Unintended Consequences; Online Payday Lending On the Rise

LOS ANGELES, Aug. 13 /PRNewswire/ -- According to Payday Loans Max, Arkansans' attorney general is suing two online payday lenders and their owners for illegally lending payday loans to residents. Arkansas is among one of the many States that has increased its rules and regulations on payday loans and their respective lenders.

According to a payday lender blog, because of tight regulations on the local lenders, many residences are looking into the online lenders for their short term financial needs.

"Demand is there and not going anywhere," says a search marketing consultant that works with payday lenders. According to him, more people are now searching online for payday loans and cash advances.

"Search volume for those keywords and related keywords have significantly increased and it seems they are coming from the States that are banning or over-regulating their payday lenders."

It appears that as States are constituting their own laws and regulations either banning or restricting payday lenders, they are not offering alternatives and as the result many consumers are looking elsewhere to meet their short term financial needs and Internet seems to be a source.

It is harder, not impossible, to regulate online lenders, but the late response in regulation on online lenders has State officials playing catch up. They are having a difficult time trying to locate these lenders and since they don't have any legal jurisdictions on them, they are left with no other choice but to sue the online lenders. Nevertheless, suing is a lengthy process and can cost the State money and resources. To receive a higher revenue, there are some online cash lenders, in particular smaller ones, that may take chances to lend out payday loans to citizens of States where payday loans are illegal. However, some cases are more innocent, and a payday loan lender can simply sign off on an illegal payday loan because it is hard to verify residency if a resident uses an out of State Identification and credentials.

SOURCE Payday Loans Max