Compliance Blog

Have you ever driven by a billboard that advertises a loan product, only to see that the advertisement is missing required information?  The ad might lack a required trigger term, or it may state rates without an APR.  I know that credit unions bend over backward to comply with Regulation Z, so I find myself a bit frustrated when I see such ads.

Well, three cheers for the FTC. Click here to see where the FTC has charged three internet payday lenders with alleged violations of Regulation Z.  According to a press release...

American Cash Market, Inc. and Anderson Payday Loans, both based in California, and CashPro d/b/a MakePaydayToday.com, based in Nevada, stated loan costs on their Web sites – a $20 fee for a $100 loan, for example – but failed to disclose the annual percentage rate (APR). For a typical 14-day pay period, consumers who obtain payday loans from American Cash Market would pay an APR of 460 percent; loans from CashPro would have a 520 percent APR, and loans from Anderson Payday Loans would have an APR ranging from 521 percent to 782 percent. APR disclosure helps consumers comparison shop so they can make informed decisions in securing credit. The FTC stresses the importance of APR disclosures in its consumer education publication, “Payday Loans = Costly Cash,” available at http://www.ftc.gov/bcp/conline/pubs/alerts/pdayalrt.shtm.

There are two lessons to be learned here.

1. Yes, payday lenders and those loan companies that advertise late at night are subject to Regulation Z.
2. Just because someone else does something, that does not make it legal. 

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Hey NAFCU members!  You may access the March 2008 Regulatory Compliance Newsletter here.