Dealing with Unlicensed Payday Loan Lenders


There are thousands of payday loan lenders, situated across the United States. Unfortunately, many are currently operating without a license in all of the states they’re doing business. For desperate borrowers, this can make a bad situation even worse.

The good news is that, if you discover you’re doing business with a lender who is not authorized to do business in your residing state, there are a few things you can do about it. Keep reading to learn more.

Close Your Account Immediately

Your first step, in rectifying the situation, is to close the account immediately! The sooner, the better. However, this doesn’t automatically solve the problem. Many of these lenders are somewhat unscrupulous, meaning they don’t always follow the rules. These unlicensed businesses often continue to withdraw money from borrower accounts, without a second thought to the legal consequences.

For this reason, it’s also necessary to contact your financial institution to make them aware that you’ve revoked your authorization, in regard to further withdrawals by this lender. It’s typically less of a hassle when you only have one bank account. Because, closing the lone account stops any new activity.

File a Complaint

Filing a complaint with local authorities is an excellent way to help prevent this situation from happening to other individuals. In the event the lender threatens you, make sure you include those details as well. It’s always better to be safe than sorry.

Speak with Your Employer

Explain the problem to your employer, as soon as possible. Remember, to include the fact that the business is unlicensed and should not have offered you the loan in the first place. This helps to ensure the probability of a payday loan employee requesting your bank information.

These lenders want a return on their investment and will do everything in their power (shady or otherwise) to withdraw the money due to them from your account. If that happens, you’ll probably be in much worse shape than you were before getting the loan.

You also need to inform your employer that the payroll department should NOT follow any requests to send your wages to the unscrupulous lender.

Contact the Lender in Writing

It’s imperative for you to have something in writing, when communicating with an unlicensed payday loan lender. Certified mail is always best and probably doesn’t cost as much as you think. This way, you’ll have documented proof that the lender did indeed receive your letter.

Convey the message that you know that they’re operating illegally and that, by law, they cannot charge you any interest and fees on the loan you took out with them. Explain that you contacted your bank and revoked authorization and that in no way should they allow the debit to be processed.

Go one step further and state your intention to file complaints against them with the Better Business Bureau, the Federal Trade Commission and the Attorney General in your state. Don’t forget to specify the amount of time you’ll give them to contact you with a reply.

In conclusion, don’t let an unlicensed payday loan lender get the best of you. Be proactive. Ignoring the problem won’t make it magically disappear.

Read our article on payday loan consolidation as well.

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