Archive for October 2016

Youth Leadership Academy kicks off Saturday

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Who’s getting money, who’s spending it: Arizona’s congressional candidates

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Minnesota Reaches $4.5 Million Settlement with Unlicensed Payday Loan Company

The Minnesota Commerce Department and Attorney General has reached a sweeping $4.5 million settlement with a California-based internet payday lending company that victimized thousands of Minnesotans with illegal, high-interest loans.

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The settlement is with CashCall Inc., its affiliated companies and owner J. Paul Reddam.

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For Minnesotans who were victimized by CashCall, this settlement will cancel their debts on these predatory loans and provide restitution for the excessive interest and fees they already paid, Minnesota Commerce Commissioner Mike Rothman said in a statement.

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We are committed to protecting consumers and cracking down on illegal, deceptive lending practices that prey on vulnerable Minnesotans.

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CashCall financed high-interest, quick-approval payday loans to consumers online, according to a news release.

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Officials say CashCall tried to evade state consumer protections by improperly invoking tribal sovereign immunity and doing business through a front company, Western Sky Financial, a company created with ownership by a man who was a member of the Cheyenne River Sioux Tribe in South Dakota.

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However, the actual tribe had no affiliation with the business.

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The Commerce Department and Attorney General jointly filed a lawsuit against CashCall, alleging that the company engaged in unlicensed lending in Minnesota, falsely claimed tribal affiliation to circumvent state laws and illegally charged annual interest rates as high as 342 percent.

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Under the terms of the consent judgment and order filed in Hennepin County District Court, CashCall is required to:

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  • Pay a $4.5 million settlement that will be used for restitution to Minnesota consumers who paid interest and fees on Western Sky loans in excess of what state law allows.
  • Stop collecting payments on all loans issued by Western Sky, and stop the sale or transfer of Western Sky loans to any third parties.
  • Cancel any current debts on loans issued by Western Sky to Minnesota consumers.
  • Send a notice to inform every Minnesota consumer with a loan issued by Western Sky that the loan is canceled, with no further payments due.
  • Notify credit reporting agencies to withdraw all reports submitted by the company on Minnesota consumers.
  • Notify all third parties that bought or acquired Western Sky loans that these loans are canceled.
  • Provide a full, detailed list of all loans issued by Western Sky, which will be used to determine restitution payments to Minnesota consumers.

The company, its affiliated companies and owner Reddam are also prohibited from consumer lending in Minnesota unless they are properly licensed and comply with state laws.

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Payday loan companies, whether online or on the corner, need to be licensed and follow the lending laws that protect Minnesota consumers from excessive interest and fees, said Rothman.

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Unlicensed lenders are a continuing problem as they prey on consumers who may be in difficult financial straits and turn to payday loan websites to get fast cash.

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Rothman encourages Minnesota consumers to protect themselves by checking with the Commerce Department before doing business with an online payday lender to confirm that it is licensed by the state.

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A license lookup tool is available on the department’s website.

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Image via Shutterstock

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Payday Loans’ Potentially Predatory Replacement

Dangerous, high-cost lending isn’t going away anytime soon.

While some have heralded the Consumer Financial Protection Bureau’s long-awaited payday-lending regulations as significant progress toward the end of predatory lending practices, other, similar products have, as predicted, started to take their place.

One of the biggest criticisms of the traditional payday-loan structure was that it required a large, lump-sum payment of principal plus interest. If–or more often, when–borrowers were unable to find the cash to pay back their very short-term loans with interest that reached the triple digits, these loans would be rolled into yet another short-term, lump-sum loan. And so the cycle went.

An uptick in what are called installment loans is the payday industry’s answer to that criticism–or, more precisely, the regulations that that criticism led to. Instead of making a lump-sum payment, installment-loan borrowers take out loans that are paid off a bit at a time, over a longer period of time. Installment loans are nothing new, and the same lenders who once predominantly peddled payday loans have been trying their hand at installment loans for some time, too. But now, they may try to make them a significantly larger share of their business. The Wall Street Journal recently reported that in 2015, lenders provided nearly $25 billion in installment loans to people with credit scores below 600. That’s 78 percent higher than the year before.

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Keeping your new driver safe at back-to-school time

TAMPA (FOX 13) – As teens who got their licenses over the summer hit the road to school, getting them insured can hit you in the wallet. Recent surveys show that your insurance can go up nearly 100 percent when you add that teenager.

Thats a big jump, obviously, and something you want to prepare for before it actually happens, offered AJ Smith of Smart Asset financial advising.

Stats show young drivers are involved in more accidents, backing up the higher rates, but she says there are some steps you can take to cut costs.

First, many insurers will offer discounts if your teen takes a defensive driving course.

Next, the type of car makes a difference.

Your teen may be pushing for a brand new fancy car, but it actually costs more to insure those so maybe start off with one thats still safe but not quite as new, continued Smith.

And finally, getting good grades can pay off. Some insurers will actually give you a discount if your child does well in school.

When it comes to keeping new drivers safe, there are also a growing number of apps.

For example, Drivescribe notifies parents of dangerous driving and awards your teen points that are redeemable on Amazon for safe driving. Drivesafe.ly Pro makes your teens phone hands-free and voice activated. And Mamabear lets parents see where their kids are all the time via GPS tracking. It notifies you if certain speeds are exceeded, when kids arrive and leave preset places, and even lets you see social media interaction.

Most offer free trial periods so you may want to test-drive a few to find the one that suits your family the best.

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Payday lenders must be stopped from preying on the poor: Guest commentary

Payday lending has come under attack in recent years for exploiting low-income borrowers and trapping them in a cycle of debt. The problem has grown to such an extent that last month, the Consumer Financial Protection Bureau proposed new rules to rein in the most egregious abuses by payday lenders.

Yet payday lenders are not alone in profiting from the struggles of low-income communities with deceptive loans that, all too often, send people into crushing debt. In fact, such targeting has grown common among industries ranging from student loan providers to mortgage lenders.

For decades, redlining denied black people and other communities of color access to mortgages, bank accounts and other important services. Today, black and brown women are similarly being #x201c;pinklined#x201d; with lending schemes that deny them the opportunity for a better life.

A recent report underlines the toll these practices have taken on women of color. Among other alarming statistics, the report shows that 6 out of 10 payday loan customers are women, that black women were 256 percent more likely than their white male counterparts to receive a subprime loan, and that women of color are stuck paying off student debt for far longer than men. It also shows that aggressive lending practices from payday lending to subprime mortgages have grown dramatically in recent years.

In Los Angeles, debt is a dark cloud looming over the lives of thousands of low-income women all over the city.

Barbara took over the mortgage for her family#x2019;s home in South Central Los Angeles in 1988. She had a good job working for Hughes Aircraft until she was injured on the job in 1999 and took an early retirement. To better care for an aging mother living with her, she took out a subprime loan for a bathroom renovation.

The interest rate on the new loan steadily climbed, until she could barely afford to make monthly payments. She took out credit cards just to stay afloat, burying her under an even higher mountain of debt. To survive, she asked her brother to move in, while her son also helped out with the bills.

Numerous studies have shown that borrowers with strong credit #x2014; especially black women and Latinas #x2014; were steered toward subprime loans even when they could qualify for those with lower rates.

Women of color pay a massive price for such recklessness. The stress of dealing with debt hurts women in a variety of ways.

Alexandra, a former military officer, lost her partner, the father to her daughter, after a protracted struggle with ballooning subprime loan payments. The credit card debt she needed to take out as a result threatened her health, leaving her with hair loss, neck pain and sleep deprivation. She eventually needed to file for bankruptcy to settle the debt.

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