The number of Americans who apply
for pay day loans has grown steadily over the past 6 years and the momentum
doesn't look to be slowing down anytime soon. Several states have enacted
regulatory legislation in order to control the pay day loan sector in response
to consumer complaints and allegations of loan sharking by the media.
As far as the big picture goes, the
pay day loan industry does not have an exceedingly high complaint ratio. One
national pay day loan provider states that it's written customer complaint
occurrence is less than 4%, which conversely could be interpreted as a 96%
satisfaction rate, depending on who is quoting the statistics.
In the financial products industry
and specifically with pay day loan products, one may think that the most common
consumer complaints fall directly in line with media reports and revolve around
high interest rates, predatory lending practices, collection harassment, or a
myriad of other potential complaints, however the actual type of complaints
that have been filed with the Better Business Bureau, Federal Trade Commission
and various States Attorney General's offices paint a different picture indeed.
Here are the 3 most common type of
complaints filed by consumers against their pay day loan providers.
1. Our research shows that the most
common consumer complaint is that the pay day loan companies make it very easy
to complete a loan application online and provide instant approvals, however
they do not provide an easy way to increase weekly or bi-weekly payment amounts
on the same website. At first glance this wouldn't even seem like a reason to
complain as the company is drawing a very low weekly payment for the loan,
however many consumers would like to pay off their loan earlier than originally
scheduled in order to avoid added interest charges, but instead of being able
to do that online, they must call and speak to a live customer service agent in
order to alter their previously agreed upon payment terms. This general area of
complaints accounts for over 1/3 of all complaints filed with the Better
Business Bureau.
2. The second most common complaint
is with late payment fees. Many pay day lenders charge a late fee, much like a
credit card company does for payments that are received after the agreed upon
payment date. In many cases this late fee can be in the neighborhood of 15% or
a $15 fee on a scheduled payment of $100. The credit card industry suffers from
similar complaints as a late payment fee of up to $40 can be assessed against
even a minimum payment of $40 which equates to a 100% late fee. Late fees would
seem to be a significant source of income for both industries.
