DOCSLIB.ORG

Consumer News San Diego City Attorney's Office

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
Consumer News San Diego City Attorney's Office CONSUMER NEWS SAN DIEGO CITY ATTORNEY’S OFFICE BEWARE OF LOAN SHARKS October 2011 As our community grapples with Repayment of loans from loan amount. However, loans for the the recent recession and dip in the sharks may sometimes be enforced purchase, construction or stock market, many individuals and by means such as blackmail and improvement of real property have families struggle month-to-month threats of violence. different limits than this ten percent to meet their financial obligations. cap. Because of these financial Loan sharking is a felony difficulties, many people have seen punishable by up to five years in There are other exceptions to the their credit ratings drop to the point state prison, but can also be ten percent interest per year rule. that they cannot qualify for a charged as a misdemeanor. Certain lenders, such as banks and traditional loan. In the event of an credit unions, may legally charge emergency, these people become More recently, specialized interest rates higher than ten vulnerable to loan sharks, who “advance fee” lenders are offering percent. Also, loans made by or offer misleading and highly “guaranteed” loans for an up-front arranged by licensed real estate exploitive loans to desperate fee to consumers who are brokers for loans secured by liens borrowers. especially desperate. These loans on real property, and cash advance are scams. No legitimate lender businesses may exceed the ten This newsletter provides general would guarantee a loan to anyone percent cap. information about the laws that without first looking at the govern loans and how to avoid borrower’s financial background. These exceptions are not those that becoming the victim of a loan cover traditional loan sharks, who shark. Most importantly, there is no may be “friends of friends” who such thing as a legal loan shark. appear willing to “help” borrowers WHAT IS A LOAN SHARK? with a short-term loan, when in fact these loans often create more A loan shark is a person or business financial problems than they solve that offers short-term, unsecured INTEREST GENERALLY CANNOT for borrowers. loans at unlawfully high interest EXCEED TEN PERCENT PER rates. The interest may accrue as YEAR INFORMATION UP FRONT often as weekly, resulting in exorbitant interest payments that Under California law, the The Federal Truth in Lending Act may even exceed the amount of maximum legal charge on any loan requires certain information be money originally borrowed. of money for personal, family, or given to borrowers prior to the household purposes cannot exceed ten percent per year of the loan [continued on next page] SERVING CONSUMERS AND PROTECTING COMMERCE finalizing of a loan. This familiar with the lender, agreements.” One borrower was information includes the dollar satisfied the lender is charged $553 in “fees” for a fifteen amount of the finance charge and legitimate, and know why day loan of $500 – more than 100 the annual percentage rate. These the information is times the maximum legal limit. disclosures must be provided in necessary. After a jury trial the loan shark was writing to the borrower before Never allow someone to convicted and sent to jail. acceptance of the loan. pressure you into taking out a loan. If you know of anyone who is LOAN SHARKING AGREEMENTS If you are having a engaging in the business of loan ARE VOID difficult time paying your sharking or is a victim of loan bills, contact your lenders sharking within the City of San Loan sharks who charge borrowers to work out an alternative Diego, call the City Attorney’s more than the statutory maximum payment plan. Often times Consumer Hotline at (619) 533- interest rate render the entire your lenders’ late fees or 5600. obligation of the borrower to pay added charges are much interest null and void. less than what you would **************************** end up paying a loan shark For more information on this topic, for quick cash. go to the U.S. Federal Trade Get advice from a neutral Commission’s website at: expert, like an accountant, www.ftc.gov and type “loan shark” Remember, there is no attorney, or financial in the Search box. such thing as a legal loan planner. **************************** shark. Reevaluate your spending Newsletter written by: Always check out any and savings habits to Jennifer Bautista, Legal Intern loan offers carefully, no avoid being in the position matter how trustworthy of needing quick cash. the lender seems to be. If you have already taken San Diego Ask up front for the rate of out a loan from a loan City Attorney’s Office interest on the loan. shark and are being Consumer and Environmental If the lender is charging harassed or threatened in Protection Unit more than the maximum any way, contact your legal rate, or you are not local police department. (619) 533-5600 comfortable with the loan Keep track of any threats, terms – DO NOT TAKE including the language The information provided in this OUT THE LOAN. used, the date and time, newsletter is intended to convey Do not accept a loan that and how the contact was general information and is not charges interest at a rate made. intended to be relied upon as legal other than yearly, such as advice. weekly or monthly interest. Investigate the license or The Consumer & Environmental accreditation of the lender. Protection Unit of the San Diego This can often be done on- City Attorney’s Office is equipped line. to prosecute individuals or Always get information in businesses involved in loan writing, and avoid making sharking activities. repayments in cash unless you get a written receipt. In one such case, the City Ignore any loan offer that Attorney’s Office prosecuted an requires an advance fee or individual who made short-term “guarantees” a loan. loans to borrowers at exorbitant Never provide your credit rates, while holding title to their card, bank account or vehicles as collateral. The loan Social Security number shark attempted to disguise the over the phone, in writing, loans by labeling them as “sales- or via email unless you are rental/ storage-buyback option SERVING CONSUMERS AND PROTECTING COMMERCE .
Load more

Recommended publications
  • The Loan Shark Problem in the Southeastern States
    THE LOAN SHARK PROBLEM IN THE SOUTHEASTERN STATES WILLIAM HAYS SIMPSON* Because of the increase in problems associated with the business of money lending in the United States many of the states passed regulatory acts. The movement ex- tended to the Southeastern area where all states, including Alabama, Florida, Georgia, Louisiana, Mississippi, Maryland, North Carolina, South Carolina, Tennessee, Vir- ginia, and West Virginia, enacted legislation which established legal interest rates. " These rates varied slightly, with all states now limiting the annual rate to 6 per cent except Georgia and Florida where interest rates were set at 7 and 8 per cent re- spectively. While 6 per cent per annum is the maximum contract rate in Maryland, North Carolina, Tennessee, Virginia, and West Virginia, the rate in writing is 7 per cent in South Carolina, 8 in Alabama, Georgia, Louisiana, and Mississippi, and io per cent in Florida. The civil penalties imposed in actions on usurious contracts of course vary in the -different states. Louisiana law contains no provision for civil penalties but in West Virginia, Virginia, Tennessee, and Maryland forfeiture of excess over legal rate may be had through legal action while forfeiture of all interest is provided for in the laws of Alabama, Florida, Georgia, Mississippi, South Carolina, and North Carolina. The laws of the latter state also provide for the forfeiture of double interest paid on loans made on household and kitchen furniture. No criminal penalties are provided for violation of the usury laws in Alabama, Louisiana, Mississippi, Maryland, Tennessee, Virginia, and West Virginia, but in Florida, Georgia, and North Carolina it is, under various circumstances, a mis- demeanor to make usurious charges.
    [Show full text]
  • Tax Evasion, Income Inequality and Opportunity Costs of Compliance
    Tax Evasion, Income Inequality and Opportunity Costs of Compliance Kim M. Bloomquist Senior Economist Internal Revenue Service Office of Research Washington, D.C. Paper presented at the 96th Annual Conference of the National Tax Association Drake Hotel Chicago, IL November, 2003 Abstract – This paper argues that widening income inequality contributes to the propensity to evade by both reducing the probability of detection and increasing compliance opportunity costs. Lower detection probability occurs as rising inequality gradually alters the composition of income from being employment-based (i.e., matchable) to investment-based (i.e., non-matchable). Greater economic polarization also increases the financial strain on many former middle-class taxpayers, thus raising their opportunity cost of compliance. In addition, the compliance opportunity costs for wealthy taxpayers also could increase if they perceive a growing exchange inequity between their tax burdens and public sector benefits. This paper tests the hypothesis that rising income inequality contributes to tax evasion in the United States. Empirical analysis for the period 1947-2000 finds a positive correlation between the underreporting rate for wage and salary income and the top decile wage share. This finding suggests that enforcement policies aimed at reducing income tax evasion may lose some effectiveness in an environment of increasing inequality. Tax Evasion, Income Inequality and Opportunity Costs of Compliance INTRODUCTION If asked to identify a single indicator that best described the overall condition of the U.S. economy in recent decades, a measure of income inequality would likely be among the top candidates. A recent study by Piketty and Saez (2001) finds that between 1970 and 2000 the share of income (not including capital gains) reported by the top decile of U.S.
    [Show full text]
  • Stopping the Payday Loan Trap Alternatives That Work, Ones That Don’T
    Stopping the payday Loan trap AlternAtives thAt Work, ones thAt Don’t NCLC® NATIONAL CONSUMER June 2010 L AW C E N T E R® © Copyright 2010, National Consumer Law Center, Inc. All rights reserved. About the Authors Lauren K. Saunders is the Managing Attorney of NCLC’s Washington, DC office, where she handles legislative, administrative and other advocacy efforts on behalf of low income consumers. She contributes to several NCLC publications, including Fair Credit Reporting, Fair Debt Collection and Consumer Banking and Payments Law. She graduated magna cum laude from Harvard Law School where she was an Executive Editor of the Harvard Law Review, and holds a Masters in Public Policy from Harvard’s Kennedy School of Government and a B.A., Phi Beta Kappa, from Stanford University. Leah A. Plunkett is a staff attorney at NCLC, where she focuses on predatory small dollar loans, auto policy, protection of exempt funds, and the consumer needs of domestic violence survivors. Before coming to NCLC, Leah clerked in the United States District Court for the District of Maryland and established the Youth Law Project at New Hampshire Legal Assistance. Leah is a cum laude graduate of Harvard Law School, where she was on the board of both the Harvard Legal Aid Bureau and HLS for Choice. Carolyn Carter is NCLC’s Deputy Director for Advocacy. She is a contributing author to Cost of Credit, Truth in Lending, Unfair and Deceptive Acts and Practices and several other NCLC treatises. Prior to joining NCLC, she worked for legal services programs in Ohio and Pennsylvania.
    [Show full text]
  • Testimony in Support of Payday Loan Reform: Informational Hearing
    Testimony in Support of Payday Loan Reform: Informational Hearing House Financial Institutions and Pensions Kansas Catholic Conference: Jeanette Pryor, Policy Specialist Monday, February 17, 2020 Chairman Kelly and Members of the Committee, “In Imitation of Our Master, we Christians are asked to confront the poverty of our brothers and sisters, to touch it, to make it our own and to take practical steps to alleviate it.” (Pope Francis) My name is Jeanette Pryor and I am the Policy Specialist for the Kansas Catholic Conference. I represent the four Catholic Bishops of Kansas and their dioceses. On their behalf, I would like to express our gratitude for this opportunity to offer information concerning financial products sold in Kansas that we believe contribute to destabilization of family financial health and the overall destabilization of the family. The family is the building block and foundation of all human society. It has always been at the heart of the Church’s pastoral mission. For this reason, everything that impacts the spiritual, mental and physical wellbeing of families is of deep concern for the Catholic Bishops of Kansas. Family financial stability has the potential, for better or worse, to deeply impact each of those critical three facets of family life and health. We believe current payday loan industry practices unfairly target the financially vulnerable in times of crisis. For many years, the Catholic Bishops of Kansas have fought this often-lonely campaign to inform legislators and urge them to engage in effective legislative action that would, at least, bring some improvements to this industry. The Kansas Legislator Briefing Book states: “The Kansas Legislature began its review of payday lending during the 1991 Session.” In fact, our State Library contains a hand-typed report prepared for the Committee on Small Loan Interest Rates of the Kansas Legislative Council.
    [Show full text]
  • Payday Loans: Shrewd Business Or Predatory Lending? Creola Johnson
    University of Minnesota Law School Scholarship Repository Minnesota Law Review 2002 Payday Loans: Shrewd Business or Predatory Lending? Creola Johnson Follow this and additional works at: https://scholarship.law.umn.edu/mlr Part of the Law Commons Recommended Citation Johnson, Creola, "Payday Loans: Shrewd Business or Predatory Lending?" (2002). Minnesota Law Review. 744. https://scholarship.law.umn.edu/mlr/744 This Article is brought to you for free and open access by the University of Minnesota Law School. It has been accepted for inclusion in Minnesota Law Review collection by an authorized administrator of the Scholarship Repository. For more information, please contact [email protected]. Payday Loans: Shrewd Business or Predatory Lending? Creola Johnsont I. The Nature of Payday Lending .......................................... 8 A. What Are Payday Loans and Who Uses Them? . 9 B. Payday Loans: Ordinary Check-Cashing Services or Lending M oney? ................................ ......................... 12 1. Payday Loans Are Covered by the Truth in Lending Act ........................................................... 13 2. Disguising Payday Loans Through Sham Transactions ........................................................... 18 II. Criticisms of the Payday Loan Industry .......................... 25 A. Unfair and Unlawful Practices Before or At Contract Form ation ................................................... 26 1. The Cost of Payday Lending: Triple-Digit Interest Rates ........................................................
    [Show full text]
  • The Debt Disparity
    The Debt Disparity What Drives Credit Card Debt In America Amy Traub Data analysis by Catherine Ruetschlin & Ellis Scharfenaker Dēmos is a public policy organization working for an America where we all have an equal say in our democracy and an equal chance in our economy. Demos.org 220 Fifth Avenue, 2nd Fl. New York, New York 10001 212.633.1405 CONTENTS 1. Executive Summary 2. Introduction 5. Demographics of the sample 7. Education and presence of children 9. Unemployment 11. Medical expenses and health insurance coverage 14. Assets 17. Differences in spending and saving 19. Consequences of debt 22. Conclusion and Policy Recommendations 26. Data Appendix: Regression Analysis EXECUTIVE SUMMARY hat differentiates households that accumulate and carry balances on their credit cards from those that don’t have debt? Building on a national survey of 1,997 households, this study examines two groups of working age low- and middle-income households that Ware statistically indistinguishable in terms of income, racial and ethnic back- ground, age, marital status and rate of homeownership—yet one group carries credit card debt, while the other has credit cards but no debt. Contrary to popular belief, we find little evidence that households with credit card debt are less responsible in their spending habits than households that do not have accumulated debt. Instead, we see that, among similarly situated low- and middle-income households of working age, factors like education, value of assets to fall back on, insurance coverage and whether a household member has lost a job are among the foremost predictors of whether a household will accu- mulate credit card debt.
    [Show full text]
  • Aarp, National Association of Consumer Advocates and National Consumer Law Center in Support of Respondent
    IN THE SUPREME COURT OF FLORIDA Case No. SC04-1825 Lower Tribunal No. 4D03-3268 McKENZIE CHECK ADVANCE OF FLORIDA, LLC, d/b/a NATIONAL CASH ADVANCE, STEVE A. MCKENZIE and BRENDA G. MCKENZIE Petitioners, v. WENDY BETTS, on behalf of herself and all others, similarly situated, Respondent. BRIEF AMICI CURIAE OF AARP, NATIONAL ASSOCIATION OF CONSUMER ADVOCATES AND NATIONAL CONSUMER LAW CENTER IN SUPPORT OF RESPONDENT FILED BY THE CONSENT OF ALL PARTIES ON APPEAL FROM THE FOURTH DISTRICT COURT OF APPEAL Deborah Zuckerman Lynn Drysdale (FBN 508489) (Pro Hac Vice Motion Pending) (Counsel of Record) AARP Foundation Jacksonville Area Legal Aid, Inc. 601 E Street, N.W. 126 Adams Street Washington, DC 20049 Jacksonville, Florida 32202 (202) 434-2060 (904) 356-6371 Counsel for Amici Curiae ii TABLE OF CONTENTS Page TABLE OF AUTHORITIES ................... ii STATEMENT OF INTEREST ................... 1 SUMMARY OF ARGUMENT .................... 4 ARGUMENT ......................... 6 I. STATE LAWS MUST PROTECT VULNERABLE CONSUMERS EXPLOITED BY FRINGE LENDERS ............. 6 A. The Nature of the Marketplace ......... 6 B. The Evolution of Payday Loans Shows Their Abusive Nature ................. 8 1. Payday Lenders & Their Antecedents Always Have Used Exploitative Practices ...... 8 2. Payday Loans Are Costly and Exacerbate Borrowers’ “Debt Trap” .......... 10 C. Usury Laws Must Be Enforced to Protect Consumers From Fringe Bankers’ Exploitative Practices ... 14 CONCLUSION ........................ 20 CERTIFICATE OF SERVICE ................. 21 CERTIFICATE OF COMPLIANCE ................. 22 APPENDIX Betts v. McKenzie Check Advance, 879 So. 2d 667 (Fla. 4th DCA 2004) ................. A i TABLE OF AUTHORITIES CASES Bankwest, Inc. v. Baker, Att’y Gen., No. 04-12420-C (11th Cir. Br. filed June 23, 2004) and 324 F.
    [Show full text]
  • World Report 2017
    RELIGIOUS FREEDOM WORLD REPORT 2017 Public Affairs and Religious Liberty 12501 Old Columbia Pike Silver Spring, MD 20904 USA RELIGIOUS FREEDOM WORLD REPORT 2017 © 2018 Public Affairs and Religious Liberty 12501 Old Columbia Pike Silver Spring, MD 20904 USA RELIGIOUS FREEDOM WORLD REPORT 2017 4 4 | RELIGIOUS FREEDOM WORLD REPORT 2017 CONTENTS INTRODUCTION 6 COUNTRIES 9 SOURCES 337 THE SEVENTH-DAY ADVENTIST CHURCH & RELIGIOUS FREEDOM 339 THANK YOU 340 CONTACT INFORMATION 341 RELIGIOUS FREEDOM WORLD REPORT 2017 5 RELIGIOUS FREEDOM WORLD REPORT 2017 | 5 INTRODUCTION “Once a self-evident truth, religious freedom is now subject to the deepest deconstructionist suspicion.”1 As a point of contention, this issue goes beyond academic debates, as is evident in a recent report of the United States Civil Rights Commission in which “religious exemptions” are positioned over against civil rights. It states: “Religious exemptions to the protections of civil rights based upon classifications such as race, color, national origin, sex, disability status, sexual orientation, and gender identity, when they are permissible, significantly infringe upon these civil rights.” The chairman of the Commission, in a separate statement, further argued that: “The phrases ‘religious liberty’ and ‘religious freedom’ will stand for nothing except hypocrisy so long as they remain code words for discrimination, intolerance, racism, sexism, homophobia, Islamophobia, Christian supremacy or any form of intolerance.” The framing of religious liberty or assimilation of its content with the above evils is deeply reductionist and troubling. Should “religious liberty” be caught in a crossfire of proxy wars on morality between radical secularists and religiously driven persons? Religious liberty deserves a broader and more legitimate platform.
    [Show full text]
  • Loan Sharks, Interest-Rate Caps, and Deregulation Robert Mayer
    Washington and Lee Law Review Volume 69 | Issue 2 Article 10 Spring 3-1-2012 Loan Sharks, Interest-Rate Caps, and Deregulation Robert Mayer Follow this and additional works at: https://scholarlycommons.law.wlu.edu/wlulr Part of the Banking and Finance Law Commons Recommended Citation Robert Mayer, Loan Sharks, Interest-Rate Caps, and Deregulation, 69 Wash. & Lee L. Rev. 807 (2012), https://scholarlycommons.law.wlu.edu/wlulr/vol69/iss2/10 This Article is brought to you for free and open access by the Washington and Lee Law Review at Washington & Lee University School of Law Scholarly Commons. It has been accepted for inclusion in Washington and Lee Law Review by an authorized editor of Washington & Lee University School of Law Scholarly Commons. For more information, please contact [email protected]. Loan Sharks, Interest-Rate Caps, and Deregulation Robert Mayer* Abstract The specter of the loan shark is often conjured by advocates of price deregulation in the market for payday loans. If binding price caps are imposed, the argument goes, loan sharks will be spawned. This is the loan-shark thesis. This Article tests that thesis against the historical record of payday lending in the United States since the origins of the quick-cash business around the Civil War. Two different types of creditors have been derided as “loan sharks” since the epithet was first coined. One used threats of violence to collect its debts but the other did not. The former has been less common than the latter. In the United States, the violent loan sharks proliferated in the small-loan market after state usury caps were raised considerably and these loan sharks dwindled away as a source of credit for working people before interest-rate deregulation began to be adopted at the end of the 1970s.
    [Show full text]
  • Credit Score Required for Debt Consolidation Loan
    Credit Score Required For Debt Consolidation Loan Shrinkable Eddie unionised his cahier embrocated unsuccessfully. Goose grope antithetically while restless Wells tubbings scathingly or transmigrated above. When Wyndham chastised his prelection redounds not gummy enough, is Torr breasted? APR Credit Cards Guide. Repaying your debt may often feel challenging. When you shop around for my best personal loan to rate, everything, but council also removes the older loans and marks them or paid your full. If customs find any accounts incorrectly reported as late or growing, like mortgage Express, Axos offers small business art commercial banking and lending tools. You have heard that we submit the debt with direct it easier, credit for people usually hire debt consolidation and payments into a high interest. Unsecured credit score with late. Find an online calculator and let nature do the math for you. This alternative is a repeal of the internet. Offers rate case with excellent payment to creditors on debt consolidation loans. To a big extent, minus their fees. Not all lenders are created equal, and make certain you understand outline of the creep of delinquent loan. Sign up for step free webinar about choosing the best middle relief valve for you. All items on that page were selected. Start slowly getting debt yourself from a credit counselor. Learn everything to get approved here. When considering credit card consolidation, car loans and other accounts. The prepayment penalty could be a percentage of the substantive loan amount like a percentage of the remaining balance. Apply size mapping when hurt are breakpoints. Should be sure you must qualify for upgrade personal consolidation for credit debt loan terms of financial or does it.
    [Show full text]
  • Just When You Thought It Was Safe... Advance-Fee Loan "Sharks"
    FTC Consumer Alert Federal Trade Commission Bureau of Consumer Protection Division of Consumer & Business Education Just When You Thought It Was Safe... Advance-Fee Loan “Sharks” A different breed of “loan shark” is preying on unwary consumers by taking their money for the promise of a loan, credit card or other extension of credit. Advertisements and promotions for advance-fee loans “guarantee” or suggest that there’s a high likelihood of success that the loan will be awarded, regardless of the applicant’s credit history. But, to take advantage of the offer, the consumer first has to pay a fee. And that’s the catch: The consumer pays the fee, the scam artist takes off with the money, and the loan never materializes. Legitimate guaranteed offers of credit do not require payments up front. Legitimate lenders may require consumers to pay application, appraisal or credit report fees, but these fees seldom are required before the lender is identified and the application completed. In addition, the fees generally are paid to the lender, not to the broker or arranger of the “guaranteed” loan. Legitimate lenders may guarantee firm offers of credit to credit-worthy consumers, but they rarely do this before evaluating a consumer’s creditworthiness. Advertisements for advance-fee loans generally appear in the classified section of daily and weekly newspapers and magazines. Often, the ads feature “900” numbers, which result in charges on your phone bill. Advance-fee loans also are promoted through direct mail and radio and cable TV spots. The appearance of ads in media outlets that you recognize — like your local newspaper or radio station — is no guarantee of the legitimacy of the company behind the ad.
    [Show full text]
  • Loan Sharks and Loan Shark Legislation in Illinois Earle Edward Eubank
    Journal of Criminal Law and Criminology Volume 8 | Issue 1 Article 8 1917 Loan Sharks and Loan Shark Legislation in Illinois Earle Edward Eubank Follow this and additional works at: https://scholarlycommons.law.northwestern.edu/jclc Part of the Criminal Law Commons, Criminology Commons, and the Criminology and Criminal Justice Commons Recommended Citation Earle Edward Eubank, Loan Sharks and Loan Shark Legislation in Illinois, 8 J. Am. Inst. Crim. L. & Criminology 69 (May 1917 to March 1918) This Article is brought to you for free and open access by Northwestern University School of Law Scholarly Commons. It has been accepted for inclusion in Journal of Criminal Law and Criminology by an authorized editor of Northwestern University School of Law Scholarly Commons. LOAN SHARKS AND LOAN SHARK LEGISLA- TION IN ILLINOIS EARLE EDWARD EUBANIC The question of usury is by no means a new one. It is almost as old as the human race; certainly as old as any financial system. In earlier periods of history, interest, payment for the use of money, and usury, payment in excess of the rate allowed by law, were used as synonymous terms, and any attempt to extract a fee for the use of a loan was looked upon as immoral. Solon, archon of ancient Athens, forbade it by law, a position which Socrates and Plato later endorsed oi ethical grounds. In medimval England, as late as the thirteenth century, Parliament made all payments for the use of money illegal. The impracticability of doing away with interest entirely by means of legislation has been commonly apparent, however, wherever at- tempted, and legislative bodies have for the most part given considera- tion to the question of the establishment and enforcement of fair and practical rates for loans rather than to measures for their com- plete suppression.
    [Show full text]