New York Goes After Online Payday Lenders
There are some states, such as New York that do not allow storefront payday lenders to set up shop. The lawmakers in these states do not realize how much these lenders help people so they ban them from their state. This leave the people who need the help in those states to turn to online payday lenders for the help that they need. Now New York has a problem with the online lenders.
Benjamin Lawsky is the superintendent of the New York Department of Financial Services. He says that online payday lenders that are located in other states are using the internet to advertise these payday loans and then provide them to the residents of New York. He says that by doing this they are avoiding state laws, because when you take the fee that is associated with the payday loan and when you annualize it, it goes far beyond the legal limit. What I want to know is, who is getting a payday loan for a year at a time and who is letting them? Why would you annualize the fee for a payday loan, these are short term loans that are meant to last on average two weeks.
Lawsky has issued 35 cease-and-desist orders to these online payday lenders as he feels they are dodging the state laws, by providing the help to the residents of New York that they do need. This is not where he stopped though. Lawsky also sent out over 100 letters to various banks warning them that they could be helping the payday lenders if they allow the lender to withdraw the payment directly from the bank account.
It is clear that Lawsky is on a “witch hunt” when it comes to payday loans. When you take things and turn them around to make them something they are not in order to further your agenda all you are doing is hurting the people, not helping them. If the people did not want or need these small short term loans, then they would not actively seek them out, but they do, so that should tell lawmakers something about the needs of the people. What will happen next in this case is anyone’s guess, only time will tell.