Abusive Collection Practices

Question: Can an online pay loan that I defaulted on press criminal charges like bad checks? A pay loan company is calling my family members and threatening that they are going to press charges against me for issuing a bad check.

Answer:

  1. Under no circumstances is nonpayment of a loan criminal.
  2. In Illinois, the bad check statutes do not apply to a postdated check issued in connection with a loan, or any postdated check, because there is no representation that you have the funds in the account. On the contrary, it is obvious that you would not be borrowing the money if you had it in your account. The bad check statutes also do not apply to ACH authorizations and the like. Finally, they do not apply to checks (postdated or not) issued to pay existing private debts, as you are not getting any money, property or services in exchange for the check.
  3. Most online lenders are unlicensed. Check with the Illinois Department of Financial and Professional Regulation. Their loans are unenforceable. You may be entitled to substantial statutory damages from them. If you have such a lender, send them a letter stating that you refuse to pay.
  4. The type of collection conduct you describe is abusive. Report it to law enforcement (Federal Trade Commission, Consumer Financial Protection Bureau, state Attorney General). It is not covered by the Fair Debt Collection Practices Act unless a third party debt collector is involved, or the creditor pretends that a third party debt collector is involved. It may violate state laws relating to defamation and the like.
  5. The main problem with taking legal action against such lenders is finding them.
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