The Kansas Office of State Bank Commissioner has been the leader in enforcing the state’s payday loan law and licensing requirement with out-of-state Internet lenders. A loan is considered made in Kansas and subject to state regulation where a creditor induces a Kansas resident to enter into the transaction by solicitation in the state by any means including mail, telephone, television, or any other electronic means including the Internet. Kansas regulators have argued that state regulators have jurisdiction over out-of-state Internet lenders, describing the loan process as deliberately targeting local consumers.
When construction of the website and viewing of that website by a Kansas consumer results in the Kansas consumer obtaining a payday loan from the company operating the website, it is logical to assume that the website constituted a ‘solicitation,” in the plain and ordinary sense of the word, of that consumer. Respondent’s website contains information regarding the availability of loans, and allows a Kansas consumer to ‘Apply in Under 2 Minutes’ by answering five questions. Once the consumer answers the five questions and clicks on ‘apply now,’ the next screen viewed by the consumer says, ‘Congratulations! You have been pre qualified for UP TO a $500.00 loan.’
This statement constitutes a solicitation, and is certainly an inducement to the individual consumer, who has just provided their personal e-mail address and the answers to the five questions, to continue filling out the loan application. Once the consumer finishes filling out the remainder of the loan application, and submits it to Respondent electronically, the consumer receives an e-mail from Respondent with an electronic version of the loan form that has been completed with all of the consumer’s personal information and loan terms. That form is then printed and signed by the consumer, and faxed back to Respondent for final processing. That fully-individualized loan form, sent to the consumer electronically by Respondent, also constitutes a solicitation of the consumer.
Kansas regulators settled cases for unlicensed payday lending by Mycashnow.com of Chattanooga, TN, and National Opportunities of New Castle, DE (operating a web site www.itsyourpayday.com). These unlicensed lenders agreed to refund finance charges collected from Kansas consumers. Kansas regulators also have a pending case against Cash Advance and United Cash Loans of Nevada.
When that case was filed in 2003, regulators sought $4.5 million in fines. The companies which share the same owner appealed a preliminary order and a hearing was scheduled. Regulators reported that the two companies made loans to at least nine hundred Kansas consumers. Cash Advance charged $90 for a two-week $300 loan that would cost $23 if made according to the Kansas payday loan law. The $75 finance charge for a $250 loan by United Cash Loans also exceeded Kansas rate limits.
