Contracts include collection terms if funds are not available in the account to repay the loan. If a borrower’s payment is dishonored at Speeddog.com for a loan applied for at Cashinaclick.com, she agrees to pay a $20 service charge for dishonored check or ACH drafts, to pay a collection agency no less than 30% of any amount not repaid within 14 days, and to pay all costs for collections including attorneys fees, court costs and collection costs.
Some lenders spell out their collection process. Quick-payday-loans.com says it will turn unpaid accounts over to a third party collection agency which will call the borrower, her family and friends at work and at home, and report unpaid loans to the “big 3” credit bureaus. ZippyCheck says it will give applicant information to third parties, even if a loan is not made. If the company finds that the customer is overdue at any service listed in the databases used by ZippyCheck, it may elect to give them information to aid in their efforts to collect debts from the applicant.
ACH authorization forms give lenders permission to deduct additional fees from consumers’ bank accounts. The CashAdvanceUSA form permits withdrawal of “any accrued late fees or applicable late fees or applicable NSF fees.” Another site claims the right to electronically withdraw payment from consumers’ bank accounts even if the financial institution and/or account numbers are different than those on the original application.
If loans are not repaid, FCash warns delinquent borrowers that their borrowing privileges will be terminated with the FCash Service and information on the borrower will be turned over to Scan and Telecheck services (check verification services used by retailers and banks) and “your check writing privileges will be terminated! Your information will also be turned over to the credit bureau’s delinquent account division.” Quikmoneyonline.com tells its borrowers if collection activity begins, the borrower will be responsible for unpaid loan extensions up to four time, plus up to four $25 NSF fees, plus administrative fees of 50% of total balance outstanding at the time the account is processed for collection, not counting court costs and fees and attorneys fees.
The Aeroadvance privacy policy states “For funds that are delinquent or in default AeroAdvance will continue to debit the checking account that you authorized us to withdraw funds from everyday after your due date until the funds have been collected.” What goes unsaid is that each attempt to withdraw funds from a depleted checking account will trigger bank NSF fees in addition to the payday lender’s fees for returned debits. The 200Cash.com Inc. master agreement permits the company and/or designated collection agency to continue initiating ACH/EFT or bank draft debit entries of the borrower’s bank account for full or partial payments of the loan and costs until paid in full, with up to five ACH/EFT transactions.
Paydayadvanceonline.com claims protection via federal bank regulatory agencies and attempts to restrict their borrowers’ rights to file complaints under the Electronic Fund Transfers Act. The FAQ page answers the question “How do I know you are only going to withdraw what you say?” with “AccessEZCash, Inc. and anyone else authorized to use the Federal Reserve Wire System must follow FDIC rules. Plus, all accounts with banks that are FDIC members are protected. You may not dispute the validity of these ACH transactions without written note from AccessEZCash.Inc.”
ZippyCheck.com, based in Nevada, claims that Navy and Air Force members qualify for a slightly higher credit rating than Army or Marines, due to “the fact that we have found that the Navy and Air Force are much less tolerant of their members defaulting on a PaydayCash Advance, and because these branches of the military are more willing to help ZippyCheck in its collection efforts.”
Some Internet payday loan agreements authorize the lender to convert the electronic withdrawal to a paper check which the lender will attempt to collect if a consumer withdraws authorization for an ACH transaction. The lender uses the information from the MICR line of the faxed check or the application entry to produce a check-like instrument called a pre-authorized draft or a demand draft. Although the loan was offered over the Internet, the use of a paper demand draft to collect on the loan triggers the legal provisions of the state’s Uniform Commercial Code.
