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01.10.2012

The payday loan market in the United States - changes in the regulation 2012

They misguide the customers and talk them into abusive contracts with an astronomical interest and additional charges. Not surprisingly, many customers get into a vicious circle, where they get one loan to pay off another. It is a simple way to ruin their home budget, and sadly, this is the reason why hundreds of thousands of Americans have already gone bankrupt, with their health affected and family life seriously undermined.

A lot has been done to protect the customers, but the legislation dedicated to payday loan companies and their customers is not uniform. Restrictions and allowances are not identical for all states. Some states prohibited payday loans. Let’s review the legislative effort in selected states:

  • Delaware: the state government limited to 5 the number of payday loans that a single person can take in a 12-month period. Also the amount limit in the definition of a short-term loan was extended from $500 to $1000;
  • Illinois: it changed its payday loan law so that any unlicensed lender who lends money to a person, cannot get back the principal interest and additional fees because their agreement with the customer is null and void, according to this new law;
  • Mississippi: here the legislative intent was to prohibit payday loan offers, cash advance services and deferred presentment services;
  • Missouri: a law was introduced that forbids renewing the payday loan more than once, also another law requires payday lenders to present their offers with required notice with at least 10-point bold to 14-point bold font type;
  • Virginia: a law was implemented that caps the rate of interest that may be charged on motor vehicle title loans, payday loans, and open-end credit plans at 36 percent per year.

The examples above are only a few from a range of legislative efforts undertaken in almost all states of the US. From this legislative review it can be seen that the payday loan market attracts the scrupulous attention of lawmakers who want to clamp down on illegal and unlawful lending. This will clean the market of fly-by-night agencies and provide more stable environment, but at the moment the direction these changes are heading to may cause some embarrassment. It all poses a great challenge to affiliate marketers who have to follow different state laws. Also affiliate programmes that act countrywide have to keep up with the dynamic changes in legislature.