(The following is a reformatted version of a press release
issued by the Office of the Governor of New York and received
via electronic mail. The release was confirmed by the sender.) 
April 30, 2014 
DFS Investigation Uncovers Online Payday Lenders Shifting to Use
of Debit Card Transactions as Pressure Mounts on Their Abuse of
ACH Electronic Payments Network 
Superintendent Lawsky Sends Cease-and-Desist Letters to
Additional Online Payday Lenders Illegally Lending in New York 
Governor Andrew M. Cuomo announced new efforts to halt the
processing of illegal payday loans through debit card
transactions and help protect New York consumers. MasterCard and
Visa have agreed in discussions with the Department of Financial
Services (DFS) to take a series of steps to help stop this
illegal activity over their debit card networks. An ongoing,
extensive DFS investigation has uncovered that - as regulatory
pressure mounts on online payday lenders’ abuse of the Automated
Clearing House (ACH) bank payments network - some lenders are
instead using debit card transactions as an end run around that
system to illegally deduct funds from New Yorkers’ bank
Benjamin M. Lawsky, Superintendent of Financial Services, also
today sent cease-and-desist letters to 20 additional companies
that DFS’ ongoing investigation has identified as illegally
promoting, making, or collecting on payday loans to New York
consumers - 12 of which appear to be using this new debit card
tactic. With today’s action, DFS has now sent cease and desist
letters to 55 online payday loan companies. Previously, in
August 2013, DFS sent cease-and-desist letters to 35 online
payday lenders offering illegal loans to New Yorkers - the
majority of which have stopped lending in New York following
those letters. 
“My administration will work tirelessly to stay one step ahead
of online payday lenders that try to evade state law and trap
consumers in a vicious cycle of debt,” said Governor Cuomo. “By
working with us to root out this illegal conduct, Visa and
MasterCard have stepped up to the plate and shown how private
companies can work alongside state government to protect
vulnerable New Yorkers. This collaboration, along with the
latest cease and desist letters from the Department of Financial
Services, should serve to put all payday lenders on notice that
illegal activity will not be tolerated in the State of New
Superintendent Lawsky said: “Whenever online payday lenders try
new schemes to flout our laws and exploit New York consumers, we
will take strong action to head them off at the pass. Visa and
MasterCard responded swiftly when we contacted them about this
issue and have set a strong example today for their entire
During its more than year-long investigation, DFS has taken a
series of steps to help limit access to the ACH electronic bank
payments network for online payday lenders who are illegally
deducting funds from New Yorkers’ accounts. However, DFS
recently identified a new trend among some online payday lenders
in processing payments from loan borrowers. These lenders have
begun notifying borrowers on their websites that they are no
longer using the ACH network to process payments, and are now
requiring borrowers to provide debit card information so the
lenders can automatically deduct loan payments from borrowers’
In recent discussions with DFS, MasterCard and Visa have
committed to taking a series of steps to help halt the
processing of illegal payday loans through their debit networks
before this becomes a widespread problem. These steps include
the following: 
·     MasterCard and Visa will work with acquiring financial
institutions to ensure that they are not processing illegal
debit card transactions on behalf of payday lenders. On an
ongoing basis, DFS will provide MasterCard and Visa with
information concerning payday lenders that may be either lending
into New York illegally or using debit networks to collect on
illegal loans from New Yorkers. This information will include
the names of the lenders, URLs, and any other identifying
information that may be useful. MasterCard and Visa will
investigate the matter and take appropriate action with the
payday lender’s acquiring financial institution to cease
MasterCard and Visa activity with that lender. 
·     MasterCard and Visa will alert all acquiring banks of the
risks of doing business with payday lenders that may be
operating in violation of state law. MasterCard and Visa will
send alerts to all the acquiring financial institutions in their
debit networks about illegal payday lending and New York laws
prohibiting payday lending. The alert will also remind acquiring
financial institutions of MasterCard and Visa rules that apply
concerning the processing of illegal transactions by merchants. 
Superintendent Lawsky today sent cease-and-desist letters to the
following 20 companies that DFS’s investigation has identified
as promoting, making, or collecting on illegal payday loans to
New Yorkers. The first 12 companies listed appear - based on
DFS’s investigation - to be requiring debit card information to
collect on illegal payday loans. 
·     AALM Consulting Services, Ltd. d/b/a MultiLoanSource
·     Action Payday, LLC
·     Coral Keys, Ltd.
·     Fast eFunds
·     First American Capital Resources ONE, LLC
·     Iggy Group, LLC d/b/a Iggy Loans
·     Joro Resources, LLC d/b/a Idealgelt
·     MB Marketing, LLC d/b/a My Next Day Cash
·     Rapital Capital
·     Red Leaf Ventures, LLC d/b/a Red Leaf Lending
·     Sierra Lending, LLC
·     Uncle Warbucks
·     VIP PDL Services d/b/a VIP Loan Shop
·     Fast Next Day Cash (aka Vista B Loans)
·     First America Credit
·     My Web Funds
·     Net Cash 123
·     Platinum Cash Link
·     CWB Services, LLC d/b/a Vandelier Group, LLC; Shoreline 
Online, LLC; Cutter Group, LLC
·     Hydra Financial Limited Fund d/b/a Hydra Fund II 
Payday lending is illegal in New York under both civil and
criminal usury statutes. In some cases, however, lenders attempt
to skirt New York’s prohibition on payday lending by offering
loans over the Internet, hoping to avoid prosecution.
Nonetheless, Internet payday lending is just as unlawful as
payday lending made in person in New York. 
The Cuomo Administration has taken a series of steps to help
stamp out illegal online payday lending in New York. In February
2013, the DFS issued a warning to debt collectors that loans
with interest rates above the statutory maximums are void and
In August 2013, the Department sent cease-and-desist letters to
35 online lenders making usurious loans to New Yorkers, with
annual interest rates as high as 1,095 percent. The majority of
those lenders have ceased lending in New York following those
letters. The Department also urged banks and NACHA to work with
DFS to cut off payday lenders’ access to New York customer
The Department expanded its investigation in December 2013 by
issuing subpoenas to 16 online “lead generation” firms suspected
of deceptive or misleading marketing of illegal, online payday
loans in New York. These firms typically do not make payday
loans directly, but instead set up websites that market those
loans and collect sensitive personal information from consumers.
Lead generators then sell this personal information to illegal
online payday lenders and other companies, including scam
artists. The Department received complaints against many of
these firms about false and misleading advertising, harassing
phone calls, solicitations and privacy breaches. 
In January 2014, Superintendent Lawsky also sent a letter to
NACHA and its board of directors noting that while the reforms
they proposed following his August 2013 letter represented
positive steps, they did not adequately address the abuses of
the ACH network by payday lenders. The Superintendent urged
NACHA to take specific, stronger actions to root out illegal
payday lending over the Internet. 
Copies of the letters Superintendent Lawsky sent to MasterCard
and Visa confirming their commitment to help halt illegal online
payday lending into New York is available at the following link
and link. 
Additional news available at
New York State | Executive Chamber | |
(bjh) NY 
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