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Online payday loan company forced out of Missouri | FOX2now.com

ST. LOUIS, MO (KTVI) – A South Dakota based online lender agrees to stop doing business with Missouri consumers. Attorney General Chris Koster is forcing the payday loan company out of Missouri.

As many as 6,300 Missouri consumers are victims. Each applied for online loans with one or more of the 8 operations run by a single individual.

Martin “Butch” Webb was doing business from a Native American reservation in South Dakota. The computer loans are short term with outragious fees and requires the consumer agree to wage garnishment if needed to ensure payback. Now, the lender must pay $270,000 in restitution and immediately stop collecting on outstanding loan payments.

Koster said Martin A. “Butch” Webb acted through numerous business entities operating from a Native American reservation in South Dakota, including Payday Financial, Western Sky Financial, Lakota Cash, Great Sky Finance, Red Stone Financial, Big Sky Cash, Lakota Cash, and Financial Solutions, none of which were licensed to do business in Missouri.

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Payday loans can lead to debt spiral – Insight News

View Comments Short-term loans may be useful but should be used sparingly

With many consumers still on shaky financial footing after the Great Recession, some choose to explore payday loans, be it from a brick and mortar store or through an online payday lender. While there are certainly instances where payday loans can help bridge small financial gaps, Better Business Bureau of Minnesota and North Dakota (BBB) is warning consumers that it’s important to have a plan in place to pay off such loans quickly and to be sure to research the payday lender before agreeing to such loans.

“Though some payday loan companies are making small steps towards self-regulation, overall it’s still a problematic industry,” says Dana Badgerow, president and CEO of BBB of Minnesota and North Dakota.

Payday loans are small, short-term unsecured loans, which – ostensibly – are to be repaid when the borrower receives their next paycheck. Historically, in regard to payday loans, exorbitant interest rates have been a problem, with some loans running in excess of 500 percent annual percentage rate (APR). In some cases, borrowers find themselves unable to pay off these loans, leading to added interest and often resulting in a debt spiral that is difficult to stem.

All payday lenders offering loans to Minnesotans – including online payday lenders – must be licensed with the State of Minnesota. Minnesota law also caps the amount of fees that can be charged on payday loans. According to the Minnesota Attorney General’s Office, for payday loans less than $350, Minnesota rates are capped on a sliding scale. For loans between $350 and $1,000, payday lenders cannot charge more than 33% annual interest plus a $25 fee. The AG’s Office encourages people to avoid payday loans which fail to meet these caps.

In some cases, desperate individuals seek out loans from online payday lenders that claim they are not beholden to state or federal laws regarding licensing requirements, debt collection practices or caps on interest rates. This can lead to a number of issues for consumers, including:

Being subject to exorbitant interest rates and hefty or hidden fees
Unauthorized withdrawals from bank accounts
Possibly even identity theft

Better Business Bureau is aware of many situations in recent years where people explored online payday loans before deciding not to go through with them. Still, simply providing some of their personal information online with unscrupulous entities later led to harassing collection calls threatening some individuals – who had ultimately never taken out payday loans – with arrest unless immediate payments were made.

Before seeking out a payday loan, BBB recommends the following:

• Consider all your options. Payday loans can be extremely expensive if you are unable to pay the loan off quickly. The Federal Trade Commission recommends looking into a short term loan from your bank, contacting your current creditors to explore payment options, working with a credit counseling center or at the very least, shopping around for the best interest rate and terms. Because of concerns with some online lenders, try to find a brick and mortar location before settling on a lender.

• Know the facts. Be aware that loans from Sovereign nations may not be subject to state law or loan caps. Make sure you understand all the terms of conditions of any payday loan.

• Look for the red flags. Unscrupulous online lenders are often not forthcoming about their location or contact information. Also be leery of any lender that doesn’t ask you for any background information outside of your bank account number.

• Research the lender with BBB. Always research payday lenders – whether they’re brick and mortar locations or online – at bbb.org before you hand over any personal or bank account information. BBB Business Reviews are free and will tell you how many complaints BBB has received, how the company responded to those complaints as well as their overall letter-grade rating.

The mission of Better Business Bureau is to be the leader in building marketplace trust by promoting, through self-regulation, the highest standards of business ethics and conduct, and to instill confidence in responsible businesses through programs of education and action that inform, assist and protect the general public. We are open 8 a.m. to 5 p.m. Monday through Friday. Contact BBB at bbb.org or 651-699-1111, toll-free at 1-800-646-6222.

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Loan Scam Warning

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The Better Business Bureau (BBB) serving Nebraska, South Dakota, The Kansas Plains and Southwest Iowa is warning consumers of a scam where phony lenders are making false promises to borrowers seeking loans in exchange for upfront fees.

BBB has received complaints from consumers who were victims of a Jamaican scam in which the lenders demanded cash up front and never provided the loans. The names being used in this scam are USA Cash Advance and Payday Loans of America.

Complainants state that according to the information they received, this business was located at 604 E North St in Rapid City, SD. Another address associated with this company is 2138 S Minnesota Ave in Sioux Falls, SD. One person paid $295, and another reported that she had sent $16,000 to this company. They were both asked to use Green Dot MoneyPak cards to transfer the “required” fees. None have received their loans or were they able to cancel them. The company just keeps asking for more money to process their refunds.

According to BBB President Jim Hegarty, “Unfortunately, many times the borrowers who fall into these traps don’t have many options because of their poor credit history or lack of collateral. Any time someone asks you pay in advance for a loan, it’s a scam because charging an advanced fee for a loan is illegal.”

A BBB investigation found that neither of addresses in South Dakota for the company were valid, and when the phone number, provided by the consumers, was called, a man with a heavy accent answered. He offered the investigator a loan and immediately sent an email stating, ”For $5,000 your monthly installment will be $242 for 24 month and we are located in 2138 s Minnesota AVE Sioux FALLS Sd 57103.” The investigator then received a phone call from a Jamaican phone number. The caller stated that he had her $5,000 loan even though she had not applied for a loan nor had she provided anything other than a phony name, email address and phone number.

Here’s how the alleged scam works: Consumers apply and get “approved” for loans online. They are then asked to “secure” the loan by paying fees under the guise of a variety of names such as interest fees, collateral or insurance costs on the loan or a broker’s fee. Consumers are then told to transfer the cash via Western Union or to purchase re-loadable prepaid card like Green Dot MoneyPak. “In many cases, the lender comes back multiple times asking for fees,” said Hegarty. “The ‘lenders’ never give out the loan. They disappear, shutting down their website and disconnecting their phones.”

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BBB says look ahead before leaping into a reverse mortgage

With the cost of living on the rise, some senior citizens are finding themselves on shaky financial ground.

This trend has led to companies offering reverse mortgages — where lenders loan people money based on the equity built up in their homes — as a way for seniors to “cash in” on their homes to pay other bills. However, the Better Business Bureau of Minnesota and North Dakota (BBB) warns these types of mortgages are not for everyone and should be researched carefully to ensure your short-term and long-term needs will be met.

“Reverse mortgages are sometimes touted as a cure-all,” said Dana Badgerow, president and CEO of the BBB of Minnesota and North Dakota, in a news release. “However, as with all investments, people need to make sure they understand how these mortgages work, as well as ensure they’re clear on the benefits and possible risks.”

Reverse mortgages allow you to convert part of the equity in your home into cash without having to sell your home. The cash may be paid to you in installments or a lump sum, so typically you don’t need to pay anything back so long as you live in your house.

Consumers should understand, however, that because they’re deferring repayment of the reverse mortgage — until they move out of their home or die — the amount they owe will grow substantially over time. Interest charges are added to the loan each day it’s held, so it’s possible the reverse mortgage may grow to equal the value of the home, leaving them, and their heirs, with nothing. People who take out reverse mortgages are also still responsible for property taxes, insurance and maintenance costs.

To qualify for a federally insured reverse mortgage, you must live in your home and be at least 62 years old. Factors such as: your age, the type of product, the value of your house and how much you owe on your house all contribute to the amount of money you may borrow.

The BBB advises the following when considering a reverse mortgage loan:

• Research the company you’re considering working with at bbb.org.

• Weigh your options carefully. Reverse mortgages are not for everyone. The Minnesota Attorney General’s Office reminds people that due to the high cost of these mortgages there may be better options if you only need to borrow a small amount of money for a short period of time.

• Be cautious of salespeople who try to sell you predatory loans or seek to tie up reverse mortgage proceeds in long-term deferred annuities or questionable investments.

• Don’t be intimidated by fear-based sales tactics or allow yourself to be pressured into a deal you don’t fully understand.

• Do not deal with individuals or firms that charge a loan “finder’s fee.”

• Move slowly and review all documentation closely. If the offer sounds too good to be true, it probably is.

For more information, visit www.ag.state.mn.us/Brochures/pubReverseMortgages.pdf.

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FTC Charges That Payday Lender Illegally Sued Debt-Burdened …

The Federal Trade Commission expanded its case against an allegedly deceptive payday lender, charging that it sought to unfairly and deceptively manipulate the legal system and force debt-burdened consumers throughout the country to travel to South Dakota and appear before a tribal court that did not have jurisdiction over their cases.

In an amended complaint, the FTC charged that South Dakota-based payday lender Payday Financial, LLC’s suits against customers are unfair, and that its contract language about the court where such suits would be brought is deceptive. The amended complaint also seeks civil penalties for alleged violations of the Commission’s Credit Practices Rule. The company, its owner, Martin A. Webb, and several others named as defendants pitch short-term, high-fee, unsecured payday loans to consumers on television and the Internet.

When customers fall behind in their payments, Payday Financial, LLC improperly files suits against them in the Cheyenne River Sioux Tribal Court, attempting to obtain a tribal court order to garnish their wages, the amended complaint alleges. The tribal court does not have jurisdiction over claims against people who do not belong to the Cheyenne River Sioux Tribe and who do not reside on the reservation or elsewhere in South Dakota.

In its original complaint filed in September 2011, the agency alleged that the defendants illegally tried to garnish employees’ wages without court orders. Under federal law, the government can directly require employers to garnish wages for debts it is owed without a court order, but private creditors must obtain a court order before garnishing a debtor’s wages. The FTC also alleged that the defendants violated the FTC Act by:

Falsely telling employers that they had the legal authority to garnish an employee’s wages without first obtaining a court order. Falsely telling employers that they had given employees an opportunity to dispute a debt. Unfairly disclosing the existence and the amounts of consumers’ supposed debts to their employers and co-workers, without the consumers’ knowledge or consent.

The defendants also allegedly violated the FTC’s Credit Practices Rule by requiring consumers taking out payday loans to consent to have wages taken directly out of their paychecks in the event of a default, and the Electronic Funds Transfer Act and Regulation E by requiring authorization for recurring electronic payments from their bank account as a condition of obtaining payday loans.

The amended complaint adds a civil penalties demand for the alleged Credit Practices Rule violation. Before filing the amended complaint to seek civil penalties, the FTC notified the Department of Justice, as required by statute, giving the department the opportunity to litigate the case. The Department of Justice stated that it would not initiate the proceeding, allowing the FTC to continue the litigation on its own behalf.

For more information regarding payday loans see: Payday Loans Equal Very Costly Cash: Consumers Urged to Consider the Alternatives.

The Commission votes approving the amendments to the complaint to seek civil damages and to add two new counts related to the improper suits in tribal court were 4-0, with Commissioner Edith Ramirez voting to approve the amendments to add civil penalties and an unfairness count, but dissenting on the addition of a deception count regarding contract language about the court where consumers could be sued. The amended complaint was filed in the U.S. District Court for the District of South Dakota Central Division on March 1, 2012. The amended complaint names as defendants Payday Financial, LLC, Great Sky Finance, LLC, Western Sky Financial, LLC, Red Stone Financial, LLC, Financial Solutions, LLC, Management Systems, LLC, 24-7 Cash Direct, LLC, Red River Ventures, LLC, High Country Ventures, LLC, and Martin A. Webb.

NOTE: The Commission files an amended complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the defendant has actually violated the law.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s website provides free information on a variety of consumer topics. Like the FTC on Facebook and follow us on Twitter.

(FTC File No. X110050)
(Payday Financial NR)

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FTC Action Halts Allegedly Illegal Tactics of Payday Lending …

After the Federal Trade Commission filed an action in U.S. district court, a payday lender that allegedly attempted to illegally garnish consumers’ wages has agreed to stop the challenged conduct pending trial.

As part of its continuing crackdown on scams that target consumers in financial distress, the FTC complaint alleges that Payday Financial, LLC, doing business as Lakota Cash and Big Sky Cash, along with other defendants, illegally attempted to garnish consumers’ wages without obtaining a court order, to collect payments on payday loans. As a result, the defendants illegally revealed consumers’ supposed debts to their employers and deprived consumers of their right to dispute the debts or make payment arrangements, the FTC alleges.

According to the FTC, defendant Martin A. Webb operates Payday Financial, LLC, and several related businesses in Timber Lake, South Dakota. The defendants offer short-term, high-fee, unsecured payday loans of $300 to $2,525 to consumers throughout the country, advertising on television and through websites such as www.bigskycash.com and www.westernsky.com.

The FTC complaint alleges that when a consumer does not pay back a payday loan on time, the defendants send documents to his or her employer that mimic those used by federal agencies collecting debts owed to the government in an attempt to garnish the consumer’s wages. Under federal law, the government can directly require employers to garnish wages for debts it is owed without a court order. But private creditors must obtain a court order before garnishing a debtor’s wages. The complaint charges the defendants with violating the FTC Act by:

misrepresenting to employers that the defendants are legally authorized to garnish an employee’s wages, without first obtaining a court order; falsely representing to employers that the defendants have notified consumers about the pending garnishment and have given them an opportunity to dispute the debt; and unfairly disclosing the existence and the amounts of consumers’ supposed debts to employers and co-workers without the consumers’ knowledge or consent.

The complaint further alleges that the defendants have violated the FTC’s Credit Practices Rule by requiring consumers taking out payday loans to consent to have wages taken directly out of their paychecks in the event of a default, and have violated the Electronic Funds Transfer Act and Regulation E by requiring authorization for electronic payments from their bank account as a condition of obtaining payday loans.

The Commission vote authorizing the staff to file the complaint was 5-0. The FTC filed the complaint and a request for preliminary relief in the U.S. District Court for the District of South Dakota, Central Division on September 6, 2011. The complaint names as defendants Payday Financial, LLC, Great Sky Finance, LLC, Western Sky Financial, LLC, Red Stone Financial, LLC, Financial Solutions, LLC, Management Systems, LLC, 24-7 Cash Direct, LLC, Red River Ventures, LLC, High Country Ventures, LLC, and Martin Webb. On September 7, 2011, the parties agreed to a stipulated preliminary injunction to immediately halt the alleged unlawful conduct, and the court accepted and entered the stipulated preliminary injunction. The FTC would like to acknowledge the assistance of the South Dakota U.S. Attorney’s Office.

NOTE: The Commission files a complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the defendant has actually violated the law.
The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and
unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call
1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel,
a secure, online database available to more than 2,000 civil and criminal law enforcement
agencies in the U.S. and abroad. The FTC’s website provides free information on a variety
of consumer topics. Like the FTC on Facebook and follow us on Twitter.

(FTC File No. 1123023)
(Payday Financial NR)

[…]

Pay Day Loan Stories

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