15 Mar West Virginia Orders Payday Lender to Alter Debt Collection Practices
Can you go door-to-door, trying to collect past due payments?
The West Virginia Attorney General fought a payday loan company that tried to collect past-due payments in person, and this week announced a settlement agreement with four affiliates of the nation’s largest payday lender, Advance America, Cash Advance Centers, Inc. (Advance America) of Spartansburg, South Carolina.
The companies agreed to cease engaging in these illegal debt collection practices.In the agreement, Advance America agreed to permanently discontinue its practice of contacting consumers in person at their homes in West Virginia, and its practice of leaving “door hangers” for consumers when they are not home when attempting to collect debts in West Virginia.
Advance America also agreed to refrain from contacting third parties about alleged debts, including persons listed as “references” on loan applications.
Payday lending is not allowed by West Virginia law, forcing consumers to travel to surrounding states.
The complaints alleged that Advance America attempted to coerce payment by threatening to bring criminal charges, making unauthorized collection calls to various third parties, including persons listed as “references” on loan applications, and by making personal visits to consumers at their homes in West Virginia. The complaints were brought by consumers who had defaulted on loans.
Under the Fair Debt Collection Practices Act, a debt collector is limited in how it collects debts from consumers. The law, however, doesn’t protect people from the actions of first-party creditors in connection with collection activities.
What’s interesting here isn’t necessarily that West Virginia has taken action against a payday lender, but the realization that people will cross state lines to borrow a few hundred dollars to tide them over until their next payday. And that rather than West Virginia educating people about how to manage their money better, they take action against a lender operating in another state.
I’m not saying West Virginia shouldn’t go after the payday lender – they should. But couple that action with educational programs to help people better understand their money.
Stop giving people fish – teach ’em how to do it on their own.
Score one for the good guys!
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