Florida: Payday Lenders Skirted Regulations by Claiming to Be Credit Service Organizations

Payday Lenders In Florida Claimed They Were Credit Service Organizations Not Subject To Florida’s Payday Lending Law.

“Last year, the state Office of Financial Regulation began looking into the practices of EZMoney and Cash America, two Texas-based chains that claim to be “credit-service organizations” not subject to Florida’s payday-loan law. “We’re in the early, fact-finding stages with both of them,” said Ramsden, the agency administrator. “We are aware they’re citing Florida’s credit-service organization law, which was intended to help consumer-credit agencies. In this situation, however, we have payday lenders using it to broker payday loans.” [Orlando Sentinel, 4/1/07]

Payday Lenders Claim They Aren’t Subject To Florida’s Payday Lending Law Because They Don’t Receive A Post-Dated Check But Rather A Promissory Note That Allows Them To Automatically Withdraw Funds From The Customer’s Bank Account. “Here’s their argument: The state’s payday law pertains only to lenders that require customers to give them a postdated check written for the amount owed. When the loan comes due, the lender simply cashes the check. But Cash America and EZMoney require no such check — only a promissory note that authorizes the lender to automatically withdraw the money from the customer’s bank account.” [Orlando Sentinel, 4/1/07]