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Federal regulators need to stop banks and payment processors from helping internet and tribal payday lenders collect illegal payments, consumer and civil rights groups urged today. That was the plea issued by the nonprofits National Consumer Law Center, The Center for Responsible Lending and The Consumer Federation of America.
In a letter sent to federal bank regulators, the U.S. Department of Justice, and the Federal Trade Commission, the National Consumer Law Center, Consumer Federation of America, the Center for Responsible Lending, and 26 other consumer and civil rights groups thanked the agencies for their efforts to date and pushed for stronger measures to stop illegal payments from being taken out of consumers' bank accounts.
These agencies want banks to be reigned in as a means of preventing the processing of said payday loans.
"Online payday loans are illegal if they do not comply with state laws," said Lauren Saunders, managing attorney at the National Consumer Law Center. Supporters of the online payday industry have criticized scrutiny of payments to lenders who claim that affiliation with a Native American tribe exempts them from state law. But "tribal immunity does not make an illegal loan legal; it just affects whether the lender can be sued," Saunders explained. "Banks and payment processors, which have no such immunity, must take swift action to address the legal and reputational risks associated with facilitating these illegal transactions."
In a separate but similar controversy, footballers in the UK have been placed under scrutiny for using payday loans to help fund their gambling habits.
According to charity Sporting Chance, players are so desperate to bet they are taking out short-term loans.
That charity helps athletes deal with their addictions. They claimed this week that one unnamed footballer lost an estimated £7 million in three years of gambling.
"It's not uncommon for us to have a footballer who has turned up that's in a circle of payday loans and gambling," Sporting Chance Executive Colin Bland told BBC Radio Five Live.
"One of the (footballers) I was talking to sort of said 'actually one of the problems is I can afford to place these bets'.
"We've worked with players who have lost up to £7 million in three years in gambling. But the particular young man I'm talking about said 'it's the quantity of bets I'm placing.
"I'm placing 50 bets a day. All I'm thinking about is my next bet or my last bet. It's affecting my life, it's affecting my performance, it's affecting my marriage. It's affecting what sort of father I can be'."
