If a payday loan in your state is illegal, if I got oneon-line is it binding?

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If a payday loan in your state is illegal, if I got oneon-line is it binding?

I live in the state of AZ where they passed a law banning payday loans in 07/10. If I received a payday loan after that date through the internet, what are my obligations? I have overpaid this company in fees (total surpasses my original principal). Do I owe them any more than that? They are claiming that since they are in Costa Rica, my laws do not apply and allegedly they claim that since this clause was within their terms, even though their business is illegal in my state they are fully able to keep debiting my account. What is the lender’s recourse?

Asked on March 3, 2011 under Bankruptcy Law, Arizona

Answers:

M.T.G., Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

Ok, well first, go and close the account.  They have the ability to debit only that account which you gave them access to.  Go even to another bank and open an account.  Then contact the state Attorney General's Office and speak with someone in the consumer fraud division on the matter.  There statement that because they are in Costa Rica our laws do not apply is untrue.  If they sued you then they would have to do so in your state and then they are subjecting themselves to the laws therein.  They will not, of course, because of the payday loan laws.  So do what I said and speak with the AG's office.  It is time that these people are put out of business for good.  Good luck.


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