Commerce Commissioner Mike Rothman warns consumers to be wary of online lenders
For Immediate Release
ST. PAUL, MN – At the click of a mouse, unlicensed payday lenders located in other states are cashing in on Minnesota consumers. As Minnesotans struggle financially in tough economic circumstances, some payday lenders are taking their business online, charging customers big fees for small cash loans.
Recognizing this growing problem, Commerce Commissioner Mike Rothman took action this week on behalf of Minnesota consumers, cracking down on four payday lenders for allegedly providing consumer small loan services over the Internet without a proper license.
Complaints received by the Commerce Department from three Minnesota consumers resulted in formal charges against: Omega Investments, Ltd., LLC in Salt Lake City, Utah; Sanguine, Inc. of Wilmington, Delaware; Ameriloan of Miami, Oklahoma; and Pack Management Group, Inc. of Carson City, Nevada. All four companies are not licensed by the Minnesota Department of Commerce, but have allegedly provided payday loans to Minnesota consumers over the Internet.
“We are working to protect Minnesota consumers from unlicensed payday lending companies that take advantage of them,” said Rothman. “Payday lending companies - online and down the street - need to obey the lending laws that protect consumers.”
Since 2008, the number of payday loans made in Minnesota has gone up more than 195 percent, with more than 135,600 loans reported by licensed companies in 2010 alone. More and more, Minnesotans are turning to payday loan websites to get fast cash. But Rothman warns consumers to be wary of online lenders, as many are not properly licensed by the state and often ignore state regulations. In many cases, online payday lenders charge exorbitant fees that far exceed Minnesota’s conservative fee schedule.
“Minnesota’s payday lending laws are specifically designed to protect Minnesotans from unreasonable, expensive fees,” Rothman said. “But unlicensed online lenders often try to fly under the radar, brazenly ignoring state rules – and their customers end up paying the price.”
Consumer complaints received by the Department have clearly demonstrated the huge fees some online payday lenders are charging. One Maple Grove resident filed a complaint with the Commerce Department in February after being charged $105 in fees for a $350 payday loan he received from an online website operated by Omega Investments, Ltd., LLC. Another consumer in Mora took out a $400 loan from Ameriloan, and was charged $120 in fees.
Rothman encourages consumers to contact the Minnesota Department of Commerce before doing business with an online payday lender. Staff is available to help consumers determine whether a payday lender is properly licensed by the state. Consumers with questions or complaints are encouraged to call the Department’s Enforcement Division at (651) 296-2488 or (800) 657-3602 or visit http://mn.gov/commerce.