Payday advances on prepaid scheme exposed

Work of the Comptroller for the Currency, a federal bank regulator, determined that prepaid credit card issuer Urban Trust Bank and payday loan provider CheckSmart Inc. evaded state payday and usury legislation in Arizona and Ohio by loading payday advances on prepaid cards. The OCC stated Orlando, Fla.-based UTB decided to correct the violations, submit to a review of its prepaid credit card system, and submit to an OCC summary of the lender’s business strategy to deal with too little its oversight of CheckSmart.

a coalition of customer advocacy teams led by The nationwide Consumer Law Center urged the OCC to power down CheckSmart’s pay day loan system. This program ended up being facilitated with UTB-issued Insight cards that are prepaid handled by Insight Card Services LLC, which can be partly owned by Dublin, Ohio-based Community Selection Financial Inc. The coalition stated CheckSmart, a subsidiary of CCFI, used the Insight prepaid cards to offer payday advances in Arizona and Ohio, where in fact the usury limitations are 36 per cent and 28 per cent respectively.

The OCC stated CheckSmart payday that is disguised as either credit lines or overdraft security on prepaid cards. “The loans cost $14 to $15 per $100 lent, or a rate that is annual of 400 per cent, nevertheless the expenses had been cloaked in several costs built to evade state legislation,” in accordance with the OCC. Read more →

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