 Thursday, June 07, 2007 ( 1:49 PM ) Andy Lending Over State Lines Many have asked what laws apply when you lend over state lines? Many have looked to the loan contract and where it originates from and if it calls for the laws of that state to apply. Dealing a potential blow to internet commerce and banking, the Illinois Department of Financial and Professional Regulation (IDFPR) has said that the state where the borrower is will prevail. In a record setting fine the state wants Global Payday Loan, LLC, d/b/a/Payday-Loans-Yes.com to pay $234,000 because of a complaint about a $300 loan. Global is based out of Jenkstown, Penn., and Salt Lake City, UT. These may or may not be loan terms you would make, could make or would borrow on yourself. A $300.00 loan was made using the web. The loan was written for only six days. Loan fees exceeded the $15.50 per $100.00 allowed in Illinois. The annual percentage rate on the loan was 2,190%. Disclosures required by the state were also not made. The lender in this case not only charged what Illinois considered usurious, but they continued their collection efforts when they didn't feel they were properly repaid. $360 was already paid, but in April collection calls were reportedly made to the borrower and her employer, demanding repayment of $630. While the terms are what the state objected to, one element I believe that needs to be focused on for greater importance is the application of the state's laws against a lender in a different jurisdiction. Application of the law in this manner will severely inhibit e-commerce and even interstate commerce when your customer moves to another state and wants you to make them a loan by mail. These pay day loan terms not withstanding, how many other states lending laws are you required to know and what happened to the exportation of rates and terms? Regulation in this area is best left to the federal government. Here is how the $234,000 fine was calculated.
Wednesday, June 06, 2007 ( 8:00 AM ) Andy Did Internet Banking Save $400,000 Carson, CA does banking online. City Treasurer Karen Avilla reviews the online statements daily and one day in May 2007 she saw a $90,500 transfer which didn't appear to be authorized. The city's bank was able to provide information on the transfer and begin an investigation. The next day there was another transfer, $358,500 was debited this time. These were discovered because of routine account review. This is one reason internet banking should be promoted as a safety feature in today's ID theft rich environment. The city's bank sent a computer forensic team to investigate. What they found was a Trojan horse on the Treasurer's laptop which allowed a keylogger to capture the log on information for the accounts. In the office the laptop was connected directly to a T1 line that was considered secure. But at home, she uses a wireless connection. This is believed to be the weak link in the information security chain. Because this was detected early, the banks have been able to freeze most of the money and prevent further losses. There is $45,000 outstanding that the Secret Service is tracking and they may be able to recover this and apprehend the criminals. That remains to be seen. Obviously this could have been much worse. This should serve as a lesson not only that we teach our customers, but ourselves. Routine review of accounts is a window of early detection. And how many bankers have laptops and take them home to do some work? What about data transfers on thumbdrives? What security measures are employed on home networks used for bank business? IT departments need to find the balance between allowing work to continue, but in a safe manner. # |
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