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Payday Lenders Resist APR Comparisons

How much are you really paying for that loan?

By Mark Huffman
ConsumerAffairs.com

June 24, 2009

Doing business with an online payday lender that claims "tribal sovereign immunity" could means triple trouble. OneClickCash.com, one such lender, has generated a number of consumer complaints lately.

"I appied for a pay day loan with One Click Cash and was approved with the understanding that I would only have to pay back a service fee of $75.00 on the loan amount of $250," DeAnna, of South Lake Tahoe, California, told ConsumerAffairs.com. "They had taken 4 payments of $75.00, which I thought would leave me a final payment of $25.00 . When I went to check my account it said that my next payment would be $125.00, with only $50.00 of that to princapal and $75.00 for another service fee."

Even by payday loan standards, those numbers are grossly excessive. But huge fees appear to be a common refrain in complaints about OneClickCash.com.

"I took a payday loan from these people who call them selves One Click Cash in February of 2009. I did not receive the $200 until March," said Joe of Dennison, Texas. “Since then they have withdrawn $700 from my account."

"I took a loan out for $150 and agreed to pay back this loan with $45 as the interest fee," Maria, of Springfield, Massachusetts, told Consumeraffairs.com. "All was well until the automatic withdrawals from my account wouldn't stop. And not only that, they would take out multiple withdrawals of various amounts on the same days. So the problem with all of us is very obvious, so what can we do about it? Is there anything?"

States have tried, but there are problems. A number of online payday loans have affiliated with federally recognized Indian tribes. Operating under the auspices of a sovereign tribe, they claim immunity from state prosecution.

The good news for consumers is that some states aren't completely rolling over. In West Virginia last year, Attorney General Darrell McGraw mounted a vigorous crackdown on payday lenders making the tribal sovereign immunity claim.

In September 2008, McGraw reached a settlement with 17 online payday lenders, including three that were affiliated with Indian tribes. OneClickCash.com, operating under the umbrella of Miami Nation Enterprises, was among them.

The settlements with the tribal corporations, Miami Nation Enterprises and SFS, Inc., affiliated with the Santee Sioux Nation of Nebraska, and MTE Financial Services, affiliated with the Modoc Tribe of Oklahoma, resulted in $128,239.50 in cash refunds and canceled debts for 946 West Virginia consumers. The companies did business under numerous trade names.

According to the Center for Responsible Lending, the case was settled before the tribal sovereign immunity issue was addressed. Consumers who feel they have been victimized by an online payday lender should contact their state attorney general.

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