How many bad apples does it take to spoil the bunch? Let’s ask the responsible cash advance lenders how many predatory lenders it takes to ruin their reputation. All it takes is one and the bag of short-term lenders, there are plenty.
There are already more than a dozen states which plan payday loan lenders. Online operations are more difficult to manage. Predatory lenders utilize the vastness of the web to connect to the residents of these states despite the rules which govern their loans. There are some lenders which have relocated their businesses to outside countries or attach them to Native American tribes in order to escape the restrictions. No loan regulations will result in many customers finding themselves victims of poor practices.
Cash advance lenders withdraw payments directly from bank accounts.
A typical cash advance lender will set up automatic EFT withdrawals. The good apples, those lenders who do follow the proper guidelines for short-term loans, will only withdraw scheduled amounts. The process is usually smooth and a customer will not have to worry about unapproved money leaving their bank account. If there is no money in the account on these scheduled days a customer will find themselves with earned insufficient fee charges by both bank and lender. It is one thing to deserve these charges, but for a predatory lender to withdraw unapproved funds and create the fees, that is a different matter.
Do banks enable predatory cash advance lenders?
Banks do allow lenders to deposit and withdraw funds from authorized accounts. When you take out a loan with a lender, you authorize these transactions to process money in and out of your account. Customers who call and complain to the bank will not always get far in solving their problem. It seems that some banks turn a blind eye to many of these lenders’ practices. Borrowers are giving lenders authorization into accounts with the promise of fast money, sometimes promised within minutes of applying. Banks will not revoke authorization immediately or at all. Curbing unauthorized account deductions is an ongoing process.
What happens when a customer pleads with the banks to stop allowing these lenders from draining their accounts further? Some of the larger banks are working on establishing rules to revoke authorizations when customers complain of unlawful practices. Unfortunately, some banks have not established such guidelines. Could it be that predatory lenders are protected by the banks? Overdrafts are profitable to banks. Each time a lender withdraws unavailable funds, the bank gets to collect on their own fees.
What does a cash advance customer do when they find out their lender is one of the bad apples? Contact the lender and try to solve the problem quickly. One of the easiest ways to close the door on a predatory lender is to pay off the cash advance loan in full as quick as possible. Better yet, don’t obtain a loan from a lender that promises you what other lenders rejected you for. Contact your bank manager. Explain the situation and make your request to cancel the lender’s right to withdraw money from your account. If you are not in the wrong and your account is being attacked fraudulently, don’t sit back and hope it all works out in the end. If your loan was through a lender not following state regulation practices, you will unfortunately not have the government to help. In all worst case scenarios, closing your bank account may be the only immediate option you have to prevent further charges against your account.
