Payday loans are risky for consumers. This is why there are laws that regulate payday lending in California. However, some lenders ignore these laws and issue illegal payday loans to desperate, unsuspecting consumers. These unlawful loans may come with high interest rates, poor repayment conditions, and excessive fees that don’t comply with state regulations. Fortunately, these unscrupulous payday lenders are often caught. For example, the Consumer Financial Protection Bureau (CFPB) recently imposed a $100,000 fine on a California company called Zero Parallel LLC. This is an interesting case because the company in question is not a payday lender itself. Rather, Zero Parallel LLC makes money by selling consumer information to payday loan providers. It ran into trouble with the CFPB because many of its lender affiliates violate California payday lending laws.
How Zero Parallel LLC Led California Consumers to Illegal Payday Loans
California residents looking for payday loans may come across the Zero Parallel website. Here, they can fill out an application for a loan, but Zero Parallel is not a lender. Instead, this company is a “lead aggregator.” This means that they take applications filled out online by consumers and sell them to payday lenders.
Allegedly, Zero Parallel failed to screen lenders, selling leads to the highest bidders. For this reason, many loan applicants were lead to illegal payday loans with terrible terms and high fees. According to the CFPB, the company will pay the fine without either admitting or denying the charges brought against it. As a side note, Zero Parallel owner, Davit Gasparyan previously owned a company called T3Leads, which was fined $250,000 by the CFPB for similar violations.
Important Laws Concerning Payday Loans in the State of California
First, California consumers considering payday loans should look at alternatives. For instance, personal loans typically come with lower interest rates, and they can actually help your credit score. Even credit cards are often better options. However, if you have a bad credit score, and an emergency comes up, you may feel forced into taking out a payday loan.
For California residents who run into this situation, here a few important laws concerning payday loans.
- In California, all payday lenders must obtain a license from the Department of Business Oversight. This law applies to both storefront and online payday lenders.
- No payday loan may exceed $300.
- Payday lenders may only issue a consumer one loan at a time.
- A lender cannot issue a payday loan to pay off a previously issued payday loan.
- Payday lenders may only charge a 15% fee on the total amount borrowed.
- If a borrower’s check bounces, a payday lender may only charge one fee of up to $15.
- Every California payday lender must post their license and fee schedule either in their physical store or on their website.
Knowing these laws and the rights they give borrowers will help you avoid unlawful payday lenders and bad payday loans. Yet, California consumers with bad credit can end reliance on payday loans by improving their credit scores.
How California Consumers Can Improve their Credit Scores and Avoid Payday Loans Altogether
For California consumers who want better credit, the credit repair process starts with paying bills on time. Once caught up with payments, you should pay down high credit card balances and try to use no more than 30% of your available credit at any given time. Building an emergency fund is another part of the credit repair process. By having money set aside, you won’t undo your credit building efforts by taking on excessive debt (such as a payday loan) to cover an unexpected expense.
Another way to get better credit quickly is to check your credit reports. Unfortunately, about 80% of California residents have flawed credit reports. Also, many of the mistakes and errors lurking on credit reports are harmful to credit scores.
If, while checking your credit reports from TransUnion, Equifax, and Experian, you find inaccuracies, contact Credit Repair Lawyers of America in California. When you call our firm to handle your credit report errors, we will provide you with an experienced credit attorney. Then, we will do whatever it takes to get you clean credit reports – for FREE.
The Free and Legal Way to Get Better Credit
Don’t let errors on your credit reports bring your credit score down. At Credit Repair Lawyers of America, we’ve been cleaning up credit reports for consumers since 2008 for free. How do we do it? The law allows us to collect our fees and costs from the defendants in any successful action. This is why our clients pay nothing for the work we do.
Let’s start the conversation about what we can do for your credit. Set up your free consultation today by calling Attorney Gary Nitzkin at (916) 438-9400 or sending him a message through our contact page.