SACRAMENTO, Calif. The California Department of Business Oversight yesterday urged credit unions and banks to be careful of conducting transactions with illegal, unlicensed online payday loan companies, especially their efforts to access member accounts for payments.
The state regulator said it will examine credit unions and banks to ensure safeguards are in place to prevent unlicensed payday lenders from gaining access to the automated clearing house (ACH) network. “By accepting debit and credit transactions from unlicensed payday lenders through the ACH network, financial institutions are, knowingly or unknowingly, enabling illegal payday loan transactions to occur in California,” the department said in a new directive.
“With the recent consolidation of the state’s payday lending regulator with the banking and credit union regulator into the Department of Business Oversight, we now are better equipped to protect both borrowers and financial services businesses,” wrote Commissioner Jan Lynn Owen, “We are reaching out to our licensees and stakeholders to try and combat this growing threat to consumers.”
The new effort comes amid growing concern that some payday lenders are accessing accounts at federally insured CUs and banks even as they are skirting state laws capping interest rates. Additionally, many are based overseas, meaning there is much less legal recourse for unsatisfied customers, the commissioner wrote.
The department listed numerous payday lenders that have been the subject of multiple consumer complaints, including: the Otoe-Missouria Tribe of Indians of Oklahoma doing business as American Web Loan; Chukchansi Indian Tribe of California doing business as BLUE KING Inc.; American Web Loan; NetPDL; NetPDL.com; the Tunica-Biloxi Tribe of Louisiana doing business as Mobiloans; and EZ CASH, ezpaydaycash.net.
