Archive for October 2013

State penalizes, bans ‘payday’ loan collectors

Five Erie County companies that have been collecting debt on short-term #x201c;payday#x201d; loans will pay more than $300,000 in restitution and penalties and will cease making further collections in New York State, under a settlement announced today by the state Attorney General#x2019;s Office.

#x201c;Payday loans trap thousands of New Yorkers in a cycle of debt and prey on vulnerable consumers, all for the financial benefit of debt collectors,#x201d; said Attorney General Eric T. Schneiderman, who is scheduled to speak this morning in Buffalo at the annual convention of the state Public Employees Federation. #x201c;Unfortunately for those companies, payday loans are also illegal, and my office will continue to crack down on an industry that exploits desperate consumers across our state.#x201d;

The settlements #x2013; resulting in roughly $279,606 in restitution and $29,606 in penalties #x2013; were handled by Assistant Attorney General James M. Morrissey. The companies involved, and their locations, are:

#x2022; Vamp;R Recovery, which does business as Alexander amp; Stefano, 3411 Delaware Ave., Town of Tonawanda.

#x2022; RJA Capital, 461 Ellicott St., Buffalo.

#x2022; Westwood Asset Management, 2316 Delaware Ave., Buffalo.

#x2022; Erie Mitigation Group, 3711 California Road, Orchard Park.

#x2022; Northern Resolution Group, 501 John James Audubon Parkway, Amherst.

One company, which wasn#x2019;t specified, was required to reverse 8,550 negative credit reports it had made to credit-reporting bureaus and is prohibited from collecting on payday loans taken out by New Yorkers, Schneiderman said. All of the companies will be prohibited from collecting on such loans from New Yorkers in the future.

In August, Schneiderman filed a lawsuit against online lenders Western Sky and WS Funding, based in South Dakota, and CashCall, based in California, for taking advantage of consumers by charging interest rates that were well above New York#x2019;s usury caps.

Payday loans #x2013; which ostensibly are to be repaid on the borrower#x2019;s next payday #x2013; typically have annual interest rates from 100 percent to 650 percent or more, Schneiderman said. Under state law, the maximum rate allowed is 16 percent for most non-bank lenders not licensed by the state; the online lenders being sued aren#x2019;t licensed in New York.

Payday loan borrowers are charged a fee for each $100, Schneiderman explained. For a $500, two-week loan at $25 per $100, a borrower would pay a $125 fee #x2013; an interest rate of 652 percent, he said.

The borrowers also must give lenders electronic access to their accounts for depositing the loan funds and withdrawing payments. But often, the lender will withdraw only the fee and will roll over the principal to the next payday. Some lenders permit interest-only payments for several pay periods, Schneiderman said.

In the example of the $500, two-week loan, if the loan is rolled over three times, the borrower would pay $500 in interest for an eight-week, $500 loan, Schneiderman said.

Payday loans also hurt the national economy, the attorney general said, citing a study released in March by the Insight Center for Community Economic Development, a national research, consulting and legal organization dedicated to building economic health in disenfranchised communities.

The center reported that while payday lending generates economic activity, its costs reduce household spending.

In 2011, for each dollar of payday lending interest paid, an estimated 24 cents was lost to the US economy. The losses, in 33 states, cost the American economy $774 million that year, according to the study.

Further, payday lending in 2011 caused an estimated 56,250 Chapter 13 bankruptcies, the center reported. With an average cost of $3,000 per bankruptcy, those losses totaled an additional $169 million. New York was not among the states included in the study.

email: jhabuda@buffnews.com

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Money, happiness linked

Financial planner Donna Skeels Cygan says that psychology and finances are a fabulous combination.

Cygan, who blogs for Sage magazines Ask the Experts panel, started out in life with a degree in psychology from Indiana University, but when she came to Albuquerque, she opted to get a masters in business administration from the University of New Mexico and go into finance. She runs a financial advising firm, Sage Future Financial in Albuquerque.

My clients hire me to get their finances in good order, she says.

What she found, though, is that about a year into getting the numbers in line, many clients wanted to go beyond that and look at ways to fund their dreams and use their money in a way that is aligned with their values.

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Perkins: I’m not a deadbeat father

GREENSBORO — It was a message aimed at votersĀ — particularly the female kind.

“I want to stop people saying that Robbie Perkins is a deadbeat dad. I am not a deadbeat dad,” Mayor Robbie Perkins told reporters Friday morning at a news conference. “I don’t know anyone that’s paid $78,000 over 10 months of the year that could be called a deadbeat dad. It’s just not factual and it’s got to stop.”

Perkins called reporters to his apartment at the Country Club Condominiums on North Elm Street to respond to what he called “whispers” and “serious allegations” about his personal life. He wanted to make it clear that he has not “shirked his responsibility” to his family, even as the real estate developer is going through bankruptcy.

Some question the timing of Perkins’ press conference. It comes on the heels of a disappointing showing in Tuesday’s mayoral primary. He took second place behind Councilwoman Nancy Vaughan in a three-way race.

Voters will chose between the two candidates in the general election Nov. 5.

Vaughan has declined to discuss Perkins’ personal issues throughout the campaign.

“I haven’t really heard a lot about his personal financial problems in a couple of weeks, and now all the sudden, he has made it a campaign issue again,” said Rebecca Klase, a former political science professor at Greensboro College.

In the past year, Perkins has filed for personal bankruptcy and gone through a bitter, public divorce.

In August, he was held in civil contempt of court for not paying a portion of what was due to his ex-wife, Carole. (He paid about $7,000 most months in child support and alimony but did not pay the mortgage on the couple’s Irving Park home, which is in foreclosure.)

Perkins hasn’t been shy about discussing his troubles, placing some blame on what he considers an uncooperative former spouse.

But he chafed at suggestions that he shouldn’t be mayor because of his personal financial problems. And he didn’t like the accusation that his priorities were out of whack because he failed to pay private school tuition for his teenage daughter but was up-to-date on his country club dues.

On Friday, he said his problems were no different than those of many others in Greensboro. Perkins said he wants to set an example of how a person can move on from difficulties.

“There are a lot of people in Greensboro, North Carolina, that have gotten kicked in the gut in the last five years,” he said.

Perkins’ current home — a rental he moved into after his luxury downtown condo at Center Pointe was foreclosed on — is proof that he has cut back, he said. He provided the media with a spreadsheet of expenses. He said he paid $60,000 in alimony and child support this year, plus tuition, insurance and legal costs.

“You can see I’m not out there living high on the hog,” Perkins said.

He said his company, NAI Piedmont Triad, has picked up the tab for his car and his Greensboro County Club dues, which he said were necessary to his work in the real estate business.

Former City Councilwoman and political consultant Florence Gatten said the news conference was the right strategy. Gatten thinks Perkins has been a good mayor, although she wrote Vaughan a donation check because the two women are personal friends.

“I think smart marketing really means that you listen to what is out there, whether you agree with it or not. You have to address that and you have to address that with the facts,” she said.

Like Klase, Gatten wonders about the timing. “It would have been nice if he had done this a month ago as far as timing,” she said.

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Wealth managers seek baby boomer clients

The baby boomer cohort of 390,000 Mainers is closing in on retirement with shaken confidence and a slew of complicated questions. Thanks to the Great Recession of 2008, the leading question of When can I retire? has become, for many, Will I ever be able to retire?

Even boomers who had been building retirement savings diligently through personal individual retirement accounts or company-sponsored 401(k) plans and thought they were on track to retire comfortably within a few years have had to reassess goals because of investment portfolios still recovering from recession losses. Risk management is coming more to the forefront for those closest to retirement age, tempering the return-based focus that guided their years of building retirement savings. The same holds true for questions about health care costs and long-term disability insurance, monetizing their home equity, providing for aging parents or paying off a portion of their childrens college loans.

For Maines banks, investment planners and other wealth management companies, those questions and the movement of almost 30% of Maines 1.3 million people toward retirement create a business challenge that is also an opportunity for a long-term,trusted adviser-client relationship: As a white paper called Mining the retirement income market by the consulting firm Deloitte concludes, Given that the average boomer may spend 25 to 30 years in retirement, planning will become more of an ongoing education process than a point-in-time event. The adviser will likely focus on assembling solutions to meet a broad array of needs, then adapt those solutions as client needs evolve through the various phases of retirement.

Bangor Savings Bank, with $2.3 billion in trust, fiduciary and investment assets, has taken note of the emerging shift in boomers perspectives from simple asset accumulation to asset payout. The bank has created a new business line devoted to fee-only financial planning that focuses on retirement goals such as meeting health care needs, budgeting, estate transfers and shifting the investment focus from growth to security.

Annette Lease, a bank vice president and senior financial planning officer, says the new fiduciary service provides financial advice based solely on a clients best interest and is not influenced by investment product options or commissions.

Its scary, Lease says of the financial challenges baby boomers face heading into retirement. Accumulation of wealth is their comfort zone. As folks are retiring or looking to retire, their thinking begins to shift into the distribution-of-wealth mode. They have been self-directed for a while, but now they have a sense of needing expert advice. They want to share that burden with someone who lets them know what their options are and can knowledgably advise them on what they should do [to support their retirement goals].

Before launching its fee-only wealth management service, Lease says the bank tested the concept in a pilot program with solicited clients and non-clients who agreed to participate in a five-week process designed to bring their finances into sharp focus. The participants were not charged, but knew from the start what the fees would have been so that theyd have a benchmark for judging the value of the service.

We got invaluable feedback, Lease says, noting the pilot group included retirees as well as people five to 10 years away from retirement.

Given the comprehensive nature of the fee-only financial planning service, Lease says the bank has built a team of planners based in Bangor and Portland whove achieved Certified Trust and Financial Advisors status from The Institute of Certified Bankers, a subsidiary of the American Bankers Association. The credential requires three years of wealth management experience, two weeks a year of offsite training with the ABA, passing an exam and earning 45 continuing education credits every three years to maintain the designation.

Theres no minimum asset requirement for prospective clients, but Lease says the $150 hourly fee for 20 hours per year creates a $3,000 litmus test for the service. Folks who are not comfortable with that wont sign up for it, she says.

The financial advice covers a full array of retirement-related issues, including tax-efficient investment strategies and approaches to withdrawing assets; anticipated health care costs; Social Security, insurance and risk considerations; estate planning; and personal financial goals such as travel or relocation.

HeadInvest

Carl Gercke, chief investment officer of HeadInvest, a Portland investment counseling and wealth management firm founded in 1989, agrees with Lease that decisions become more complicated as baby boomers head into the distribution phase of their investment program.

The market declines in 2008 were poorly timed for the baby boomers, he says. Your last 10 years of work are supposed to be your highest retirement investment phase. Peoples plans took a hit hellip; they dont have enough time to recover their losses, to take the risk [with retirement looming]. Its a huge conundrum. Most often the response is I have to work longer.

Responding to the needs of boomers heading into retirement, HeadInvests services have evolved in recent years to provide a broader array of advice than simply whether a particular stock or bond is likely to be a good investment. Like Bangor Savings Banks new program, he says, those services are offered on a fee-only basis.

HeadInvests typical clients are both mass affluent (having between $500,000 and $1 million of investable financial assets) and high net worth (with $1 million or more of investable financial assets). Gercke says boomers in the first group, as well as those who are still building assets to reach those levels, are more likely to be panicked about supporting their lifestyles in retirement, especially given the virtual disappearance of the pension plan among private sector employers. The latter group is more likely to be focused on legacy issues such as bequeathing their wealth to heirs or achieving specific philanthropic goals.

Theres no question, he says, the competition is fierce among the different types of wealth managers, with the trend for each of them being toward more holistic financial advising. That, in turn, puts an even higher value on the expertise of the financial counselors and the confidence their clients have in the advice thats given.

The idea of having a trusted adviser puts a premium on stability in our client relationships, Gercke adds.

Although not directly tied to the mid-September announcement that HeadInvests management team had purchased the firm from Androscoggin Bank in a transition to becoming an employee-owned firm, Gercke says that move gives him and the other financial advisers greater control over their destiny in a rapidly changing arena that also includes reaching out to the children of baby boomers.

Most of our clients are older, he says. So its in our businesss best interest to develop relationships with their children to maximize the chances they will continue using our firm.

HM Payson Co.

Founded in 1854, HM Payson Co. in Portland is an independent registered investment adviser and trust company with more than $2 billion in client assets. Its services are fiduciary and the majority of its accounts are high net worth clients, although in recent years the number of its mass affluent clients has grown. Prospective clients must have a minimum of $400,000 of investable financial assets to qualify for the firms financial management services.

Most wealth management advice is a value-added service covered by the fee clients pay the firm for managing their account, says Thomas Pierce, HM Paysons managing director.

Part of what we do is managing the money, part is acting as trustees, part is offering advice, Pierce says.

John Beliveau, chairman of the Wealth Management Group and a principal of the company, says the time and resources devoted to the advice component has increased in recent years, driven in part by the boomer generation closing in on retirement. For many of them, he says, their financial investments in the last 12 to 13 years of their prime top-wage period of employment have not been as productive in earnings as theyd wished.

Even those with higher available assets to invest are finding their spending expectations or needs are in excess of what their resources can provide for in retirement, he says. Their nest egg is simply inadequate to provide for the lifestyle they had prior to retirement.

Whatever the level of retirement savings, Beliveau says HM Paysons financial planning process begins with an analysis of the clients financial priorities and their respective costs, both short- and long-term, in relation to their retirement savings. Inevitably, the discussion enters the realm of tradeoffs what priorities might have to be scrapped in order to achieve the top ones. Quite often, the tradeoff is deferring retirement a few more years in order to build up savings and delay the drawdown of those assets.

We cant say Dont retire yet without knowing those tradeoffs, says Beliveau. We show them the economic impacts of making those decisions, so that whatever direction they choose to go, their decisions are well informed.

Chip Weickert, a managing director and chairman of the Portfolio Management Group, says retired boomers whove started drawing upon their retirement savings should resist the common impulse to immediately shift into a protective investing mode.

We spend a lot of time educating our clients, he says. We think the mainstream conventional wisdom [of putting everything into low-risk, low-return investments upon retirement] is bad advice.

HM Paysons approach, he says, is to differentiate the short- and longer-term needs and allocate investments accordingly, with higher-yield investments made to hedge paying for the long-term needs whose cost isnt always predictable.

The biggest risk boomers will face in their retirement years? Too much spending, says Beliveau. The second, he says, is making emotionally driven investment decisions whether its putting their childrens needs before their own or being too fearful in making investments.

This is where investment counsel becomes extremely important, he says.

With the last of the baby boomers reaching age 65 in 2030, wealth managers have their work cut out for a good number of years to come.

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GUEST COLUMN: New health insurance choices coming soon

If you already have health insurance coverage through your employer or already have Medicare, you do not need to do anything.

Open enrollment on the new health care exchange began Oct. 1 and lasts until March 31, 2014. Coverage begins Jan. 1, 2014. The exchange is a marketplace of different insurance policies. With one application, you can compare policies and determine how much they cost–all in one place. You can also find out if you might be eligible, based on your income, for financial assistance to lower your costs. This marketplace will improve the customer’s ability to shop around and subsequently increase competition between insurance companies.

You can enroll online, by phone, by mail or in person with the help of a trained assister or navigator.

If you need help, there are many resources to help you make sense of the various policies and options available to you. You may hear different names for the people who can help you including “navigators” and “certified application counselors” and insurance brokers. You can also get help from the telephone help line 1-800-318-2596 all day, seven days a week. TTY users should call 1-855-889-4325.

If you don’t have health insurance or you have a high deductible plan that will only cover you for a catastrophic illness, you can sign up for good coverage that begins as soon as Jan. 1, 2014. Many of us will qualify for a subsidy that will reduce our costs.

For business owners that may feel financially daunted by the ACA, there are tax credits available that can cover up to 50 percent of the total costs for small businesses and up to 35 percent for nonprofit businesses.

For more information or to find policies in the marketplace, visit www.healthcare.gov or call 1-800-318-2596. For a list of resources based in Maine, you can visit your local library or look at www.enroll207.com. For a three-minute overview of the ACA, go to http://youtu_be/ioc6DrsJcCo.

If you or someone you know is not covered, please encourage them to sign up. Young people who are healthy often feel they don’t need insurance. However, they can have an accident or an unexpected illness, which can bankrupt them and ruin their credit. The leading cause of personal bankruptcy in the United States is an unexpected illness for a person without health insurance. Nobody should have to go bankrupt because they get sick.

I encourage you to use the resources available to learn as much as you can about the ACA and how you or your family or friends can benefit from it. Many Mainers who have worked hard to achieve financial stability are one illness or injury away from unemployment or financial ruin. As a community, we cannot plan for a secure future if this is a reality for so many of our neighbors.

Affordable health care is about more than covering more Mainers and Americans. It’s about what we stand for as a state and a community. When we see fellow Mainers, who are ill or injured and unable to pay hospital bills, we don’t turn a blind eye. We act to reflect the true values of Maine.

Rep. Jane Pringle, D-Windham, is serving her first term in the Maine House. She serves on the Insurance and Financial Services Committee and is a retired primary care physician and physician educator.

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Despite personal issues, mayor projects positive image

GREENSBORO — Robbie Perkins shifted his weight from one foot to the other, scanning the crowded downtown block for familiar faces.

He’d been up working since 5:45 am Now, edging toward 9 am, he was in shorts and running shoes ready to climb the Bellemeade parking deck nine times in honor of the first responders who were killed at the World Trade Center on Sept. 11, 2001.

Perkins circled the crowd, high-fiving a team of UNCG athletes and chatting with young firefighters. He was grinning the whole time.

“This is perfect,” he said. “Doesn’t get any better than this.”

Before the day is out, he would make three other public appearances and watch his daughter’s soccer match.

This is the person Perkins wants the city to see — the guy with relentless energy and a positive attitude about his city. The mayor who wants Greensboro to shoot for big things, like a performing arts center, and thinks it can accomplish them.

He’d rather they ignore the other Perkins, the one whose familial and personal financial problems have made headlines picked up by newspapers across the country.

The first-term mayor will defend his seat against at-large Councilwoman Nancy Vaughan and political newcomer George Hartzman.

The top two vote-getters from the Oct. 8 primary will face each other in the Nov. 5 general election.

Perkins, 57, is a Virginia native who became a North Carolinian by way of his studies at Duke University. He was a star long-distance runner, and he came to Greensboro to work in the real estate industry after he got his MBA.

Perkins is at ease before a crowd and can even charm a group that disagrees with him. He’s self-confident in a way that sometimes comes off as arrogant. He’s not afraid to say what he thinks, even if it is not popular.

He’s the father of five — one a high school senior and the others adults. He has had a long career in commercial real estate brokerage and development and now is the president of NAI Piedmont Triad.

It’s a career that has often led residents to wonder if his loyalty lies with the industry — or with residents.

It’s also a career that, combined with the lengthy economic crisis, led to his financial undoing.

In the past year, Perkins filed for personal bankruptcy, reporting debts of $8.5 million. Over several months this year, Perkins and his now ex-wife fought in court over what he should — and could — afford to pay to support her and their last minor child.

He lost his high-rise downtown apartment to foreclosure. Now, he rents a two-bedroom condo near Moses Cone Hospital.

“I’m starting over financially, but that’s OK,” Perkins said.

His personal troubles have led residents to question his judgment and wonder if he has the time to dedicate to his office.

Perkins said the financial troubles and a high-profile divorce have not distracted him from city business.

“I don’t think circumstance should define your character,” he said. “That’s the key to living a productive life.”

His supporters see that, too.

“What he’s going through is no different than what others have gone through,” said Chris Adams, who hosted Perkins’ campaign kickoff party on Sunday.

Perkins has kept an active schedule of council meetings, community events and trips to represent the city in Washington.

He ticks through a long list of City Council accomplishments this term: securing a new recycling contract; hiring a new city manager and attorney (he personally recruited the attorney when the post failed to lure applicants); approving a new performing arts center, of which Perkins’ was an unabashed supporter; and working out a water and sewer agreement with the county that opened up thousands of acres of eastern Guilford County to development.

That last one, Perkins said, is evidence that he’s been able to work cooperatively with the county.

It’s all evidence that Greensboro is heading in the right direction, he said.

That’s a lot to get done, Perkins said, after the last City Council left the city in disarray after years of

divisiveness over the White Street Landfill.

But the stress does sometimes show in those moments when Perkins has to sit and listen to yet another speech from former police officer Charles Cherry calling him a deadbeat dad.

You can hear it in his complaints that it is ridiculous that anyone might take his opponent Hartzman seriously as a candidate.

It shows in his frustration when his colleagues won’t get on board with his ideas.

All that might be why Perkins’ campaign is trying to focus on the positive. He’s rolled out the phrase “PAINT,” an acronym for “Positive Action Instead of Negative Talk.”

It’s what he has tried to do, he said, be that constant cheerleader for the city, instead of a detractor.

“I know that the worst is behind me,” Perkins said. “I know that positive things are ahead.”

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Progress on Predatory Lending







Payday loans have long been huge financial traps for cash-strapped, low-income borrowers. Several states have tightened regulations to clamp down on these “quick fix” loans, which sometimes carry annual interest rates of 400 percent or more. But a lot more needs to be done, particularly since the federal Consumer Financial Protection Bureau has not yet formulated rules governing these loans.

Today’s Editorials

  • Editorial: The Syrian Pact
    (September 16, 2013)

  • Editorial: E-Smoking Among Teenagers
    (September 16, 2013)

  • Editorial: Seeking the Riches of Gay Marriage
    (September 16, 2013)

Connect With Us on Twitter

For Op-Ed, follow @nytopinion and to hear from the editorial page
editor, Andrew Rosenthal, follow @andyrNYT.

A new study by the Center for Responsible Lending, a nonpartisan research group, has found that the payday loans cost American families $3.4 billion in fees every year. Despite state efforts, millions of borrowers remain at the mercy of unscrupulous practices.

Payday loans — which can come from banks, storefronts or online services — are billed as short-term credit options, but they actually force people into a debt cycle. Borrowers often do not have enough income to repay the loan and cover recurring monthly expenses, so they have to borrow again and again. This trap is built into the business model.

For example, an analysis earlier this year by the Consumer Financial Protection Bureau found that three-fourths of payday loan fees were generated from people who borrowed more than 10 times in a 12-month period.

Payday lending expanded dramatically during the 1990s, when many states unwisely exempted the lenders from usury caps. But after seeing borrowers being destroyed by these loans, many states, according to the study, have in recent years either prohibited payday lending or put new limits on it.

For example, voters in Arizona and Montana voted to bring payday lenders under a 36 percent interest limit. Voters in Ohio defeated a ballot initiative that would have overturned the state’s 28 percent rate cap. Delaware and Washington State have limited the number of payday loans that a borrower can take in a single year.

Still, more than half the states offer little or no protection from unscrupulous payday lenders. The Consumer Financial Protection Bureau is barred by law from setting interest rates. But it can do more. It could help vulnerable, low-income borrowers by putting an end to deceptive advertising and balloon payments that make it impossible for borrowers to close out a loan. It could also force lenders to verify the borrower’s ability to repay before a loan is made.

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Payday lenders move online as regulators crack down

The banner ad atop the website features a wide-eyed baby cradled in an adults hands with the words, Did that special vacation for two end up producing a third? Castle Payday has lifes unexpected expenses covered.

On a growing number of sites like this one, short-term loans are just a click away for Web-surfing borrowers, regardless of any history of bankruptcy, bounced checks or other credit problems.

The catch is these so-called payday loans often come with sky-high interest rates of 400 percent or more. The Castle Payday website advertises an effective 888 annual percentage rate, meaning a 14-day loan of $500 will end up costing the borrower $675.

Those who cant scrape together the cash to pay off the loans along with their other bills may be tempted to take out another short-term loan to cover the first, potentially ensnaring them in a cycle of debt.

Consumer advocates complain that companies like Castle Payday are setting up shop on the Internet to avoid laws in some states that restrict or ban traditional storefront payday lending.

More and more states are cracking down on payday lending, and its a lot easier to hide online than it is to hide in a storefront, said Ed Mierzwinski, consumer-program director for US PIRG, an advocacy group.

But industry groups contend online payday loans are legal and provide a vital service for millions of struggling Americans with few credit options.

Most consumers dont have the ability to get $500 or $600 in an emergency through their banks or credit unions, said Peter Barden, spokesman for the Online Lenders Alliance, a trade organization. Credit-card limits have been reduced, equity loans have been reduced, so people are increasingly looking to alternative financial-services companies for short-term credit. And like with any other industry right now, theyre looking online.

Payday loans are illegal in 15 states, including North Carolina, Georgia and Pennsylvania. Nine others among them Washington and Florida do allow payday loans but enforce strict rules that limit fees, require longer repayment periods or restrict the number of loans per customer, according to a Pew Charitable Trust study.

In recent months, state and federal regulators have intensified pressure on banks to stop working with online lenders. But the industry is fighting back in court.

The legal situation is complicated by the fact that many online lending websites are run by Native American tribes, which say their sovereign status means they arent subject to state laws. Castle Payday, for example, is operated by the Lac Vieux Desert Band of Lake Superior Chippewa Indians in Michigan.

The Lac Vieux joined with another tribe to seek an injunction against a New York regulator, arguing that states have no authority over them.

Benjamin Lawsky, the New York superintendent of financial services, had sent cease-and-desist orders to Castle Payday and 34 other online lenders to stop them from making payday loans to consumers in New York, where such loans are illegal.

Lawsky also asked more than 100 banks to deny the lenders access to the automated system used to process electronic payments, so that they cant debit borrowers accounts.

In a lawsuit filed in US District Court, the Lac Vieux and the Otoe-Missouria tribe of Oklahoma condemn what they describe as regulators bare-knuckle attack on tribal sovereignty. If not stopped, the suit warns, New Yorks campaign of misrepresentations, threats and coercion will destroy tribal businesses and devastate tribal economies.

Tribes in impoverished and isolated areas need the proceeds from online lending to fund their governments and services everything from education to new fire trucks, said Barry Brandon, executive director of the Native American Financial Services Association, an advocacy group for tribes in the online lending business.

We have had reports from some of our member tribes that the revenues they are producing from their online lending operations are now making up between 25 and 50 percent of the tribal budget, he said.

Unfortunately, non-Indian online lenders often claim tribal sovereignty in situations where their ties to tribes are loose at best, said Uriah King, of the Center for Responsible Lending in Durham, NC

When we scratch the surface, they dont look like tribal lenders, King said. They look like sham relationships that benefit the lenders, not the tribe.

In one high-profile case, the payday-lending operation AMG Services in Overland Park, Kan., claimed to be owned by the Miami and Modoc tribes of Oklahoma and the Santee Sioux of Nebraska. Yet the tribes reportedly received only 1 to 2 percent of the revenue from each loan.

The real benefactor allegedly was race-car driver Scott Tucker, who used $40 million collected from borrowers to sponsor his racing team, according to a complaint filed last year by the Federal Trade Commission.

Sovereign immunity for the tribes is a very serious issue, but it shouldnt be used as a fig leaf for predatory lending, King said. At the end of the day, a payday loan is a junk product that gets people deeper into debt, and it doesnt matter if its a bank or nonbank or a tribe, the reality is that its just not a good product and it doesnt matter who provides it, he said.

Consumers also should be wary of phony online payday-loan websites designed to steal their names, Social Security numbers and bank information, he said. A federal judge in Illinois earlier this month ordered one such operation in Tampa, Fla., to halt operations after an investigation by the Federal Trade Commission.

The FTC accused defendants Sean Mulrooney and Odafe Ogaga of using websites with names such as Vantage Funding, Ideal Advance and Your Loan Funding to debit consumers checking accounts without their permission. Tens of thousands of customers lost more than $5 million to the scheme.

Mulrooney and Ogaga allegedly used the scam to finance luxurious lifestyles, complete with fancy cars. Mulrooney owned a Maserati GranTurismo, while Ogaga owned a Rolls-Royce Ghost and a Ferrari, court documents show.

You absolutely have no idea who youre dealing with when you take out a loan online and you agree to let somebody put their hand in your bank account, said Mierzwinski of,US PIRG. Please step back and think: Is there any other way I can get this money to meet my bills? Because once you go into high-cost payday lending, whether online or in person, its not something you do once. Its usually something you do again and again and again.

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UK Regulator to Set Payday Lending Rules on Cost to Consumers

Market Snapshot

  • US
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Gold IRA Investment Is the New Way to Make Safe and Secure Investment for …

Dallas, TX — (SBWIRE) — 10/07/2013 — Gold IRA Investment has become new way to invest and make the funds work and give a good return on investment in a safe and secure way. It has been seen for decades that Gold has been growing at a good rate irrespective of the market condition. Even in adverse financial distress the Gold has seen no negative impact.

Click Here To Learn More About The Gold IRA Investment And The Benefits.

Many have rolled over their IRA’s to Gold IRA because they have understood the benefits and want to get in as soon as they can so they can reap the rewards later on when they really need the fund. To be able to invest in Gold IRA, one needs to take help of a custodian bank or a financial advising company such as Regal Assets. Regal assets has been helping people switch their IRA’s to gold or helping people open new IRAs.

Founded in 2003, Regal Assets has been advising investors about rolling over retirement accounts into precious metals. To date, the Gold IRA Company is now managing close to $70 million in total assets. SpotGoldAndSilverPrice.com has tied up with Regal Assets to offer Free Gold Investment Kit.

Click Here To Visit The Website And Request The Free Gold Investment Kit.

The spokesperson of the website SpotGoldAndSilverPrice.com said, “Many contact us to find more about Gold IRA Investment and the benefits. We have been helping people understand in detail about Gold IRA. People can visit our website and learn why switching to Gold Ira is a wise choice.”

To find out more about Gold IRA rollover please visit the website http://www.SpotGoldAndPrice.com and request a free Gold Investment Kit.

About SpotGoldAndPrice.com
SpotGoldAndPrice.com is a personal finance website that provides information about retirement, retirement plans, investments and savings. Featuring retirement options, it is home to helpful tips on picking the right gold investment company to help people retire with wealth.

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