Loan Issues

There are an increasing number of online loan schemes affecting Vermont consumers. An increasing number of money lenders operate solely via the internet (or use spam email, pop-up ads, or text messages), offering “EZ cash” or “Quick access to cash, no credit check” or “No credit? No problem!” Many of these offers are fraudulent, some purport to originate from Vermont. While some fraudulent loan offers can appear to be legitimate, there are steps you can take to protect yourself.

First and foremost, try to avoid online loan schemes altogether (if it sounds too good to be true, it usually is), and seek out other alternatives for money management. The Federal Trade Commission offers helpful advice and alternatives.

Read the Attorney General’s Report on Illegal Lending (dated April 23, 2014)

Read the "Fact Sheet" summarizing the Report.

Is the lender licensed to do business in Vermont?

Unless it is a federally-regulated entity, a lender operating in Vermont or lending to Vermont consumers must be licensed with the Vermont Department of Financial Regulation. You can check the licensure status of a lender online on the Department of Financial Regulation's website. You can also check online to see if a lender has already been identified as an "unlicensed lender" on the Department's Unlicensed Lender List.

If the lender is unlicensed, you may file a complaint with the Department of Financial Regulation:

•Call (802)828-3307 or email: DFR.BnkConsumer@state.vt.us [If emailing, for security reasons, please specify "Unlicensed Lender complaints" in the subject line].

Is there a fee you have to pay before you receive the loan funds?

This type of loan, one that requires a payment up front from you prior to disbursing funds, is unlawful in Vermont. Do not pay any money up front for a loan. If a lender wants you to wire money prior to receiving your loan, cease contact with the lender.

Is it a pay day loan?

Pay day loans (short terms loans with very high interest rates) are also generally unlawful in Vermont, as their interest rates often conflict with Vermont usury laws. Many of these loans are also from unlicensed internet lenders (see above.) The instructions below are for anyone who has obtained a pay day loan, or a loan from an unlicensed lender.

What you should do if you have a pay day loan or loan from an unlicensed lender:

•Cease all electronic payments immediately, by sending written notice to the lender stating that you revoke authorization for all automatic debits and electronic payments and requesting that all payments stop immediately.
•Here is a sample notice form to revoke your authorization and instructions on how to send it. •Provide a copy of the notice to your bank and request that all electronic payments to that lender also be stopped by your bank.
•Provide all proof that you sent the notice (i.e., fax confirmation receipt, a copy of the "sent" email, etc.) to your bank.
•Even if your lender has not responded to you, explain to your bank that you cancelled your authorization and that the bank should no longer allow any automatic debits from that lender.
•Ask the lender for a “payout statement” or “alternative payout” (i.e., a way to pay off the loan).
•If you have paid back all of the loan amount, you do not have to pay any more. If not, contact the Consumer Assistance Program to determine what your options are.
•Collect as much information as you can from the lender (their place of business, their contact information, ask for all documents pertaining to your loan).
•It is unlawful for the lender to harass you to collect the loan. Visit our Debt Collection page for more information.
Contact us with questions or to file a complaint.
•You may also file a complaint with the Department of Financial Regulation (see instructions above in answer to previous question).

I submitted an online loan application, how do I protect against identity theft?

If you have submitted a loan application online, or wired money to a lender, you should take immediate steps to protect yourself from identity theft such as:

•notify the wire transfer company (if you have wired funds) of the fraud immediately. If the funds have not been picked up, you may be able to stop the transaction.
•file a report with local police,
•contact your bank and credit card company to advise them that your account information may be compromised,
•place a security freeze on your credit files,
•file a complaint with CAP, including the website address for the online "lender".

You may find more information about protecting yourself from identity theft on our Identity Theft page.

The Attorney General's Office is directly involved in stopping illegal lending:

Relevant Vermont Laws

  • Consumer Protection Act provision on “Unlicensed loan transactions” (including payment processors): 9 V.S.A. § 2481w
  • Licensing requirements: 8 V.S.A.§ 2201; 8 V.S.A. § 2233
  • All lending requirements: Title 8, Chapter 73
  • Interest rate limits: 9 V.S.A. § 41a
  • Settlements

    "CashCall, Inc. & Western Sky, et al. (California and So. Dakota online lender and servicer)
    "Government Employees Credit Center, Inc.(Delaware online lender)
    "Sure Advance, LLC (Delaware online lender)
    "T Money, LLC (“T-money”; California payment processor)

    Lawsuits

    PBT Loan Services, et al. (Florida online lender)
    Cash in a Wink (Delaware online lender)
    Intercept Corporation (No. Dakota payment processor)

    Cease and Desist Letters

    Letter to 81 known illegal lenders: demanding compliance with VT law
    List of all known illegal lenders and contact information

    Advisory Letter and Requests for Assistance

    Letter to Vermont Association of Broadcasting
    Letter to Comcast Corporation
    Letter to DISH Network Corp
    Letter to DirecTV
    Letter to Google, Inc
    Letter to Yahoo! Inc
    Letter to Microsoft Corporation
    Letter to NACHA – The Electronic Payments Association
    Letter to Electronic Transactions Association
    Letter to Third-Party Payment Processors Association
    Letter to Vermont Bankers Association, Inc. and Association of Vermont Credit Unions
    Letter to Vermont Employers

    Consumer Tips

  • Alternatives to an online loan, including:
  • Ask your employer about participating in the United Way’s “Working Bridges” income advance loan program -- for more information, visit: http://www.unitedwaycc.org/resources-for-companies/working-bridges/
  • Send your lender and a copy to your bank or credit union the "Cancellation Form to revoke access to your bank account and cancel the loan
  • Read the Attorney General’s Report (pp. 11-13 for “consumer tips”)
  • Contact the Attorney General: AGO.UnlicensedLending@state.vt.us
  • Sign up for news or alerts from the Attorney General’s email list on illegal lending: UnlicensedLending-request@list.state.vt.us
  • Published: May 28, 2014