How do I get a pay day loan to stop debiting my checking account?

Posted by idawrites on December 10, 2009 in Loans, Money |

Once upon a time, quite some time ago, I was an employee for a payday lending call center.  I started out on the phones and worked my way up to being the compliance officer and trainer. Later, I was hired by another payday lender to launch and manage their new call centers. To say I know a little about how the industry works would be a huge understatement.

This morning, I logged onto Yahoo! Answers and saw this question: How do I get a pay day loan to stop debiting my checking account?

Since I’m sure that she’s not the only person to wonder about this, and I’m pretty darned qualified to offer an answer, I thought I’d share it with you:

Notify the lender by mail, return receipt requested, that you are revoking their permission to debit your bank account.  This notification MUST be received by the lender no later than 72 hours prior to the scheduled debit.

Then send a copy of the letter and your return receipt from the post office to your bank and ask them to block any further debits to your account from this source.  Some banks can do this and others can’t, so you should definitely check with the bank first.

If the lender does not comply and debits your account anyway, contact the Federal Trade Commission to file a complaint (ALWAYS IN WRITING!), providing copies of the letter you sent to the lender and the return receipt from the post office. Send a copy of your FTC complaint to the lender.

Just remember that this will not stop collections activity from the company.  You still owe the money and the fees associated with the loan.  This simply stops them from being able to debit your account directly.

But I think there is more to this than just the answer to that question.  ALL lenders have two functions.

  1. Lend you money
  2. Get their money + interest back from you

That’s it. It stands to reason that if they only have two jobs, they’d be pretty damned good at those jobs. If you borrow money from ANY lender, not just a payday lender, let me assure you that they are very very good at getting their money back. They don’t care if you just lost your job or your aunt Millie died a week ago and you’ve been too devastated to work. They care that you owe them money, that you signed a contract to repay.

Lenders are not social service organizations … they’re a business. If you can’t pay back the money, don’t borrow it. Otherwise, you’re committing theft. If you take out a loan and then freak out because you can’t pay the finance fees and suddenly want to cut off access to your account to the big bad company that is debiting it (Oh yeah, per the contract YOU signed) and you can’t afford it, then it’s not the company that is wrong here.

Payday lending sucks. The fees are pretty high. But they’re well within their legal rights… and with the hundreds of thousands of people who are applying for them every single day, they are obviously a product that is in high demand. I’m definitely not an advocate for payday lending, but I AM an advocate for personal responsibility. If you knew what you were legally obligating yourself to do… and then decided the price was too high after you received the benefit of the service… then the big bad person here is not the lender that you’re trying to screw. It’s you and your victim mentality.

1 Comment

  • Jerry Lotz says:

    You know what, I’ve been on here reading many things and you do provide good information. But the big problem here is the APR rates defy laws in many states. If you take a $1000 loan they turn around and debit you $300 every two weeks for the first 4 weeks of contract. After that they debit you $300 plus another percentage to pay down loan and then that $300 falls by like $10 each week. The payday companies don’t let the consumer know this stuff very well in the contract. The payday companies ultimately are making more than their money back on these loans. And in many states they are illegal. Many consumers to be fair in that instance can get away with just paying the Principal amount on account. So while you have good information and urge personal responsibility by consumers how about personal responsibility by the payday lenders also?

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