. Being responsible lenders may not create the most revenue for the lender, but the responsibility of taking care of the consumer in their financially vulnerable state is far more important to society. There are enough financial problems happening in today's culture, the idea to promote new ones is just not acceptable.
Another matter which is drawing concern for the Federal Trade Commission and the U.S. Consumer protection Bureau is with identifying who is behind the actual operations of the tribal and off-shore companies. There has already been charges brought against a Kansas businessman and his affiliates for starting a business but have a tribal nation run the company as if it were a tribal based business. The businessman made millions being protected by sovereign immunity and is now in court proceedings with alleged charges of operating his payday loan company in such manner.
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