SACRAMENTO, Calif. (10/10/13)--California credit unions and banks are on alert to stop illegal unlicensed online payday lenders and to identify and report any suspicious activity.
Jan Lynn Owen, commissioner of the California Department of Business Oversight, directed financial institutions licensed by the department to monitor transactions with any unlicensed lender and immediately report potential violations, in an Oct. 7 letter.
"Protecting consumers from illegal online payday lending is a central focus of the department's enforcement efforts," said Owen. "With the recent consolidation of the state's payday lending regulator with the banking and credit union regulator into the Department of Business Oversight, we are now better equipped to protect both borrowers and financial services businesses. We are reaching out to our licensees and stakeholders to try and combat this growing threat to consumers."
The department said it will examine credit unions to ensure safeguards are in place to prevent unlicensed payday lenders from gaining access to the automated clearinghouse (ACH) network.
Names of unlicensed lenders that have been the subject of multiple consumer complaints are cited on the Department of Business Oversight website.