New York Payday Loan Crackdown Continues as DFS Subpoenas 16 Lead Generators

The New York Department of Financial Services (DFS) opened a new front in its campaign against the payday lending industry by subpoenaing 16 online lead generation firms that allegedly collected and sold consumers’ confidential personal information to online payday lenders. The DFS emphasized that the subpoenas were directed not at the online payday lenders, but at those firms that allegedly established websites marketing payday loans, which are illegal in New York.

In identifying the 16 companies, Governor Andrew Cuomo explained that “earlier this year, my administration launched an investigation of online payday lenders and today we are expanding this investigation to protect New Yorkers from similar scams that ensnare families in endless cycles of debt.” The DFS had allegedly received numerous complaints from consumers who were inundated with calls from suspected scam artists after having uploaded their personal information on the websites of the subpoenaed firms.

In our alert last week, we wrote that the DFS’ crackdown on online payday loans was not limited only to the lenders allegedly making illegal payday loans. Rather, the DFS has recently expanded its probe to target debt collectors, banks, and law firms that allegedly provide services to online payday lenders that lend money to New York residents. The subpoenas are yet another warning that any vendor working with online payday lenders must confirm that its services are not facilitating unlawful (as opposed to lawful) payday lending. In particular, any vendor whose services are being used by an online payday lender to make loans in New York is vulnerable to enforcement action by the DFS or New York Attorney General.

Topics:  Compliance, Department of Financial Services, Internet Lenders, Payday Loans

Published In: General Business Updates, Communications & Media Updates, Consumer Protection Updates, Finance & Banking Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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