BBB Advises Consumers of New Payday Lender Laws
Legislature to require lenders to display fee information, obtain a license
Texas - July 26, 2011
all eyes were on the budget this Legislative session, Texas passed two bills
that may help protect consumers from scams involving payday loan scams.
2592 requires lenders to provide certain disclosures to customers, such as fees
and interest rates. Some of these fees can add up to an annual interest rate of
more than 300 percent. Customers have found themselves owing much more than the
initial cost of the loan.
2594 creates a licensing requirement for car and payday loan providers. The new
requirement will allow customers to check a lender out with the state before
will be effective Jan. 1, 2012.
To help consumers
avoid high fees and scams, BBB
offers the following tips:
Beware of online lenders offering quick cash. Such lenders claim
they are not bound by state and federal regulations and therefore, skirt many
of the laws that protect consumers.
Pay off the loan quickly. A $15 fee isn’t too high if you pay it only
once. Extending the loan period means paying multiple fees, making it more
difficult to pay down on the original loan amount.
Do not pay a fee up front. Lenders asking for a fee before they
provide the loan are not legitimate.
Be wary of lenders asking for a wire transfer. The Texas Attorney
General’s Office said scammers will ask for this type of payment rather than
allowing you to mail a check to avoid an additional charge of mail fraud.
Check the lender’s name closely. Scammers will also use a company name
similar to that of a reputable lender. The AG’s office filed suit against a
company calling itself City Mortgage, which had no affiliation with Citibank or
If it seems too good to be true, it is. Companies claiming to offer a low
interest rate regardless of credit are not trustworthy, according to the AG’s
office. The National
Foundation for Credit Counseling or the Consumer
Credit Counseling Service in your area can help you consolidate debt or get
a loan despite poor credit history.
Check the company’s rating. Visit BBB.org to check out a company’s
rating and customer complaints before dealing with a lender. Remember, the
threat of identity theft is high since all lenders require personal
information. Unscrupulous companies will use that to their advantage.
the reliability of a company and find
trustworthy businesses, visit bbb.org.
About Better Business Bureau:
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be the leader in advancing marketplace trust. BBB accomplishes this mission by
creating a community of trustworthy businesses, setting standards for
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Contact BBB serving
Central, Coastal, Southwest Texas and the Permian Basin at (512) 445-4748.