This document discusses predatory lending practices and provides consumer protection information. It summarizes types of predatory loans like payday loans, car title loans, and refund anticipation loans. It describes common predatory loan terms and tactics to trap borrowers, as well as consumers' rights. The document advises seeking alternatives to high-cost loans and provides contact information for consumer assistance agencies.

1. Consumer Affairs Branch
Fairfax County Department of
Cable and Consumer Services
fairfaxcounty.gov/consumer

2.  Who is a target?
◦ People with credit problems
◦ Low-income individuals
◦ Military members
◦ 50+
◦ Limited English skills
◦ Anyone who is not informed!

3.  Unfair terms and conditions
 High interest rates
 Deceptive marketing
 Aggressive sales tactics
 Loans made without consideration of
borrower’s ability to pay
 Prepayment penalties
 Offer unnecessary products or services

4.  Payday loans
 Car Title loans
 Tax Refund Anticipation Loans
 Over-draft Protection Loans
 Predatory mortgage lending
 Foreclosure rescue scams
 Rent-to-own stores
 Buy Here, Pay Here auto dealers
 Pawn shops

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8.  A short-term loan with high interest and fees
 Usually for 2 weeks or less.
 You sign a contract and give the lender a
personal check as collateral for a cash
advance.
 The lender agrees not to deposit the check
for a specified period of time.

9.  Same high interest and fees as store-front
lenders.
 Gives lenders more direct access to the
borrower’s bank account.
 Illegal in Virginia.
 Report to the Virginia Bureau of Financial
Institutions at 800-552-7945 or 804-371-
9657.

10.  One payday loan at a time per borrower.
 A payday loan can not be made on the same
day another loan is paid in full.
 A borrower cannot have more than 3 payday
loans outstanding at the same time.

11.  The SCC maintains an Internet database.
 Payday lenders are required to check before
making any loans to be sure the applicant is
eligible for the loan.
 More details are available at
www.scc.virginia.gov/bfi.

12.  Example of a $500 payday loan
◦ You pay a 15% lender’s fee
(15% of $500 = $75)
◦ You write a check for $575
◦ You get $500 cash in return
◦ The $75 interest you paid for the loan calculates to
an Annual Percentage Rate (APR) of 390%

13.  Original loan = $500

14.  You will pay $525.00 in finance charges.
 Your total repayment will be $1025.00.
 The annual interest rate for this loan is 390%
APR.

15.  Borrowers got 13 loans and were expected to
pay each loan back in 16 days.
 Borrower paid $663 in interest to repeatedly
borrow the same $342 over 7 months.

16.  If the loan is not paid
◦ Additional interest and fees will be added.
◦ The lender may deposit the check which may cause
other checks to bounce and your account
overdrawn.
◦ If the check is returned to the lender, additional
fees and interest may be charged.
◦ The lender may take you to court to seek court
costs and attorney’s fees.

17.  Designed to trap borrowers.
 You must pay the entire loan with interest on
the next payday or the lender can take the
money out of your checking account.
 If you pay the loan, you might have to get a
new loan to pay other bills.
 You pay high interest rates.
 May end up paying more than you borrowed.

18.  These practices are prohibited
 Threaten criminal prosecution when you can’t or don’t
repay.
 Impersonate law enforcement.
 Abusive collection tactics.
 Repeated phone calls.
 Visits to home and on the job.
 “We will take care of you”.
 Harassment of family members or friends.

19.  You CANNOT be criminally prosecuted.
 You have the right to close your bank
account
◦ DO NOT let the lenders overdraw your account
causing you NSF fees and possible loss of your
account
 You have the right to pay partial payments
before the due date of the loan.

20.  Lenders cannot refuse your payment.
 You have the right to borrow less money if
you re-borrow from a payday lender.
 You have the right to refuse to get another
payday loan.

21.  What Lenders Can’t Do
◦ Require you to provide more than one check as security
for the payday loan.
◦ Post-date the check.
◦ Require you to provide security other than the check
payable to the lender.
◦ A lender can not provide a loan for more than $500.
◦ If the check you write to the lender bounces, they cannot
threaten to prosecute you.
◦ You cannot go to jail because of a loan secured by a
personal check.

22.  Safeguard your bank account.
 If you cannot pay back the loan when it is
due, contact the lender before the due date
and try to make payment arrangements.
 DO NOT get talked in to getting another loan!

23. Virginia State Corporation Commission
Bureau of Financial Institutions
PO Box 640
Richmond, VA 23218
800-552-7945
www.scc.virginia.gov.bfi
Email: sccinfo@scc.virginia.gov

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27.  A short term loan.
 Usually not longer than 30 days.
 Your car title is used to secure the loan.
 Not regulated.
 About 150 locations in Virginia.
 Majority of borrowers owe 90% of the
principal after 5 months.

28.  What does the lender do?
◦ Put a lien on your title.
◦ Keep an extra set of your keys.
◦ Charge 30% interest per month or 360% APR.
◦ Charge fees in addition to the interest.

29.  What lenders don’t do?
◦ Base loans on the borrower’s ability to pay the loan
back.
◦ Run credit checks.
◦ Tell you the annual percentage rate, they usually
only quote the monthly finance charge.

30.  If the loan is not paid
◦ The lender may take the car and sell it to get the
loan money back
◦ High interest rates build up
◦ You lose the money you paid

31. ◦ You borrow $200 at 25% for 30 days (25% of $200
= $50).
◦ At the end of thirty days you pay the lender $250.
◦ If you can’t pay, another 25% is added. You now
owe $300.
◦ Each month you don’t pay $50 or 25% is added.

32. ◦ At the end of six months, you owe $500.
◦ This is more than twice what you borrowed.
◦ If you can’t pay the loan in full, you car is taken.
◦ You are now deeper in debt with no car.

33.  Borrowers risk losing a vehicle they own free
and clear in exchange for a small cash loan.
 The loan is usually only for a fraction of the
car’s value.
 After several months, you may owe more than
you borrowed.

34.  If the loan is not paid
◦ You will pay high interest rates.
◦ The lender will take the car and sell it to get the
loan money back.

35.  A short-term cash advance that is secured by
your federal income tax refund.
 Consumers pay fees to the tax preparers and
the participating financial institution.

36.  Bank issues a short-term loan to the
consumer.
 A lender can’t guarantee a specific date for
availability of your money.
 You pay to borrow your own money.

37.  Most RALs require the following fees:
◦ Fee for the tax preparation service that prepared your
taxes.
◦ Fee to the tax preparer for preparing and processing
your RAL application.
◦ Fee to the lender or bank that will give you the loan.
◦ Fees range anywhere from $50 to several hundred
dollars, depending on the size of the refund.

38.  Repayment of the loan is usually due within
7-14 days.
 The loan is repaid when your tax refund is
processed by the IRS and paid out to the
bank that loaned you the RAL.
 Refund amount may be reduced by prior
debt.

39.  You have to pay the loan even if the IRS
denies or delays your refund or if your refund
is smaller than expected.
 If your income tax refund is less than the
RAL, you will have to come up with additional
money to pay back the money borrowed, plus
interest

41.  Expensive.
 Loan fees range from $40 to $$$$$.
 Triple digit interest rates of about 60% to
over 700%.

42.  Get a RAL if you:
◦ Value speed over cost.
◦ Impatient and can’t wait 8-15 days.
◦ Can afford to pay high fees.
◦ Sure that the refund amount submitted is correct.
◦ Willing to pay triple digit interest rates.

43.  Go electronic
◦ You’ll get the money almost as fast as you would
with a RAL but without paying any loan fees or
interest.
◦ The IRS has a partnership with tax preparers and
software companies that offers free online tax
preparation and e-filing to some taxpayers.
◦ The Free File program is available to taxpayers
whose adjusted gross income is $56,000 or less.

44.  Direct Deposit
◦ Electronic filers generally get their refund deposited
in to their bank accounts 10-15 days.
◦ Protects against lost or stolen refund checks sent
by mail.

45.  Ask your creditors for more time to pay your
bills and negotiate fees such as late charges.
 Consider a short-term loan from a credit
union or bank
◦ The interest rate for the loan will be lower and loans
can be paid back out several months

46.  Contact a consumer credit counseling agency
that can help you work out a spending plan.
 Arrange a repayment plan with your creditors.
 Don’t do business with an agency that
requests money from you before they provide
assistance or services.

47.  See if you can get an advance on your
paycheck.
 Borrow money from a friend or relative, or
seek help from a nonprofit organization.
 Make payment arrangements to delay or pay
a reduced amount on a bill that doe not
charge interest or has a low interest rate.

48.  Prevent the Debt Trap
◦ Payment plan with creditors
◦ Work out payment terms with utility companies
◦ Advances from employers
◦ Consumer Credit Counseling
◦ Emergency assistance programs
◦ Help from friends and family
◦ Credit union loans
◦ Military loans

49. Virginia State Corporation Commission
Bureau of Financial Institutions
PO Box 640
Richmond, VA 23218
800-552-7945
www.scc.virginia.gov/bfi
Email: sccinfo@scc.virginia.gov

50. Short-term loans
Fairfax County Federal Credit Union
PO Box 1300
Fairfax, VA 22038
703-208-9900
www.fairfaxcu.org
Email: information@fairfaxcu.org

51.  Active duty or retired military should call
800-464-8107 for Military Onesource.
 Navy and Marine personnel may qualify for a
Quick Assistance Loan (QAL) which is interest
free and repayable within 10 months.
◦ Call the Navy Marine Corp Relief Society at 703-696-
4904.
 Coast Guard personnel can contact Coast
Guard Mutual Assistance at 800-881-2462.

52.  To prepare and electronically file your federal
taxes fast, easy, and free:
◦ www.irs.gov
 If you make $56,000 or less a year, you may
qualify for FREE FILE.
 If not, you can e-file.

53. If you earned less than $42,000 in 2009, free
income tax preparation is available. Contact:
Volunteer Income Tax Assistance Program
Falls Church SkillSource Center
703-553-5400; TTY 703-533-5316
www.fairfaxcounty.gov/dfs/childrenyouth/fami
lies_income_tax_prep.htm

54. Consumer Affairs Branch
Department of Cable Communications and
Consumer Protection
12000 Government Center Parkway
Suite 433
www.fairfaxcounty.gov/consumer
Email: consumer@fairfaxcounty.gov
703-222-8435; TTY 711

55. Legal Services of Northern Virginia
4080 Chain Bridge Road
Fairfax, VA 22030
703-246-4500
www.lsnv.org

56. 12000 Government Center Parkway, Suite 433
Fairfax, Virginia 22035
703-222-8435 TTY 711
www.fairfaxcounty.gov/consumer
consumer@fairfaxcounty.gov
fairfaxcounty.gov/consumer