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					                    CONSUMER PROTECTION WEEK

Beware of
unlicensed payday
loan companies

T   he situation is all too common: your sick child
    needs to go to the doctor or your broken-down
vehicle needs to be fixed. Yet, payday is too far
                                                       A lender can also charge one $20 fee for a bounced
                                                       check and may charge you for fees their financial
away and you are desperate for money.                  institutions charged them for your bounced checks.
                                                       They may also collect for any amount a court
That’s when you seek out a payday lender to give       awards for collection of an unpaid loan.
you a loan. Also known as cash advance loans,
post-dated-check loans, check advance loans, or        The law allows a lender to renew an existing payday
deferred presentment loans, they can come with         loan up to two times after the first loan is made.
consequences. Payday loans are small, short-term
loans that must usually be paid back in a minimum      There are currently 67 licensed payday lenders in
of 31 days or not longer than 60 days.                 Oregon. Before July 1, 2007, there were close to 400.

Many times, people go to unlicensed companies,         “After the law changes, most of the major lenders
which can charge exorbitant interest and fees.         left the state,” said Mike McCord, Financial Services
                                                       program manager in the Oregon Division of Finance
However, payday lenders, including Internet-based      and Corporate Securities, which licenses payday
entities, must be licensed to do business in Oregon    lenders. “Although there are several locations in
and there are rules to how much companies can          Oregon, consumers continue to use the Internet for
charge.                                                their loans. I personally think people like the Internet
                                                       because it is an anonymous transaction.”
Since July 1, 2007, Oregon law allows lenders to
charge an interest rate up to 36 percent per year.     However, that creates even bigger problems,
They may also charge a one-time loan origination       because most of the complaints the division
fee for a new loan of up to 10 percent of the amount   receives are about unlicensed, and, for the most
borrowed, up to a maximum of $30.                      part, out-of-country lenders, McCord said.
“Their rates exceed the maximum allowed by              McCord recommends researching any payday loan
Oregon and the terms are usually shorter that the       company from which you may seek a loan.
required 31 days. This type of lender being off shore
makes it almost impossible to enforce an order.         “There are many licensed payday lenders in
These companies run under several names and             Oregon,” he said. “You can contact the division to
fictitious locations,” he said.                         see if the company is licensed.”

Another major issue is tribal lending.                  To file a complaint, contact the Oregon Division of
                                                        Finance and Corporate Securities at 866-814-9710
“Companies are paying the tribes for allowing them      (toll-free) or
to use the tribe’s name and address,” McCord said.
“This allows them to avoid federal and state regula-
tions as the tribe is a sovereign nation.”

                                                            Division of Finance and Corporate Securities

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