World
What you Should Know about Payday Lenders

Recent settlement shines light on the sometimes unscrupulous practices of payday lenders

 

Predatory payday lenders can prove to be a nightmare for consumers who need a quick influx of cash to pay a bill on time or otherwise make ends meet. 
 
Last week, we got an idea of how nightmarish it can get with two online payday lenders, AMG Services and MNE Services, agreeing to pay $21 million to settle FTC charges that they misrepresented how much loans would cost consumers. The settlement is an eye-opener for anyone who uses an online payday lender to help keep themselves financially afloat.
 
Here are a few key takeaways:
 
Mega misrepresentation — The FTC said some borrowers were grossly overcharged for what they borrowed. For instance, though an AMG contract stated that a $300 loan would cost a total of $390 to pay off, consumers were charged $975 to repay the loan. 
 
Hidden terms — Payday lenders are not required under federal law to offer borrowers the lowest annual percentage rate (APR) available but they are required to adequately disclose the APR, and that’s something that the FTC said the payday lenders did not do. The CFPB, which has also investigated payday lenders, noted: “A typical two-week payday loan with a $15 per $100 fee equates to an APR of almost 400 percent. By comparison, APRs on credit cards can range from about 12 percent to 30 percent.” 
 
Illegal conditions — The FTC said the payday lenders made preauthorized debits from consumers’ bank accounts a condition of the loans, which counts as a violation of the Electronic Funds Transfer Act. 
 
Threats – In its complaint preceding the settlement, the FTC alleged that the payday lenders collected on loans illegally by threatening borrowers with arrest and legal action if they didn’t pay up. The CFPB states that a borrower cannot be arrest for defaulting on a payday loan. The agency says to contact your state attorney general if you are threatened with arrest.
 
As part of the settlement, AMG Services and MNE Services will waive $285 million in assessed customer charges that were not yet collected.
 
For financial alternatives to payday loans, click here. And for more of our coverage on payday loans, here
 
 

User

Bank strike postponed as IBA assures to resolve issues by February

The four-day bank strike of employees from nationalised banks has been postponed following talks between unions and IBA

 

The four-day strike of employees from nationalised banks scheduled to start from 21st January has been postponed. "The four-day bank strike put on hold as Indian Banks' Association (IBA) has assured to expedite talks and resolve the wage increase issue by February. Hence in the interest of banking public we have deferred the strike, " says  CH Venkatachalam, general secretary, All India Bank Employees Association (AIBEA).
 
The strike call was given by United Forum of Bank Unions (UBFU), which has more than 10 lakh employees and officers of banking Industry under its umbrella. The UFBU is an umbrella organisation comprising of nine bank staff unions. According to earlier reports, there are 27 public sector banks in the country.
 
Public sector bank employees have been calling for a wage revision from November 2012 and various talks with the IBA were not successful even though the Unions have been conducting strikes over the years.
 
However, the unions have warned that if IBA fails to resolve the wage issue by February, then there would be fresh call for strikes. Mr Venkatachalam said, “If there is no satisfactory outcome, fresh dates of strike action in February would be announced. We expect the government to intervene and settle the demands of employees.”
 

User

COMMENTS

vishal

2 years ago

the sooner the settlement comes the better it is for the nation. With out nationalized Banks day to day operation of the country's economy will comes to standstill. We have seen this in the past and there is no use in prolonging this sort of agitation. The younger generation of workers everywhere in our country are in a restless mood and it is difficult to pacify them.

subramani s

2 years ago

i have retired from banking service in december 2013. People in the banking industry are seing wage settlement and payment of arrears after about 30 months after the end of the previous 5 years period. this is the practice followed by the management to which the unions (ufbu) are conscious participants. All other sound bites are dramatic in nature. now a days the young workers are increasingly seeing through this and are becoming restless. this is not good for the future collective power of the workers.
I can assure the bankmen that they will get their arrears by june or july this year. (this is the way iba / govt carries out wage revision and unions are only doing only formal routines)

subramani s
sankar nagar, pammal, chennai-75
20-01-2015
email: [email protected]

Bullish Impulse

Rate cut by RBI has created fresh bullishness

 

Moneylife Long Term Portfolio...

Premium Content
Monthly Digital Access

Subscribe

Already A Subscriber?
Login
Yearly Digital+Print Access

Subscribe

Moneylife Magazine Subscriber or MSSN member?
Login

Yearly Subscriber Login

Enter the mail id that you want to use & click on Go. We will send you a link to your email for verficiation

We are listening!

Solve the equation and enter in the Captcha field.
  Loading...
Close

To continue


Please
Sign Up or Sign In
with

Email
Close

To continue


Please
Sign Up or Sign In
with

Email

BUY NOW

The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine and Lion Stockletter)