Internet payday loans are illegal in Virginia. They are a felony. (In order to make payday loans in Virginia, they have to have a licensed office in Virginia. The internet payday loans do not have offices Virginia–they are on the internet.)
Since the people behind the internet payday loans could be sent to jail in Virginia, the internet payday loan companies are careful to stay beyond the limits of Virginia law. Some claim to be operated by Indian tribes, which cannot be regulated by state governments. Others are in foreign countries.
Their internet payday loan websites seem friendly enough, but to understand who you are dealing with, think of the Godfather, or Tony Soprano. When you sign up for an internet payday loan you need to understand you are dealing with organized crime.
Digital organized crime. Because they are “digital” they will not really come around to your house and shoot your dog, the way Tony Soprano might. They will, however, make illegal threats.
Most of those threats will be on the phone, but sometimes they come by email. Here’s an extreme example. It’s a threat that the consumer will be arrested for bad checks and bank fraud for not paying back the internet payday loan. That threat is total bogus. The people who are guilty of bank fraud are the internet payday loan companies themselves.
Even after bankruptcy, my clients sometimes still get these illegal threats–and they ask if I can get the bankruptcy judge to stop them.
Sorry, the answer is no. Think about it this way. The didn’t care they could get one to five years in jail just for making the internet payday loan…do you think the internet payday loan people care the bankruptcy judge will fine them?
So, what can you do? Here’s my best advice. Just say, “My bankruptcy lawyer told me you’d try that BS on me.” And hang up. You may have to do it five or six times. But when they know you have wised up, they will move on to someone else.
Is there any good news? Sometimes, we get lucky. Sometimes the illegal internet payday loan ends up in the hands of a legal debt collector. Here’s one example. Kathy, not her real name, got an internet payday loan through Pay Day Loan Yes. Pay Day Loan Yes, on their website, does NOT have any information about where they are located. (Godaddy says the company that owns the website had an address in Gulf Breeze, FL. That’s the address of the UPS store which is obviously just a mail drop.)
(Pay Day Loan Yes claims that they do not make the payday loans themselves–they just arrange them. That dodge is also illegal in Virginia.)
While Pay Day Loan Yes is operating illegally in Virginia, their debt collector, NCA appears to be a legitimate outfit. A legitimate debt collector, collecting an illegal internet payday loan can get sued under the Fair Debt Collection Practices Act. We plan to do that for Kathy. (PS I was wrong–this debt collector is a scam outfit too. They are trying legitimate means to collect illegal debts, but when I tried to track them down, they evaporated, too.)
What’s the big lesson in all this? Don’t give you social security number, bank account info, and phone numbers to Tony Soprano.
PS Here’s a link to the Federal cyber crimes reporting website. Complaining there might encourage prosecution of the worst of these internet payday loan scam collectors, if they can find them.
You can read more in this blog from my friend John Merna, a bankruptcy lawyer in Tidewater.
PPS. A guy in Illinois is suing Payday Financial LLC, under Illinois law. Payday Financial claimed that they could only be sued on the Cheyenne River Sioux reservation–and a US District Court agreed! That was reversed on appeal by the Seventh Circuit. They said the tribal court of the Cheyenne River Sioux is not qualified to decide what does or doesn’t violate Illinois payday loan law. (You can read that here.) Hope he wins and can collect. That pretty much ends the owned by an Indian tribe dodge.