•          Web sites marketing and/or delivering small loans are growing rapidly, with numerous referral sites feeding applications to actual lenders. Lenders are hard to locate, identify or contact. Some are licensed in their home states, while others hide behind anonymous domain registrations or are located outside the United States.

                      •          Banks are involved in Internet payday loans through the Automated Clearing House System (ACH) used to electronically deliver loans to consumers’ bank accounts and to withdraw payments.  County Bank of Rehoboth Beach, DE, participates directly in Internet payday lending.

                      •          Internet payday lenders bypass state usury laws and consumer protections by locating in lax regulatory states and making loans without complying with licensing requirements or state protections in the borrower’s home state.  State regulators, notably in Kansas, New York and Colorado, are beginning to enforce state usury and small loan laws against lenders making loans online to state consumers.

                      •          Payday loan applications made online expose consumers to privacy and security risks as bank account numbers, Social Security numbers, and other personal financial information are transmitted to lenders, often over unsecure web links. Privacy policies do not protect privacy.

                      •          Federal electronic banking laws and industry self regulatory rules for use of the Automated Clearing House (ACH) system do not adequately protect consumers who use electronic fund transfers to borrow and repay loans from bank accounts.