Online Payday Lender Western Sky To Stop Funding Loans Sept. 3

Editor’s note: The CFPB, a federal agency, has proposed new rules for payday, car title, and high-cost installment lenders.

BUT, they need to hear from consumers- that means you! We have an easy-to-use page where you can weigh in- it only takes a minute and will help bring about important consumer protections with these loans. Please share a line or two in the comments box about why you care about this issue and want to see strong federal reforms.

PS: You do NOT have to be a payday, car title, or installment borrower to sign the petition.

Two laws signed by Governor Brown will help Consumers in California Facing Illegal Debt Collection Practices

Two laws were recently signed into law by Governor Jerry Brown, both laws are positive developments for California consumers.

1) Deficiency Collections on Foreclosure   SB 426 prohibits deficiency collections and adverse credit reporting on non-recourse loans following a non-judicial foreclosure. A deficiency is the outstanding balance of a mortgage and the foreclosure sale amount. In spite of existing anti-deficiency protections for residential borrowers in California, some creditors and debt collectors have been attempting to collect debts by non-judicial means after a foreclosure. SB 426 makes clear that this practice is illegal. CRC and Housing Economic Rights Advocates co-sponsored the legislation. For more information, visit Senate Majority Leader Corbett’s webpage: Governor Signs Corbett Bill Protecting Struggling Homeowners, Borrowers

2. Debt Collectors in California will have to prove that the borrower owes a debt  SB 233 requires debt buyers and collection agencies to prove in court that a borrower owes a debt that they agency owns, the balance of that debt and that the debt is still within the statute of limitations and subject to collections before any judgment can be issued against the borrower. Public Good Law Center sponsored this legislation. An article in the Visala Times Delta explains the need for this bill- “Governor signs bill that holds debt collectors to stricter standards“ by Valerie Gibbons, July 12, 2013

According to the article, the bill traces its origins to State Senator Lou Correa (D-Anaheim), who was told his wages would be garnished after a default judgment on a debt. The only problem was that Senator Correa didn’t know about the debt because he didn’t owe it. According to the article, the mix-up took years for him to clear up the mistake the collection agency made.  And, Correa isn’t alone- according to the article, debt collectors/buyers hold the unenviable spot of #1 industry for complaints to the Federal Trade Commission, which has over 100,000 cases “in the federal pipeline against the firms.”

Resources from the CFPB if you are dealing with debt collectors  If you’re dealing with debt collectors who are engaging in illegal practices, you will also be happy to know that the Consumer Financial Protection Bureau is taking steps to regulate the collection industry. As of July 10, 2013, the CFPB will begin taking complaints about debt collectors on their website. (Click on “debt collection.”)

Model letters to use with debt collectors The CFPB also recently released five model letters that consumers can use if they’re dealing with a debt collector. Click here to access them.

1) Needs more information on the debt- For consumers who need more information about a debt.

2) Wants to dispute the debt and wants debt collector to prove responsibility or stop communication- Tells collector that you’re disputing the debt, instructs the collector to stop contacting you until they provide evidence that you’re responsible for the debt.

3) Restrict how and when debt collector contacts you- to tell the collector your preferred way to be contacted.

4) Have hired a lawyer- this will direct the collectors to contact your lawyer instead of you.

5) Wants debt collector to stop any and all contact- it’s important to note that sending this letter doesn’t stop a debt collector from continuing to pursue other remedies, like a lawsuit.

To stay up to date on financial justice issues in California, especially as they relate to low income communities and communities of color, you can follow the California Reinvestment Coalition on our Facebook page, via Twitter, watch our movies on our YouTube Channelsign up to receive our newsletter and action alerts, and of course, visit our website.

10 Things you may not know about payday loans and the companies that make them

Editor’s note: The CFPB, a federal agency, has proposed new rules for payday, car title, and high-cost installment lenders.


BUT, they need to hear from consumers- that means you! We have an easy-to-use page where you can weigh in- it only takes a minute and will help bring about important consumer protections with these loans. Please share a line or two in the comments box about why you care about this issue and want to see strong federal reforms.

PS: You do NOT have to be a payday, car title, or installment borrower to sign the petition.

1. Payday lenders would not survive without financing from banks and Wall Street. Adam Rust, Director of Research at Reinvestment Partners, and author of the blog Bank Talk, recently highlighted this in his post: “High-Cost Consumer Finance Companies Extol the Benefit.” Rust uses statements from companies like National Money Mart and First Cash Financial to illustrate that Wall Street plays an important role in funding services like payday lenders and pawn shops. Read more: “High-Cost Consumer Finance Companies Extol the Benefits” by Adam Rust, Bank Talk Blog, July 30, 2013.

2. Payday lenders LOVE people with Social Security! Why? Because Social Security is a regular payment, so repayment of their loan is virtually guaranteed. According to the Detroit Free Press, Patricia Guy, A 62 year old in Detroit, who receives Social Security, took a loan from Western Sky after seeing an ad on TV that said this it was a good way to pay off payday loans (she had two at the time and thought she could use the new loan from Western Sky to pay them off).

Ms. Guy is paying 139.13% interest for this loan. In other words, to borrow $2,525, she will pay $11,412.12 in interest over the course of four years. The Michigan State Department of Insurance and Financial Services is trying to kick Western Sky out of the state, with a hearing set for September 24th. Read more here: “Debt can soar for users of quick-fix loans” Susan Tompor, Detroit Free Press, August 12, 2013.

3. Payday lenders exploit loopholes. In Ohio, they have exploited so many loopholes in a 2008 state law that the Toledo Blade recently editorialized against them, suggesting “Lawmakers must close the loopholes to make the Short-Term Lending Act work as it was designed to, including a ban on auto title loans secured by a consumer’s car. Essentially, any payday-style loan must be subject to the 28 percent cap.” Ed Mierkwinski recently captured the dynamic of payday lenders trying to use loopholes to get around predatory lending laws: “Playing ‘Whack-a-Mole’ With Predatory Lenders” (US News and World Report , Opinion, August 13, 2013) Read the Toledo Blade’s editorial here: “Swimming with sharksToledo Blade. August 12, 2013.

4. Federal regulators are starting to pay attention to online payday lenders: According to an article by the Center for Public Integrity, six different federal agencies are now investigating online payday lenders, and the Justice Department has already subpoenaed more than 50 financial companies, “mainly banks and the payment processors that connect consumers to online lenders and other companies that Justice thinks may be operating fraudulently.” Six federal agencies are investigating online payday lenders” Daniel Wagner, Center for Public Integrity, August 8, 2013

5. They make payday loans in the United Kingdom, and it’s been the focus of government officials and advocates all summer:

Some payday lenders decided they would rather close shop than follow the law. During a “Payday Lending Review” by the Office of Fair Trading in the United Kingdom, the regulator identified areas of noncompliance with 50 payday lenders. Of these 50 lenders, 13 of them decided to stop doing business instead of complying with the law. Read more: OFT Payday lending compliance review 

One payday lender in the UK recently tried collecting money from people who never had loans with them. Unfortunately for them, one of the people they sent a collection email to was a banking law expert in the United Kingdom. He received a collection email from “Quick Quid,” (a payday lender) who eventually acknowledged (after wasting his time) that he never owed them a debt. In response, a British Prime Minister accused Quick Quid of “dodgy dealings.” Read more here: “Payday loan firm Quick Quid demands cash from Ancoats bank expert who had never borrowed any” Jennifer Williams, Manchester Evening News, August 12, 2013.

6. State Attorneys General don’t like payday lenders. In July, Georgia’s Attorney General sued CashCall Inc, and Western Sky Financial, LLC (Western Sky), demanding that they stop breaking Georgia state law, specifically, the Pay Day Lending Act which prohibits offering these types of loans, including online. Georgia consumers have complained that CashCall representatives have “harassed them with repeated telephone calls, obscene and abusive language, threats of wage garnishment or other legal action, and even going so far as to call consumers’ employers to threaten wage garnishment.” Read more: Attorney General Olens Files Suit to Protect Georgia Consumers from Illegal Payday Lenders 

Similar to Georgia, New York’s Attorney General, Eric T. Schneiderman, is also suing Western Sky Financial. He is suing them for violating New York usury laws that limit interest rates at 25 percent. According to the New York Times, the AG believes that Western Sky has made 17,970 loans in the past three years, with interest and fees totaling almost $185 million. New York is one of at least 9 states going after lenders with ties to American Indian tribes. Read more: “Suit Accuses Online Lender of Violating New York Rate Caps” by Jessica Silver-Greenberg, DealBook, New York Times. August 12, 2013.

7. Cities across the U.S. are passing laws to stop payday lenders. The California Reinvestment Coalition is proud of our work in California to restrict harmful payday lending in Sacramento, San Francisco, Oakland, Oceanside, San Diego, and more recently in San Jose, as part of the Coalition Against Payday Predators (CAPP). Currently, we are excited to work with CAPP on local ordinance campaigns in Gilroy and Sunnyvale, and to support our allies and partners in the cities of Fresno and Long Beach.

We are also encouraged to see cities in other states taking on the payday loan industry-

Texas: On August 2, 2013, the Town of Flower Mound became the 7th city in Texas (including Austin, Balcones Heights, Dallas, Denton, El Paso, and San Antonio) to adopt an anti-payday lending ordinance. The Texas Municipal League also started a payday lending clearinghouse with helpful information, including example ordinances and lawsuit pleadings for other city leaders who are considering legislation against payday lenders.

Iowa: Cedar Rapids was the sixth city in the state to enact stronger regulations against payday lending. According to the Associated Press (“Iowa cities take on payday lenders with zoning laws” June 17, 2013), Ames, Clive, Des Moines, Iowa City, and West Des Moines have already enacted legislation aimed at limiting payday lenders.

Read More: Texas Municipal League Payday Lending Clearinghouse  
Read More: “Iowa cities take on payday lenders with zoning laws” by Associated Press. June 17, 2013.

8. There’s nothing more unpatriotic than taking financial advantage of soldiers, but it still happens. Twenty-three senators and 53 members of the US House of Representatives recently weighed in on this topic, asking the Department of Defense to close a loophole in the Military Lending Act that has allowed lenders to offer high-interest, triple-digit interest rate loans to soldiers. Read more: “Congress to Pentagon: Save the Troops From Predatory Lenders” by Erika Eichelberger, Mother Jones, August 9, 2013.

9. Payday lenders have redefined “sleazy campaign tactics.” Propublica’s recent expose: “The Payday Playbook: How High Cost Lenders Fight to Stay Legal” shines a bright light on industry tactics recently used to stop a proposed law in Missouri. Payday lenders used secret funds to threaten and intimidate churches, harass community organizers who were trying to get petitions for a ballot initiative, filed decoy laws to confuse voters, and even hired a former NFL player to be their spokesperson. All of these tactics were used to stop a law that would have capped interest rates at a reasonable 36%. Read more: “The Payday Playbook: How High Cost Lenders Fight to Stay Legal” by Paul Kiel, Propublica, August 2, 2013.

10. Payday loans are also offered by banks.  Banks also make short-term, small dollar amount, high-interest loans, but they try and dress up the high interest rates on these loans by using language such as “direct deposit advance” (Wells Fargo), or “Checking account advance” (US Bank), or “Ready Advance” (Regions Banks).

With a few clicks of the mouse, customers can obtain loans with sky-high interest rates. At a recent Senate hearing about these bank payday loans, a lobbyist for the banks struggled to explain the difference in storefront payday loans and the payday loans made by banks to Senator Elizabeth Warren (D-MA). Senator Bill Nelson (D-FL), Chair of the Senate Select Committee on Aging, (committee which held the hearing), also pointed out that making these types of loans is virtually risk-free for the banks since the customer has to have a source of income to qualify for the loan.

Annette Smith, a senior from California, testified at the hearing about her experience trying to pay back a Wells Fargo direct deposit advance on her Social Security income of roughly $1,200 a month. Read CRC’s perspective on the hearing here. “Hearing Focuses on Direct Deposit Advances, are They Different than Payday Loans?

A coalition of groups in Illinois, Missouri, and Iowa, recently started a campaign against Regions Bank for offering its version of a payday loan, known as a “Ready Advance” loan. George Goehl, executive director of National People’s Action explained that groups are organizing against bank payday loans because “Banks should help people build wealth, not strip it away.” Read more here: “Groups call on bank to stop offering ‘predatory’ payday loans” Jessica M. Karmasek, Legal Newsline Legal Journal. August 12, 2013.

Are you a Californian who has used a payday loan and would like to share your story? Do you want to get involved in local efforts to restrict payday lending in our communities? If so, please contact Liana Molina, CRC’s Payday Campaign Organizer:  or 415-864-3980.

To stay up to date on financial justice issues in California, especially as they relate to low income communities, and communities of color, you can follow the California Reinvestment Coalition on our Facebook page, via Twitter, watch our movies on our YouTube Channel, sign up to receive our newsletter and action alerts, and of course, visit our website.

FTC sues and settles against web payday lender AMG

Editor’s note: The CFPB, a federal agency, has proposed new rules for payday, car title, and high-cost installment lenders.


BUT, they need to hear from consumers- that means you! We have an easy-to-use page where you can weigh in- it only takes a minute and will help bring about important consumer protections with these loans. Please share a line or two in the comments box about why you care about this issue and want to see strong federal reforms.

PS: You do NOT have to be a payday, car title, or installment borrower to sign the petition.

More enforcement against payday lenders!

Coalition Against Payday Predators

Partial screen shot of 500FastCash payday lending website advertising “real solutions for real people” and “60 seconds can make a world of difference. Apply now."The Federal Trade Commission (FTC) has reached a settlement with some defendants in its case against the web-based payday lending company AMG Services Inc.  The FTC had sued AMG, alleging that defendants threatened borrowers in debt collection calls and violated the Electronic Fund Transfer Act (EFTA).

According to News Room America, “The FTC has sued a number of payday lenders for engaging in unfair and deceptive practices against consumers.”

A United States Magistrate judge found that AMG could not avoid the FTC Act, the Truth in Lending Act, and the Electronic Fund Transfer Act, by aligning themselves with American Indian tribes.

Read more here.

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CRC Submits Comments on Payment Methods for Health Care

CRC submitted the letter below as part of our work advocating on behalf of low income Californians.  In this letter to the Centers for Medicare & Medicaid Services (CMS), CRC suggests that patients should have several options available for paying for their  premiums for Qualified Health Plans.  CRC also advocates against CMS partnering with any businesses that will offer prepaid cards loaded with high fees for consumers.

July 16, 2013

Marilyn B. Tavenner
Administrator, Centers for Medicare & Medicaid Services
Department of Health and Human Services
Room 445–G, Hubert H. Humphrey Building
200 Independence Avenue SW.
Washington, DC 20201

Re: CMS–9957–P; Patient Protection and Affordable Care Act; Program Integrity: Exchange,
SHOP, Premium Stabilization Programs, and Market Standards; Proposed Rule (Federal
Register, Vol. 78, No. 118, June 19, 2013)

Dear Administrator Tavenner:

Please accept these comments from the California Reinvestment Coalition in response to the Centers for Medicare & Medicaid Services’ request for information about implementation of the Affordable Care Act. Our comments are specifically about the “Enrollment Process for Qualified Individuals” section (§ 156.1240).

The California Reinvestment Coalition is a non-profit coalition of over 300 organizations from across all of California. We advocate for financial services practices and policies that respond to the needs of low income households, communities of color and other economically and politically marginalized communities in California.

Please Expand the Types of Acceptable Methods to Pay for Health Coverage Costs.

We strongly urge that Qualified Health Plan issuers be required to accept payments for premiums and other health coverage expenses in forms other than checks and credit card. In particular, we urge you to adopt regulations that require insurers to also accept money orders and other payment platforms including prepaid cards, electronic money transfer (such as MoneyGram), and online money transfer platforms (such as PayPal). These are the payment methods most often used by those without bank accounts that meet their financial needs, those often referred to as unbanked or under-banked.

Nearly 8% of California’s 12 million households have no bank account, approximately 18% have an account that does not meet all of their financial needs.  The most common groups of unbanked persons include low-income individuals and families, those who are less-educated, households headed by women, young adults and immigrants. These are the most vulnerable households that the Affordable Care Act is intended to help and they should not be left un-insurable.

Please Avoid Partnering with Payment Service Companies that Will Prioritize Profit from Payment Fees over Ensuring Affordable Care Coverage.

However, we are extremely concerned that you discourage the use of payment products that exploit and strip the scarce resources of these vulnerable families. Currently, the pre-paid card industry is exploding in size, sophistication, and market power and it is largely unregulated.  There are literally thousands of cards sold with varying fee terms offered by as many different companies, some with mixed motives, at best, that can pit the company’s fee generation and revenue at odds with the service provided to customers.

We have heard from low income people who have been charged $1 for each use of a prepaid card, $1 for checking the card’s balance, $1.50 for a declined purchase, and more fees for loading money to the card, for failing to use the card frequently enough, and on and on. Money transfer companies, both online and storefront, are similarly diverse in fee rates and nearly as unregulated.

We strongly warn against partnering with for-profit companies that sell payment platforms including prepaid cards and money transfer services, such as Jackson Hewitt, which target the unbanked and under-banked population to sell unregulated financial products. Such companies would necessarily have their fee generated revenue interests above the long-term interests of customers they target.

In fact, Jackson Hewitt, among others, were famously spurned by the IRS for selling expensive Refund Anticipation Loans that would cost lower income families, including those qualified for Earned Income Tax Deductions, hundreds of unnecessary fees. We strongly condemn those practices and ask that you not provide these companies with yet another opportunity to fleece lower income customers in the guise of a needed service.

Partner Instead with Reputable Non-Profit Organizations that will Provide Safe and Affordable Services.

We urge you to partner with non-profit enrollment assisters that specialize in providing financial management services to the unbanked and under-banked population, such as choosing safe and affordable financial tools, help opening bank accounts, and free tax-time assistance through the IRS Volunteer Income Tax Assistance (VITA) and the Tax Counseling for the Elderly (TCE) programs.

We also join the Assets and Opportunity Network at the Corporation for Enterprise Development to ask that you consider additional changes to the payment process that will help facilitate timely payment especially for low-wage workers and the unbanked and under-banked consumers. These can include:

  • Deductions from paychecks: Automatic withdrawals from payroll help facilitate on-time payment. Similar to retirement savings or social security deductions, payroll deductions for insurance purchased on the exchange will ensure regular on-time payments, and should be an option.
  • Ability to pay in advance: If open enrollment in states across the country were aligned with tax time, consumers could pay for their premiums via their tax return. CMS should work with the Department of the Treasury to explore mechanisms for streamlining payments through resources consumers receive at tax time. Many Volunteer Income Tax Assistance (VITA) sites work with the unbanked population and can facilitate community outreach for this payment option.
  • Use of navigators: Navigators should be required to provide payment information to each consumer who is purchasing health insurance via the Marketplace. Navigators can be key ambassadors of this information. We recommend creating FAQs on payment options for this formerly uninsured population.
  • Website development: Each state will have either its own website or they will be referring people to the federal website to access the Marketplace. Payment information should be provided on the website and should be sent to consumers via email or traditional mail upon purchasing their insurance. Given that immigrants make up a significant percentage of the unbanked community, this information should be accessible in a variety of languages.

With great appreciation for the hard work of providing health insurance for all families, we thank you for the opportunity to submit these comments.


Andrea Luquetta
Policy Advocate
California Reinvestment Coalition

President Obama Will Answer Questions about Housing on Wednesday, August 7

President Obama is giving a speech on Tuesday about housing in Phoenix, Arizona.  The next day (Wednesday, August 7th), at 1pm (ET), President Obama will take part in a live online event, hosted in coordination with Zillow and Yahoo! focused on housing.

Homeowners, renters, and prospective buyers can submit questions for President Obama in three ways:

1) Short videos on YouTube, Instagram, or Vine (share your video using #AskObamaHousing)

2) Via Twitter, with the hash tag: #AskObamaHousing

3) On Facebook, through Zillow’s Facebook page

The recent article in the LA Times (“Wall Street firms become landlords in buy-to-rent industry” 7/31/2013) about the billions of dollars Wall Street is spending on buying up homes (often pushing out first-time home buyers who can’t compete with all cash offers) will hopefully be one of the issues discussed during this online event.

Speaking of social media, you can follow the California Reinvestment Coalition on Twitter, Facebook, Google+ or visit our YourTube channel.

New Homeowner Bill of Rights Collaborative Will Assist Consumer Attorneys with New Law

UPDATE: Registration now open for San Diego training!

California’s Homeowner Bill of Rights was enacted in January 2013 and similar versions of the law have also been recently enacted in Nevada and Minnesota.

A new collaborative, funded by the California Attorney General’s Office, (with money from the National Mortgage Settlement) will provide free services for consumer attorneys throughout California to make full use of this law.

The HBOR Collaborative is comprised of four organizations: the National Housing Law Project (NHLP), and its project partners, Western Center on Law & Poverty, the National Consumer Law Center, and Tenants Together.

The Collaborative’s free services include education, advocacy, technical assistance, litigation support, and extensive web-based attorney resources. The Collaborative is also providing internet webinars and live trainings in areas throughout California. Click here to go directly to the registration page for the San Diego training (September 18), or click here to see the Registration Flyer for more information.

The Collaborative is sponsoring two trainings this fall, one in San Diego, California, and one in Sacramento.  Each training will cover HBOR basics and provide practical tips for representing clients. The training will cover the interplay of HBOR with NMS, CFPB servicing rules, and the Protecting Tenants at Foreclosure Act. HBOR also codifies the broad intentions of the National Mortgage Settlement’s pre-foreclosure protections and provides tenants in foreclosed properties with a host of substantive and procedural protections. Participants will also learn about HBOR’s attorney fee provisions.  Each training will offer 5 Hours of MCLE Credit, including 1 hour of Ethics. Continental breakfast and lunch will be provided.

Registration will open in August, for more information about the trainings or services provided by the Collaborative, visit their website:

For a concise summary of rights under the Homeowner Bill of Rights, check out summaries prepared by the Fair Housing Law Project: English and Spanish.

Collaborative Trainings

1. Wednesday, September 18th
Housing Opportunities Collaborative Achievement Academy
1045 11th Avenue
San Diego, CA

2. Wednesday, October 23rd
Sierra Curtis Neighborhood Association
2791 24th Street
Sacramento, CA

A PDF describing the trainings is also available here: Upcoming Trainings.