Superintendent of Financial Services Linda A. Lacewell Leads Multistate Investigation of the Payroll Advance Industry

Superintendent of Financial Services Linda A. Lacewell Leads Multistate Investigation of the Payroll Advance Industry

New York Leads Regulators from Ten States and Puerto Rico in Investigating Companies that Engage in Payroll Advances

States to Investigate Allegations of Illegal Online Lending, and Unlawful Interest Rates Disguised as Tips, Monthly Memberships and Other Unexpected Fees to Protect Cash-Strapped Consumers

NEW YORK - Financial Services Superintendent Linda A. Lacewell today announced that the Department of Financial Services (DFS) is leading a multistate investigation into the payroll advance industry and allegations of unlawful online lending.  Members of the industry purport to provide consumers access to wages already earned prior to payroll.  However, some of these firms appear to collect usurious or otherwise unlawful interest rates in the guise of “tips,” monthly membership and/or exorbitant additional fees, and may force improper overdraft charges on vulnerable low-income consumers.  The investigation focuses on whether companies are in violation of state banking laws, including usury limits, licensing laws and other applicable laws regulating payday lending and consumer protection laws.

“High-cost payroll loans are scrutinized closely in New York, and this investigation will help determine whether these payroll advance practices are usurious and harming consumers. Protecting consumers is our top priority and New York is leading the charge to expand the investigation of illegal online lending by including regulators from ten additional states and Puerto Rico,” said Superintendent Lacewell. “We will use all the tools at our disposal, including partnering with peer regulators to safeguard consumers from predatory lending and scams that ensnare families in endless cycles of debt.”

DFS is sending out letter requests for information to members of the payroll advance industry. 

The following regulators join DFS in investigating the payroll advance industry: 

  1. Connecticut Department of Banking;
  2. Illinois Department of Financial Professional Regulation;
  3. The Office of the Commissioner for Financial Regulation in the State of Maryland;
  4. New Jersey Department of Banking and Insurance;
  5. North Carolina Office of the Commissioner of Banks;
  6. North Dakota Department of Financial Institutions;
  7. Oklahoma Department of Consumer Credit;
  8. Puerto Rico Comisionado de Instituciones Financieras;
  9. South Carolina Department of Consumer Affairs;
  10. South Dakota Department of Labor and Regulation's Division of Banking; and
  11. Texas Office of Consumer Credit Commissioner.   

Consumers who believe that they have been the victim of a payroll advance company can file a complaint with the DFS at www.dfs.ny.gov/complaint.  You may also contact the Consumer Hotline at (800) 342-3736, Monday to Friday, 8:30 a.m. to 4:30 p.m. DFS has also posted information on its website for consumers about combating illegal online payday loans.

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