Sutherlin says the law is still evolving on this issue, but adds “in this case it was clear they were doing business in Wisconsin.” This is one of the reasons they agreed to settle down.
As the industry spends a lot of money to thwart efforts to tighten state regulations and expand federal rules, which now only regulate loans to military families, the courts are a key arena where the practices of payday loans are disputed, according to the Center for Responsible Lending, an advocacy group with offices in North Carolina, Washington DC and California. For example, the North Carolina and Florida appeals courts have ruled that arbitration clauses in loan agreements like the one signed by Bernhardt do not prohibit consumers from suing lenders.
Sutherlin says internet court battles show that legislation should address the issues raised by online lending. The payday loan bill now before the Wisconsin Senate specifically mentions the Internet; this would require lenders operating in cyberspace to prominently display their Wisconsin license on their websites.
Orr also says it’s time to look at the specific regulations for online lenders, of which many have grown: “This really is the next frontier. On the one hand, she says, Internet loan providers should be required to obtain a license.
As Wisconsin lawmakers stumble toward caps on payday loan fees, 394 Wisconsin clients of Arrowhead are expected to receive a check in the mail. Payday loan users who can be traced and paid Arrowhead more than the original loan amount taken out between 2001 and 2007 will split $ 100,000. This is the maximum that a court can award as restitution in class actions under state law. Individual repayment amounts will be calculated based on how much is greater than their loan amount paid by customers, but no average amount is yet available, Orr says. The state will receive $ 30,000 for fines and assessments, and the legal clinic will receive $ 15,000 in legal fees. Outstanding loans from people in the class will be canceled and their credit scores adjusted.