Payday loan lender withdraws funds from customer's bank account

After woman signs up for payday loan, lender starts withdrawing from bank account

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Shortly after signing up for the loan, $75 began being withdrawn from her bank account. Shortly after signing up for the loan, $75 began being withdrawn from her bank account.
"I thought they were going to put my money in there, the money I was borrowing," Wisecarver said. "I thought they were going to put my money in there, the money I was borrowing," Wisecarver said.
"She has enough to pay her bills. Just barely. But as far as trying to save money, that is obsolete," Nikki said. "She has enough to pay her bills. Just barely. But as far as trying to save money, that is obsolete," Nikki said.

By DON DARE
6 On Your Side Consumer Investigator

MORRISTOWN (WATE) - A Morristown woman who found herself short of cash took out a payday loan last year, from an online loan company. Now she regrets her decision.

Businesses that offer payday and title loans are prevalent throughout East Tennessee.

For those who need fast money, short term loans fill a niche. As long as you pay the loan back, usually within 30 days, you are not hit with an exorbitant interest rate.

Most people use local businesses, but if you go online, it's a different game as a woman in Morristown found out.

When Rhonda Wisecarver went to her bank to make a house payment ten days ago, she got a real surprise.

"I noticed that my checking account was low," she said. "Hydra Fund was taking $75 out of my check."

The teller printed up papers representing ten months of checking account activity.

"I couldn't believe it," she said.
 
What she couldn't believe were the number of withdrawals from two payday loan companies that began shortly after she took out a $500 loan in August of 2012.

She gave the lenders her checking account information when she got the loan.

"The reason I did that is because I thought they were going to put my money in there, the money I was borrowing," Wisecarver said.

Adding it up, nearly $3,000 has been withdrawn by two payday loan companies in ten months.

"I was really mad. I was angry," said Nikki Fleenor, Rhonda's close friend.

Wisecarver, who lives alone, has cerebral palsy and other disabilities. She gets a monthly Social Security check and works part time.

On the internet last year, she discovered a payday loan company, Hydra Fund II, that offered quick cash.

She needed the money to help pay her bills.

But her bank statement shows that nine days after getting the loan, Hydra Fund and Anasazi start withdrawing cash.

"$75 a pop," Nikki said.
    
Rhonda remembers giving Hydra Fund II checking account and routing numbers and other personal information they had requested.

"She was under the assumption they wanted the account number so they could deposit the money, then she would make monthly payments," Nikki said.

"Under the business model of a payday loan, you are supposed to pay your loan back on your next pay day," said Better Business Bureau President Jerry Tipton.
 
Tipton says there are some inherent risks using online payday loan companies.

"People can do anything with your checking account information. They can charge you any rate they want, take as much as they want out," Tipton said.

The BBB shows Hydra Fund II's rating is an F.

The vast majority of complaints are billing and collection issues.

The bureau says that Anasazi group loan company is from the West Indies.

Through e-mail and by phone, we reached out to the two companies for comment. There's been no response.

At her bank the other day, Rhonda closed her checking account and opened a new one.

So now, those payday businesses can't withdraw any more money.

"She has enough to pay her bills. Just barely. But as far as trying to save money, that is obsolete," Nikki said.

Rhonda said she's learned her lesson about online loan companies

She says if you don't check up on them first, you can go broke doing business with them.

If you find yourself having to use their services, it is particularly important to do business with a payday loan service that is trustworthy.

To find a company with a good reputation, the Better Business Bureau, with its background records and grading system, is a good place to start.


Don Dare's 6 On Your Side reports can be seen every Monday and Wednesday on 6 News at 5:00.

If you have a consumer issue, call the 6 On Your Side Hotline at 865-633-5974 or email ddare@wate.com.

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