- Payday loans are a pitfall for consumers, who are charged very high fees and rates.
- First Bank of Delaware offers payday loans using the ThinkCash brand.
- Because it is a chartered bank, First Bank of Delaware can operate remotely in California.
Are ThinkCash payday loan contracts illegal and unenforceable in California?
This isn't really a question but rather a "posting" to verify some information that I've seen here related to questions/comments regarding PayDay Loan providers in the State of California. First, check your Loan Agreement. I discovered that often times what's noted as the APR % is not what's being charged. Often you may be charged more than what you agreed to. If they are charging a rate that is over the legal limit (in CA it's 460% APR), your agreement is unenforceable and, in fact, if you want, you could sue them (or take them into Arbitration) for overcharging you. Second, in the State of California, ALL PayDay Lenders must be Licensed to do business in the State (not all are). If they are NOT Licensed in the state, the agreement is VOID! First Bank of Delaware (now known as ThinkCash) is NOT LICENSED TO OPERATE IN THE STATE OF CALIFORNIA! Not only are they not licensed in the State of California to do business as a bank, they are notorious for charging ABOVE the maximum allowable by law APR (460%) by packaging their PayDay Loans as "Installment Loans" and they spread them out over an 11 week period. Look at: DIVISION 10. CALIFORNIA DEFERRED DEPOSIT TRANSACTION LAW on the web and specifically review "Chapter 3, Division 10, Commencing with Section 2020 through Section 23106."
Payday loans, also called "cash advance loans," "check advance loans," or "deferred deposit check loans," are a frequent pitfall for consumers. A fee anywhere from $15-$30 per $100 borrowed is charged for an average loan of $300. The borrower will give the lender a post-dated check, which the lender later uses to electronically transfer a payment or the entire balance of the loan from the borrowers account. If the payday loan is transacted on the Internet, the borrower gives the payday lender authorization to access the borrower's checking account via the ACH system.
I have no love for payday lenders in general, or banks offering Internet payday loans in particular.
However, your major thesis is First Bank of Delaware must be licensed in California to transact business with California residents. That is not true because the bank has no branches or agents in California, as far as I can tell by reading the bank's 2009 10-K. A state or federally chartered bank, thrift, savings association, industrial loan company or credit union is not subject to the California Deferred Deposit Transaction Law.
Your minor thesis is all California payday lenders must be licensed by the state. That may or may not be true, but it is irrelevant for First Bank of Delaware because it has no branches or agents in California, as far as I can tell, and is a Delaware-chartered bank.
Your conclusion — a loan contract with First Bank of Delaware is illegal and unenforceable in California because First Bank of Delaware is unlicensed in the state — is not supported by your arguments. I am unable to find any California court cases regarding First Bank of Delaware on this question. (Readers, please provide citations if you do.)
I hope this information helps you Find. Learn & Save.