Know the Facts About Payday Loans

Payday loans are also called cash advance loans or paycheck advance loans. You write a personal check made payable to the company who is loaning you the money for the amount you want to borrow plus a fee. The lender gives you the money, and you are told the number of weeks you have to repay the money. Interest rates for payday loans, if adjusted to an annual rate, range from 350% to over 500%! Such loans are intended to satisfy short-term financial needs and are not effective for long term use. Although the payday loan may be convenient, because of the high interest rate on these loans, consider a loan from a bank, a credit union, or a family member before obtaining a payday loan.

If you plan to use a payday lender, please see our “Consumer Guide to Payday Lending” for additional information and make sure the company is properly licensed with the Bureau of Financial Institutions. If you or your spouse are a member of the military, there are additional consumer protections for military personnel. A list of the payday lenders licensed in Virginia is also available on our website. If you have questions or need additional information, you may contact us at 804-371-9657 or through the State Corporation Commission’s toll free number at 1-800-552-7945 (ask for the Bureau of Financial Institutions).

Know the Facts about Motor Vehicle Equity Lines of Credit

The Bureau of Financial Institutions has received a number of calls about a fairly new product being offered in Virginia called a “motor vehicle equity line of credit”. These are generally small loans secured by your motor vehicle (a lien is recorded on your automobile title). Borrowers are required to provide the lender with a duplicate set of keys for the motor vehicle. According to the motor vehicle equity lines of credit we have seen, borrowers who fail to make required payments within ten days after the payment due date (or are otherwise in default of their agreement with the lender) could lose their car. The amount you can borrow is typically based on the value of your car (which you must own outright). Interest is calculated on the balance of the loan at a very high annual rate, often 350% to over 500%! Because of the high interest rate on these loans and the risk of losing your car, consider a loan from a bank, a credit union, or a family member before obtaining a motor vehicle equity line of credit.

Check 21

Check 21 is a federal law that is designed to enable banks to handle more checks electronically, which should make check processing faster and more efficient. Check 21 became effective on October 28, 2004.

For a complete list of Frequently Asked Questions, please refer to the Board of Governors of the Federal Reserve System, which has answers to some of these questions. Visit the Federal Reserve's Check 21 Frequently Asked Questions page.

Identity Theft

A new centralized government website on identity theft was launched April 23, 2007 as a result of a Task Force of several Federal agencies created by Executive Order. The new site provides consumers with recommendations on preventing identity theft as well as information to assist those consumers who have become identity theft victims. The new centralized government website on identity theft is http://www.idtheft.gov/

E-Mail Phishing Scams Circulate on the Internet

There are several different e-mail phishing scams circulating on the Internet in an attempt to gain sensitive financial and personal information.

What is phishing?

Phishing is a scam in which the attacker sends an e-mail disguised as a valid financial-related service provider. The e-mail will use tactics to scare a victim into visiting the malicious site. Once on the Website, which generally looks and feels much like the valid banking site, the victim is instructed to log in to his/her account and enter sensitive financial information such as bank PIN number, Social Security number, mother's maiden name, etc. This information is sent to the attacker who then uses it to engage in credit card fraud, bank fraud, and identity theft.

What can I do?

Don't be a victim. Consumers may call the SCC toll-free (in Virginia) at 1-800-552-7945 or in Richmond at (804) 371-9967 regarding matters involving securities, insurance, or financial institutions.

Consumer fraud complaints are also handled by the Office of the Attorney General at 1-800-451-1525 and the Office of Consumer Affairs within the Virginia Department of Agriculture and Consumer Services at 1-800-552-9963.

Phishing e-mails that you receive should also be sent to the following email address: spam@uce.gov according to the Federal Trade Commission.

Virginia Telephone Privacy Act (unsolicited telemarketing calls)

The Virginia Telephone Privacy Protection Act (VTPPA), Virginia Code §§ 59.1-510 through 59.1-518, provides the following protections against unwanted telemarketing calls to Virginians:

1. prohibits telephone solicitation calls at any time other than between 8:00 a.m. and 9:00 p.m.;
2. requires telephone solicitors to identify themselves by first and last name and by the name of the company for which they are calling;
3. requires telephone solicitors to transmit for caller identification services the number, and when available by the telephone solicitor’s carrier, the name of the telephone solicitor;
4. prohibits telephone solicitors from intentionally blocking caller identification services;
5. requires telephone solicitors to play a prerecorded identification message whenever a live sales representative is not available to speak with the person answering the call within two seconds of that person’s completed greeting;
6. prohibits telephone solicitors from calling a telephone number when someone at that number has stated that he or she does not wish to receive solicitation calls by or on behalf of the company for which the call is being made;
7. prohibits telephone solicitors from calling a telephone number on the National Do Not Call Registry;
8. permits individuals to sue to enjoin violations, recover damages of $500 for each violation or up to $1,500 for willful violations, and recover their attorneys’ fees and court costs;
9. authorizes the Commissioner of the Department of Agriculture and Consumer Services to inquire into possible violations and the Attorney General to issue civil investigative demands; and
10. authorizes the Attorney General, Commonwealth’s Attorneys, and attorneys for any county, city, or town to sue to enjoin violations, recover damages for affected citizens of $500 for each violation, recover a civil penalty of up to $1,000 for each willful violation, and recover attorneys’ fees and expenses.

If you believe you are receiving calls in violation of the VTPPA as described above, you may file a complaint with the Virginia Office of Consumer Affairs. Write: Office of Consumer Affairs, Counseling, Intake and Referral Unit, P.O. Box 1163, Richmond, Virginia 23218; or call: (toll free in Virginia) 1-800-552-9963 or 804-786-2042. A complaint form and additional information is available at the Office of Consumer Affairs website.