Illegal Online Payday Loans May Not Have to Be Repaid

“If someone makes you a loan that’s illegal, either because they don’t have a license or they violate usury laws, you’re not under any obligation to pay it back,” said Norman Googel, an assistant attorney general in West Virginia.

In trouble from an online payday loan? You might not have to repay it

  • Help

    Can they report it to your credit if it is not paid back?

    • http://caveatemptorblog.com Sam Glover

      Yes, probably.

  • Danielle Dutton

    Hi John, I would also if possible could you send me a example letter of what you sent so I can send it to all the payday loan companies I have? I got told today I had to pay $300 now or I would be sumends to court. I called my local attorney and he said that all of these companies are collecting illegally because they have no license and can’t collect in the united states. He told me also that they can’t do anything about court either. I would like a copy of the letter you sent so I can send it to these fraudsters. Thanks so much for you assistance :)

  • John Madison

    I took out a loan with Peppercash for $575 and made payments which they took only as renewals. After making 6 renewal payments total of $1005. I saw articles like this one and wrote them a letter of revoking their ACH authorizations and I closed my bank account. Sure enough the next day they tried to withdraw money out of my account and it wasn’t even a scheduled renewal day(friday). When I went to the website and login into my account. They had a new loan number that stated I took out another loan of $400 on 8/2/12 which was so untrue. I sent them a letter about this and also sent it to my state attorney. I haven’t heard from them again. I agree stay away. It stinks but I would rather borrow from my family members before trying online lender ever again.

    • Karen

      Hi John,

      I just saw your posting about Pepper cash and the letter you sent. Any way you could send me an example of what you sent them and the AG? I experienced the SAME THING with them. PC told me they “leaked” my info to a 3rd party and thats who has been harrassing & threatening me. I told PC as well as this unprofessional 3rd party I was contacting my AG. Ugh! Never again!

    • crystal harman

      I would also like to receive a copy of the letter. The payday loan that we received is threatening to take us to court. We had to cancel our bank account and everything because of them. I would like information to find out what I am able to do. Or what I need to do!

  • Diane

    I am wondering if I should close my checking account and open a new one. I have several payday loans that have by this time cost me almost twice the original amount. I have tried to pay these off several times and I keep getting told that I did not give them enough notice or they have no record of my phone calls. I tell you one thing I have learned my lesson. I will eat top ramen and weiners before I ever deal with these companies again. I cannot believe they get a way with this.

  • Frank Pipitone

    Thanks for this post. The only advice that should be given to individuals looking for pay day loans is “stay away!” I think borrowers are lured in by the small dollar amounts offered, but they end up causing nightmares.

    For what its worth, most of the payday loan companies my clients have dealt with have been based in Canada, technically “off shore” just as the article states. These companies do not seem to care about FDCPA or our bankruptcy laws and typically have no contact information available.