West Virginia Congressional Delegation Should Correct Rent-a-Bank Scheme
The Charleston Gazette-Mail published an editorial encouraging West Virginia’s congressional delegation to take action to stop payday predators.
Here’s more:
Cross any of West Virginia’s borders and one of the first things you’ll notice is a host of payday lending or check cashing businesses. These operations typically give those who are having money problems a loan with ridiculously high interest rates that snowball and keep the borrower under their thumb.
You see them in high volume right across the border because these types of businesses are illegal in West Virginia. While state law can’t stop anyone from crossing into Ohio and taking out a bad loan, it at least protects its citizens from predatory lending within its own borders.
Stopping Rent-a-Bank Protects West Virginians
West Virginia also outlawed this practice when the state Supreme Court ruled against a company called CashCall, which was providing small loans of up to $5,000 to West Virginians with an obscene interest rate as high as 96%. Collection practices were ruthless.
When the business was taken to court by West Virginia Attorney General Darrell McGraw, with successor Patrick Morrisey eventually taking the helm, CashCall argued that it wasn’t breaking any West Virginia laws because the loans were coming from a bank in South Dakota. Detractors call this a “rent-a-bank” scheme. The Supreme Court found that the business was illegally using the bank’s name to get around state law. This ruling further protected West Virginians from predatory lenders.
For more on consumer protection issues, follow Andy Spears
