A Nevada company that used interactive websites to make payday loans has agreed to refund West Virginia consumers a total of $305,446 to settle a lawsuit brought by the state attorney general’s office.

Payday loans typically charge high interest rates for short-term loans — rates that can add up to 600% to 800% in annual percentage rate. A borrower who can’t repay the payday loan and interest quickly digs a financial hole when then loan is renewed, which combines the original loan and interest with even more interest payments. The nonprofit Center for Responsible Lending estimates payday loans cost U.S. consumers $3.4 billion each year.

In West Virginia, payday loans are illegal and FFD Cos. agreed — while denying any wrongdoing — to refund 576 consumers for fees and interest for payday loans made over the Internet. The settlement closes a lawsuit brought by the state in November.

Continue reading Payday loan company to refund W.Va. consumers

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Now that President Barack Obama has signed into law the biggest overhaul of the banking industry since the Great Depression, many Americans are wondering exactly how financial reform will impact them.

Officially called The Dodd-Frank Wall Street Reform and Consumer Protection Act, the far-reaching implications of the 2,300-page law will take many months, even years, to be fully felt. Moreover, since specific rules must still be written, observers fear that loopholes and carefully-worded fine print could muddy various elements of financial reform.

Despite these uncertainties, there are some clear ways that financial reform will impact you and your wallet. Here are seven of them:

Continue reading 7 ways financial reform will impact your life

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Last month, I wrote about a big move by the Treasury Department to make all payments from the U.S. government electronically. In the announcement, Office of Management and Budget Director Peter Orszag called the change a “win-win for the American public.” Now, we’re hearing from others with a different opinion.

Consumer rights groups, including the Consumer Federation of America and Consumers Union, have stepped forward to say that the real winner here could be banks and payday lenders.

The issue at stake is that, while the Social Security Administration says that 83% of all Social Security and SSI beneficiaries receive their benefits by direct deposit, the elimination of paper checks may be forcing the rest into a situation that could put them at risk for expensive payday loans and high fees.

Continue reading Social Security’s electronic payment system criticized

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Collecting on America’s unpaid debts is big business. In the past, we here at WalletPop have contacted some of the people who earn a living as debt collectors and gotten them to spill their secrets. Now, CNN/Money is hopping on the bandwagon with this profile of 10 former debt collectors.

Many of them ‘fess up to either seeing or engaging in behavior that’s unprofessional at best, illegal at worst. One says she heard a co-worker threaten to beat up a debtor with a tire iron, while another said the technically-illegal practice of contacting friends and family about a debt was a good tactic for getting people to pay up. Several admitting raising their voices and yelling or deliberately making the people on the other end of the line feel bad, but many said plenty of debtors yelled and cursed right back at them, too.

Continue reading ‘Yeah, we broke the rules,’ debt collectors admit

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Despite the best efforts of banks and security experts, Internet fraud continues to cost consumers millions of dollars every year. But a new credit card sized piece of plastic has the potential to stop one of the most popular forms of online fraud; fooling consumers or their banks into handing over information that can be used to empty accounts.

This credit card sized piece of plastic that inventor Matt Walker hopes to stop Internet fraud cold in its tracks is the PassWindow, which is a finalist in the Asian Innovation Awards.

Instead of the expensive-to-distribute security tokens that some banks use to verify the identity of a consumer, the PassWindow can be built into your existing bank debit or credit card and operates in a simple manner.

Continue reading Can a piece of plastic make online banking more secure?

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Debtors prisons were federally abolished in the United States in the 1800’s, yet in certain states, they seem to be making a comeback. Out of Minnesota come disturbing reports of Americans being thrown in jail due to outstanding bills — sometimes for as little as $85. The Star-Tribune of Minneapolis profiles a number of people who say their debts got them jailed, including Joy Uhlmeyer a 57-year-old patient care advocate who was pulled over on her way home from visiting her elderly mother and put in jail for a night for missing a court hearing about unpaid debt.

The Star-Tribune reviewed the state’s court documents and found that arrests like Uhlmeyer’s are up 60% in Minnesota over the past four years. And Minnesota isn’t the only state where this is happening. It’s a turn of events Ed Mierzwinski, consumer program director at advocacy group U.S. Public Interest Research Groups (or PIRG), calls a “very bad situation for consumers.” Mierzwinski attributes the practice to “bottom-feeder debt collectors [who] are very aggressive.”

Continue reading America’s new debtor prison: Jail time being given to those who owe

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The unemployment rate remains stubbornly above 9 percent, but certain sectors hit hard by the recession are making a surprise come back. Finance is one, according to Paul Webster, a director of the front office banking area for top recruiting firm Michael Page International. Wall Street, especially the big banks, is once again opening its checkbook for talent. Webster, a recruiter with 10 years of experience in the U.K. and the U.S., shares some tips on where the jobs are and how to get them.

Where are the finance jobs today?

It was a myth that there was no hiring between the summer of 2007 and 2009. Areas that were hiring were counter-cyclical in nature, such as restructuring finance, financing for distressed companies, and areas where banks could mitigate their losses.

The market has steadily picked up from July 2009 to December 2009. And from January of this year, it has rapidly improved. I’ve seen aggressive hiring in mergers and acquisitions, leverage financing, and sales and trading. So, where before it was in counter-cyclical areas that were not revenue generating but cost mitigating, today, banks are hiring for capital market positions.

Continue reading Recruiter Paul Webster has tips for finance job seekers

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A tweet can land you in jail in Venezuela.

Two people were arrested Thursday for allegedly spreading false rumors on Twitter designed to destabilize Venezuela’s banking system. It’s against the law in that Latin American country to spread false rumors about the banking systems on any social network.

“Anybody who spreads malicious rumors by any means, emails, SMS messages on cellphones, Twitter, Facebook … or any other means of communication is committing a crime and should answer for it before the competent authorities,” national investigative police unit head Wilmer Flores Trosel said in a statement to Reuters.

The free speech site, Global Voices Advocacy, identified the pair today as Luis Acosta, 41, and Carmen Cecilia Nares Castro, 35. They could face up to 11 years in prison.

Twitter’s term of service says all posts are the sole responsibility of the person tweeting the information and anyone relying on tweets does so at their own risk.

Even in this country, you may not end up in jail, but you could get sued. Read on WalletPop about what happened when a woman posted an online review and how you can avoid a lawsuit.

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America, give yourself a pat on the back. According to new data from the American Bankers Association, more of us are paying our credit cards and home equity loans on time — which is good news in a still shaky economy. Bank card delinquencies dropped from 4.39% in the last quarter of 2009 to 3.88% in the first quarter of this year. This rate is actually below the 15-year average for bank-card delinquencies, and is the lowest rate since 2002. (The ABA regards a delinquency as a payment more than 30 days overdue.)

In related good news, we’re also becoming more prompt about paying our home equity loans on time. The delinquency rate slipped down a tick this quarter (to 4.12% from 4.32%), the first decline in two years, according to the ABA.

Also on the mend are on-time payments on home equity lines of credit, property improvement loans, auto loans and personal loans. Unfortunately, delinquencies in some loan categories are still on the rise. Americans are blowing off their payments on boats, RVs and mobile homes to an increasing degree, the ABA’s research showed.

Continue reading Credit card delinquency improves

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There is one surefire way to reinvigorate the housing industry and it’s such a simple solution that regulators should be embarrassed they have to be reading about it here: Re-institute the liar loan.

In polite circles, these loans were called stated income loans or “no doc” — short for “no documentation” loans. They allowed borrowers to say that their income was whatever the bank wanted to hear it was and then, with a wink and a nod, get their money to buy a house. Everybody was happy and no, this alone did not lead to the housing collapse — although it may lead to its recovery.

First, in their defense: It was those adjustable rate loans with crazy low initial interest rates that jumped into the stratosphere at about the time you lost your job that led to the housing collapse. It was also the fact that some homeowners kept borrowing against the paper equity in their homes under the false assumption that the home’s value would continue to appreciate. It didn’t.

But liar loans? Puh-lease. They may have hurt those who lied to the extent that their noses grew, but that wasn’t most people. Most people inflated their income 15% to 19%, says the research. And that was basically the populace disagreeing with the government about how much of our earnings we should spend on our housing. The regulators thought 25% was enough. I, for one, didn’t.

Continue reading Could ‘liar loans’ help bring back the housing market?

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