District Court when it comes to Eastern District of Pennsylvania has highlighted once more the regulatory dangers that the alleged вЂњtrue lenderвЂќ doctrine can make for internet-based loan providers whom partner with banking institutions to determine exemptions from relevant state customer security regulations (including usury rules). Even though Court failed to achieve a concluding decision on the merits, it declined to just accept federal preemption as grounds to dismiss an enforcement action brought by the Commonwealth of Pennsylvania against an internet-based payday lender whom arranged for the state-chartered bank to invest in loans at interest levels exceeding the Pennsylvania usury limit.
The attention prices on these loans far surpassed those allowed under Pennsylvania usury legislation.
The truth is Commonwealth of Pennsylvania v. Think Finance, Inc. (January 14, 2016). 1 The defendants Think Finance and companies that are affiliatedthe вЂњDefendantsвЂќ) had for several years operated internet-based payday lenders that made loans to Pennsylvania residents. 2 The Defendants initially made these loans straight to Pennsylvania residents and did therefore lawfully since the Pennsylvania Department of Banking (the вЂњDepartmentвЂќ) took the career that the usury laws and regulations used just to loan providers whom maintained a physical existence in Pennsylvania. Continue reading