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Beware Online Payday Loan Sites

May 18th, 2012

Payday loans are targeted towards people who need some money fast – covering bills or groceries between paychecks, for example. Most payday loans are short-term loans with a timeline of about two weeks. The high interest rates have caused many consumers to approach payday loans with caution – the typical payday loan borrower faces an annual interest rate of 650 percent. Refinancing costs, if the borrower cannot pay the loan back in time, are also very high.

Officials have targeted online payday loans as being exceptionally risky. The Federal Trade Commission sued 500FastCash, one such site, for allegedly adding hidden fees and using unethical means to threaten their borrowers into repaying their loans.

With some online payday loan sites, you can get a loan approved quickly – even directly deposited into your account – by providing your bank account information. In addition to sending sensitive information over a potentially insecure connection, you are giving a company control of your finances. According to Jean Ann Fox, consumer protection advocate and director of financial services for the Consumer Federation of America, this creates a dangerous situation.

“The hazard here is that you grant lender access to your bank account and you don’t know how much you will pay back by the time you are done,” Fox said. “Many [lenders] require you to manually set it up to make a principle payment.

If the borrower does not adjust the billing options manually, Fox warned, he or she is only paying off interest payments, not the principle amount borrowed.

To protect your finances, use extreme caution when taking out high-interest loans like payday loans. Taking out a traditional loan might involve a little more time and red tape, but in the end might be worth it.

The Sarelson Law Firm – Miami litigation attorneys

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iPod Class Action Moving Forward

May 16th, 2012

If you purchased an iPod between September 12, 2006 and March 31, 2009, you might involved in a class action lawsuit against Apple for unfairly blocking a competitor.

The suit dates back to 2004 when RealNetworks released music software called Harmony. Previously, iPod users could only sync music in their iTunes library to their iPod, but Harmony allowed users to sync music obtained through their own network. Apple discovered what RealNetworks was doing with Harmony, labeled the activity as “hacking” and released a software update that prevented users from syncing their Apple devices with RealNetworks media. Subsequent iPods carried this same software update.

In the aftermath, iPod owners sued Apple for unfairly blocking competition. The case stalled for several years until U.S. District Court Judge James Ware noted that neither side of the case had introduced an expert report. He noted that Apple would have the chance to challenge said report, and he asked for both parties to come together and agree on a schedule for further proceedings.

If you bought a standard iPod, iPod Nano, iPod Shuffle or iPod Touch, you are already involved in the class action lawsuit, according to the lawsuit’s website (ipodlawsuit.com). If you want to exclude yourself from the lawsuit, you must send a letter of exclusion to the following address by July 30, 20102.

Apple iPod iTunes Antitrust Litigation

c/o Rust Consulting, Inc.

P.O. Box 8038

Faribault, MN 55021-9438

The Sarelson Law Firm – Miami class action attorneys

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Banks Replace Payday Loans with Prepaid Cards

May 14th, 2012

Consumer protection groups are calling on the government to step up the restrictions on some prepaid bank cards.

One such target is CheckSmart, a payday lender owned by Community Choice Financial, Inc. The lender is allegedly skirting payday loan laws by offering bank cards that function in a similar way.

Payday loans came under fire due to high annual interest rates. Lenders market payday loans as short-term loans to help get the lender through a rough period between paychecks. The interest rates are very high: when calculated at a yearly level, they climb to about 400 percent APR, often much higher.

In response, Ohio and Arizona passed legislation that caps payday loans at 28 and 26 percent, respectively. Since the APR adjustment, CheckSmart is selling prepaid bank cards instead of payday loans in Ohio.

“Prepaid cards and payday loans just don’t mix,” said Lauren Saunders, managing attorney of the National Consumer Law Center. “Prepaid cards should be a safe alternative to bank accounts, not vehicles for evading state law with predatory loans that trap people, often those with the least means, in a spiral of debt.”

The bank cards offered by CheckSmart in Ohio allow users to directly deposit wages or benefits onto the card. They can also enroll in “overdraft protection” which works similar to a payday loan: the borrower can get a $100 advance from their next paycheck for a $14 fee and 35.9 percent interest rate. Compare this to a typical payday loan: a borrower can take out a $100 loan for a $15 or $20 fee and face equally high interest rates.

While the bank cards are technically not payday loans, they can easily trap consumers in a web of debt and high interest payments. They can be useful when getting out of a quick jam, but use extreme caution if you plan to use them more than once.

The Sarelson Law Firm – Miami litigation lawyers

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